Sunday, August 16, 2009
Thursday, May 21, 2009
Thursday, May 14, 2009
Why position size is so important
This is the number one element to succeed in the market. Traders who lose their capital, have no control over their position size, they don’t know how big their lot size should be, how much they are risking in a particular trade.
Some key points to follow:
Always keep your position size the same in every trade. Traders who change their position size randomly are very often likely to fail in their business.
As your capital increases, you can increase your position size accordingly.
Never risk more than 5% of your capital in a single trade
If you lose two trades in a row third trade must be ½ the size of initial size.
After three losing trades in a row, do not trade anymore, what ever happens in the market.
As a swing trader you should not lose more then 8% in a single trade.
If you have 10 consecutive losing trades, you should take some time off from trading and review your system.
Remember; traders who make money are only good in one thing; that is money management.
What ever system you use for entry or exit should only differ by 1-2% of your performance.
Risk management will make you money.
It is very important that you understand trading is a game of probability, no one is 100% sure about their prediction, so before you enter a trade you must know how much you are willing to lose if the trade does not work out your away.
When you enter a trade, set a stop loss order.
You must know the reason behind your entry, stop and exit. If you don’t know the reason, don’t enter the trade.
Some key points to follow:
Always keep your position size the same in every trade. Traders who change their position size randomly are very often likely to fail in their business.
As your capital increases, you can increase your position size accordingly.
Never risk more than 5% of your capital in a single trade
If you lose two trades in a row third trade must be ½ the size of initial size.
After three losing trades in a row, do not trade anymore, what ever happens in the market.
As a swing trader you should not lose more then 8% in a single trade.
If you have 10 consecutive losing trades, you should take some time off from trading and review your system.
Remember; traders who make money are only good in one thing; that is money management.
What ever system you use for entry or exit should only differ by 1-2% of your performance.
Risk management will make you money.
It is very important that you understand trading is a game of probability, no one is 100% sure about their prediction, so before you enter a trade you must know how much you are willing to lose if the trade does not work out your away.
When you enter a trade, set a stop loss order.
You must know the reason behind your entry, stop and exit. If you don’t know the reason, don’t enter the trade.
Sunday, April 26, 2009
Sunday, April 19, 2009
Friday, April 10, 2009
Why you need a trading plan?
A trading plan should have complete sets of rules that cover every aspect of any trader's trading.
• What instrument (stock, forex, options, future, CFD etc) you want to trade and why? I trade stock and forex not because I like stock or forex market I have definite reasons to trade those, you need to know why you are trading individual stock not index?
• Which market (NYSE, NASDAQ etc) you want to trade?
• What is best time for you to trade why? (Suppose for forex London open is the best time to trade)
• How you will select a stock or a currency pair that will give you the best result. (I have 12 specific rules to select a stock that helps me a lot to avoid over trading)
• The maximum percentage you will risk on each trade. This is most important for new trader to learn risk management. I follow three golden rules to manage my risk.
• How many lots/share you will trade per trade (position size).I always follow two different rules to know my position size.
• Which time frames you will look at. Time frame is very important aspect to any trading. I follow 5 and 15 minutes chart for equity .Any good set up will appear in any time frame but the point is exit will be different in different time frame.
• A trading plan will give you clear-cut entry strategy, where should you enter and why .My trading plan has eight specific entry strategies.I think exit is the key to a successful trading plan. An exit strategy will show you where to exit and why. I use Three different exit strategies.
• What instrument (stock, forex, options, future, CFD etc) you want to trade and why? I trade stock and forex not because I like stock or forex market I have definite reasons to trade those, you need to know why you are trading individual stock not index?
• Which market (NYSE, NASDAQ etc) you want to trade?
• What is best time for you to trade why? (Suppose for forex London open is the best time to trade)
• How you will select a stock or a currency pair that will give you the best result. (I have 12 specific rules to select a stock that helps me a lot to avoid over trading)
• The maximum percentage you will risk on each trade. This is most important for new trader to learn risk management. I follow three golden rules to manage my risk.
• How many lots/share you will trade per trade (position size).I always follow two different rules to know my position size.
• Which time frames you will look at. Time frame is very important aspect to any trading. I follow 5 and 15 minutes chart for equity .Any good set up will appear in any time frame but the point is exit will be different in different time frame.
• A trading plan will give you clear-cut entry strategy, where should you enter and why .My trading plan has eight specific entry strategies.I think exit is the key to a successful trading plan. An exit strategy will show you where to exit and why. I use Three different exit strategies.
Thursday, April 9, 2009
Double top
A double top is a reversal pattern .This pattern occurs following an uptrend. It is named for the two of peaks which form when price is unable to make a new high. Traders get the sell or short signal when price breaks below the reaction low which formed between the two peaks.The characteristics, volume pattern and measuring rules are similar to that of the head and shoulders except for there being only two peaks.
Ideally, the double top would have two peaks at about the same price level with volume being heavier on the first peak and lighter on the second.
Wednesday, April 8, 2009
2B pattern
When market makes new high or new low, there is always a pullback .After the pullback the market will retest the previous high/low. If the market fails to hold the new high/low, it signals a potential trend reversal. Trades orders are entered to sell the low of the bar trying to breakout or buy the high of the bar trying to breakdown. Target: The target is usually the ‘swing low’ prior to the new high or ‘swing high’ prior to the new low. Stop: Protect your ‘long’ trade entry by placing a ‘stop’ below the recent low and protect the ‘short’ trade entry by placing a ‘stop’ above the recent high.
Monday, April 6, 2009
Sunday, April 5, 2009
Friday, April 3, 2009
Thursday, April 2, 2009
What a move!
What a move! Yesterday I shorted this pair & made some money, it formed a double top. But the pair didn’t have any intention to go down .This morning I was happy to see a nice triangle, which was telling me to buy.Friday, March 27, 2009
Update
Hello guys, sorry for not able to post any trades this week.Yes anonymous, i will post some charts of losing trades,though they are very little in quantity .
Wednesday, March 18, 2009
EUR/GBP long
After my entry i was very negative about the trade,since last 6 days this pair was chopping a lot.After three and half hours of waiting ,i was happy to see some money.
Thursday, March 12, 2009
Two trades
Only two trades in this week so far.EUR/GBP was one of the best trades in this month.Market is choppy at the moment so its better to sit behind the side line.Sunday, March 8, 2009
Friday, March 6, 2009
Saturday, February 28, 2009
GBP/JPY short
The reason behind the trade was trend line break .The breakout was confirmed when we see the shooting star formation. The result wasn’t impressive ,I guess not every trade won’t meet your expectation.Friday, February 27, 2009
Wednesday, February 25, 2009
Two trades
Yesterday I took one trade and today one,both of them successful.GBP/JPY (is my favorite pair even though i hate the big spread) is the pair where you will make big chunk,if the price is right ,i mean if the pattern shows authenticity.
Monday, February 23, 2009
Ultimate short selling pattern 1
The market is a place where we trade our emotions, greed and fear, you might not agree with me in this matter but it would be a lie if I say, I am an emotion free trader. Market is a place where we react to emotions and draw our behavioural pattern. But the problem is nothing stands still even human emotions are not continual patterns. Our knowledge and skills might reform our emotions or other rational/irrational behaviours. Traders who live in the era of information super highway definitely trade very differently from how traders traded in the 1900. Yes you are right we are getting very complex in our thinking. In 1900 U.S.A was a production based country now it is a service based economy, Dow Theory might not be applicable that much in today’s diversified economy but identification of market behaviour will not change and hasn’t changed.
According to Charles Dow an uptrend is when price make successive higher high and higher low and the down trend is when price make lower high and lower low.
To be continued.....
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