: 100 TRADING TIPS : Continued

When pyramiding (adding positions), follow these guidelines.-

Each successive layer should be smaller than before.-

Add only to winning positions.-

Never add to a losing position. One of the few trade management rules that we can state we never break is ‘Never add to a losing trade’. Trades are split into winners and losers, and if a trade is a loser, the chances of it turning right around and becoming a winner are too small to risk more money on. If indeed it is a winner disguised as a loser, why not wait until it shows it’s true colors (and becomes a winner)before you add to it. If you do this you will notice that nearly always the trade ends up hitting your stop loss and does not look back. Sometimes the trade turns around before it hits your stop and becomes a winner and you can count yourself very fortunate. Sometimes the trade hits your stop loss and then turns around and becomes a winner and you can count yourself unlucky. Whatever the result, it is never worth adding to a loser, hoping that it will become a winner. The odds of success are just too low to risk more capital in addition to the initial risk. -

Adjust protective stops to the breakeven point.

Risk Control -

Never risk more than 3-4 percent of your capital on any trade-

Predetermine your exit point before you get into a trade -

If you lose a certain predetermined amount of your starting capital, stop trading, analyze what went wrong, and wait until you feel confident before you begin trading

Know why you are in the markets. To relieve boredom? To hit it big? When you can honestly answer this question, you may be on your way to successful stock market trading

Never meet a margin call; don’t throw good money after bad.

Close out losing positions before the winning ones,

Except for very short term trading, make decisions away from the market, preferably when the markets are closed.
Work from the long term to the short term.

Use intraday charts to fine-tune entry and exit.

Don't trade the time frame. Trade the pattern. Reversal patterns, hesitation patterns and breakout patterns appear often. Learn to look for the pattern in any time frame.

Try to ignore conventional wisdom; don’t take anything said in the financial media too seriously.

Always do your homework and stay current on global events. You never know what's going to set off a particular currency on any given day.

Learn to be comfortable being in the minority. If you are right on the market, most people will disagree with you. (90% losers,10% winners).

Technical analysis is a skill that improves with experience and study. Always be a student and keep learning.
Beware of all tips and inside information. Wait for the market's action to tell you if the information you've obtained is accurate, then take a position with the developing trend.

Buy the rumor, sell the news.

Carry a notebook with you, and jot down interesting market information. Write down the market openings, price ranges, your fills, stop orders, and your own personal observations. Re-read your notes from time to time; use them to help analyze your performance.

Don't count profits in your first 20 trades. Keep track of the percentage of wins. Once you know you can pick direction, profits can be increased with multi-plot trading and variations in using your stops. In other words, now is the time to get serious about money management.

"Rome was not built in a day," and no real movement of importance takes place in one day.

Do not overtrade.

Patience is important not only in waiting for the right trades,but also in staying with trades that are working.

You are superstitious; don't trade if something bothers you.

Technical analysis is the study of market action through the use of charts,for the purpose of forecasting future price trends.

The charts reflect the bullish or bearish psychology of the marketplace.

The whole purpose of charting the price action of a market is to identify trends in early stages of their development for the purpose of trading in the direction of those trends

The fundamentalist studies the cause of market movement, while the technician studies the effect.
Rising commodity prices generally hint at a stronger economy and rising inflationary pressure. Falling commodity prices usually warn that the economy is slowing along with inflation.

The larger the Pattern ,the Great the potential. When we use the term “larger” ,we are referring to the the height and the width of the price pattern. The height measures the volatility of the pattern. The width is the amount of time required to build and complete the pattern. The greater the size of the pattern-that is ,the wider the price swings within the pattern (the volatility ) and the longer it takes to build –the more important the pattern becomes and the greater the potential for the ensuing price move.

The breaking of important trendlines . The first sign of an impending trend reversal is often the breaking of an important trendline. Remember however ,that the violation of a major trendline does not necessarily signal a trend reversal.The breaking of a major up trendline might signal the beginning of a sideways price pattern ,which later would be intedified as either the reversal or consolidation type.Sometimes the breaking of the major trendline coincides with the completion of the price pattern.

The minimum requirement for a triangle is four reversal points. Remember that it always takes two points to draw a trendline.

The moving average is a follower , not a leader. It never anticipates;it only reacts. The moving average follows a market and tells us that a trend has begun, but only after the fact.

Shorter term averages are more sensitive to the price action ,whereas longer range averages are less sensitive.In certain types of markets ,it is more advantageous to use a shorter average and ,at other times , a longer and less sensitive average proves more useful.

When the closing price moves above the moving average , a buy signal is generated. A sell signal is given when prices move below the moving average.

A buying signal on a two-moving average combination occurs when the shorter term of two consecutive averages intersects the longer one upward. A selling signal occurs when the reverse happens, and the longer of two consecutive averages intersects the shorter one downward.

Shorter average generates more false signals ,it has the advantage of giving trend signals earlier in the move .The trick is to find the average that is sensitive enough to generate early signals, but insensitive enough to avoid most of the random “noise”.

Cutting losses is painful for every trader.The ability to cut one’s losses in time is the sign of a seasoned trader.

Long term charts provide important information regarding long-terms or cycles. The trader can get a correct perspective regarding the real direction of the market in the long run, the strength or direction of the current trend occurring within that trend, or the possibility of a breakout from the long-term trend.

Common Points All Of Reversal Patterms -
- The first signal of an impending trend reversal is often the breaking of an important trendline.
- The larger the pattern,the greater the subsequent move - Topping patterns are usually shorter in duration and more volatile than bottoms.
- Bottoms usually have smaller price ranges and take longer to build







The head-and-shoulders formation is confirmed only when the completion of the three rallies and their reversals is followed by a breach of the neckline. The failure of the price to break through the neckline on closing prices basis puts on hold or negates the validity of the formation.

Keep It Simple Stupid, more complicated isn’t always better.

The double-top formation is confirmed only when the full completion of the two rallies and their respective reversals is followed by a breach of the neckline (the closing price is outside the neckline ).The failure of the price to break through the neckline puts on hold or negates the validity of the formation.

The flag formation is a reliable chart pattern that provides two vital signals: direction and price objective. This formation consists of a brief consolidation period within a solid and steep upward trend or downward trend. The consolidation itself tends to be sloped in the opposite direction from the slope of the original trend, or simply flat.

A Breakaway gap provides the direction of the market.

The runaway or measurement gap provides the direction of the market. This gap confirms the health and velocity of the trend.

The runaway or measurement gap is the only type of gap that provides a price objective. The price objective is the previous length of the trend, measured from the runaway gap, in the same direction as the original trend.
The exhaustion gap provides the direction of the market.

Near the beginning of important moves, oscillator analysis isn’t that helpful and can be misleading. Toward the end of market moves ,however ,oscillators become extremely valuable.

When the oscillator reaches an extreme value in either the upper or lower end of the band, this suggest that the current price move have gone too far too fast and is due for a correction of some type.

The oscillator is most useful when its value reaches an extreme reading near the upper or lower end of its boundaries.
The market is said to be overbought when it is near the upper extreme and oversold when it is near the lower extreme. This warns that the price trend is overextended and vulnerable.

A divergence between the oscillator and the price action when the oscillator is in an extreme position is usually an important warning..

Oscillator-The crossing of the zero line can give important trading signals in the direction of the price trend.

Because of the way it is constructed, the momentum line is always a step ahead of the price movement. It leads the advance or decline in prices , then levels off while the current price trend is still in effect. It then begins to move in the opposite direction as prices begin to level off.

The best way to combine technical indicators is use weekly signals to determine market direction and the daily signals to fine-tune entry and exit points. A daily signal is followed only when it agrees with the weekly signal. (daily-weekly, 4 hour-daily,4 hour-1 hour).

The failure of prices to react to bullish news in an overbought area is a clear warning that a turn may be near. The failure of prices in an oversold area to react to bearish news can be taken as a warning that all the bad news has been fully discounted in the current low price. Any bullish news will push prices higher.

Elliot Wave Theory- A complete bull market cycle is made up of eight waves, five up waves followed by three down waves.

Support and resistance are the most effective chart tools to use for entry and exit points. For purposes of placing stop loss, support and resistance levels are most valuable.

Don't use the markets to feed your need for excitement.

Don't try to buy at the bottom and sell at the top. It can't be done except by liars."

Emotions are your worst enemy in the stock market.

If you hear that everybody is buying a certain stock, ask who is selling.

If Investmens are keeping you awake at night-Sell down to sleeping points.

A stock does not know that you own it.

Experienced traders control risk, inexperienced traders chase gains.

When speculation has done its worst, two and two still make four.

There are two times in a man's life when he should not speculate: when he can't afford it, and when he can.


From : JinvaniAdvisors

: 100 TRADING TIPS :

Nobody is bigger than the market.

The challenge is not to be the market, but to read the market. Riding the wave is much more rewarding than being hit by it.

Trade with the trends, rather than trying to pick tops and bottoms.

There are at least three types of markets: up trending, range bound, and down. Have different trading strategies for each.

In uptrends, buy the dips ;in downtrends, sell bounces.

In a Bull market, never sell a dull market, in Bear market, never buy a dull market.

Up market and down market patterns are ALWAYS present, merely one is more dominant. In an up market, for example, it is very easy to take sell signal after sell signal, only to be stopped out time and again. Select trades with the trend.

A buy signal that fails is a sell signal. A sell signal that fails is a buy signal.
Let profits run, cut losses short.

Let your profits run, but don't let greed get in the way. Once you've already made a nice profit on a trade, consider taking either some or all of the money off the table and move on to the next trade. It's natural to hope that one trade will end up as your "winning lottery ticket" and make you rich, but that is simply not realistic. Don't hold the position too long and end up giving all your well-deserved profits back to the market.

Use protective stops to limit losses.

Use appropriate stop-loss orders at all times to cut your losses and never, ever sit back and let your losses run. Almost every trader at some point makes the mistake of letting his or her losses run in hopes that the market will eventually turn around in his or her favor but, more often than not, it simply leads to an even greater loss. You win some, you lose some. Simply learn to cut your losses, take your occasional lumps and move on to the next trade. And if you made a mistake, learn from it and don't do it again. To avoid letting your losses run, get into the habit of determining an acceptable profit target as well as an acceptable risk tolerance level for each and every forex trade before entering the market. Then simply place a stop-loss order at the appropriate price - but not so tight (close to the market) that the stop could quickly take you out of the position before the market has a chance to move in your favor. Using a stop is always the smart move.

Placing stop loss is an art. The trader must combine technical factors on the price chart with money management considerations.

Analyze your losses. Learn from your losses. They're expensive lessons; you paid for them. Most traders don't learn from their mistakes because they don't like to think about them.

Stay out of trouble, your first loss is your smallest loss.

Survive! In Stock Market trading, the ones who stay around long enough to be there when those "big moves" come along are often successful.

Don't trade unless you're well financed…so that market action, not financial condition, dictates your entry and exit from the market. If you don't start with enough money, you may not be able to hang in there if the market temporarily turns against you.

Be more objective and less emotional.

Use money management principles.

Money management increases the odds that the trader will survive to reach the long run.

Diversify, but don’t overdo it.

Employ at least a 3 to 1 reward-to-risk ratio.

Calculate the risk/reward ratio before putting a trade on, then guard against holding it too long.

Don’t trade impulsively ; have a plan

Have specific goals and objectives.

Five steps to build a trading system: a) Start with a concept b)Turn it into a set of objective rules. c) Visually check it out on the charts d) Formally test it with a demo e) Evaluate the results.

Plan your work and work your plan.

Trade with a plan - not with hope, greed, or fear. Plan where you will get in the market, how much you will risk on

the trade, and where you will take your profits.

Follow your plan. Once a position is established and stops are selected, do not get out unless the stop is reached or the fundamental reason for taking the position changes.

Any successful trading system must take into account three important factors: price forecasting , timing , and money management. Price forecasting indicates which way a market is expected to trend. Timing determines specific entry and exit points. Money management determines how much to commit to the trade.
Don't cherry-pick your system's set-ups. Trade every signal.

Trading systems that work in an up market may not work in a down market.
Establish your trading plans before the market opening to eliminate emotional reactions. Decide on entry points, exit points, and objectives. Subject your decisions to only minor changes during the session. Profits are for those who act, not react.Don't change during the session unless you have a very good reason.

Double-check everything.

Always think in terms of probabilities. Trading is all about thinking in probabilities NOT certainties. You can make all the “right” decisions and the trade still goes against you. This does not make it a “wrong” trade, just one of the many trades you will take which, through probability, are on the “loosing” side of your trading plan. Don’t expect not to have negative trades - they are a necessary part of the plan and cannot be avoided.

The place to start your market analysis is always by determining the general trend of the market.

Trade only with a strategy that you've proven to yourself.

Continued...

: The Day Trader's Aptitude Test :

1. When I want investment advice, I get it from:
a) The Stock Market Guide to Profitable Investments b) The Wall Street Journal c) Complete strangers I run into at the video store.

2. When I wake up in the morning, I:
a) Shower b) Get dressed. c) Lift my head off the keyboard and start shorting drug stocks.

3. In order to trade stocks intelligently, one must have a:
a) BA b) MBA c) Mouse

4. The last book I read was:
a) Madame Bovary. b) The Stock Market Guide to Profitable Investments c) Windows 2000 for Dummies.

5. I go to the doctor:
a) Once a year. b) Once every two years. c) When I put my fist through the screen.

6. "TCS" is a company that manufactures:
a) Paper b) Cowboys c) I have no idea, but I just bought two hundred shares.

7. When I am in a bar and meet a beautiful woman/man who seems to be attracted to me, the first thing I look at is:
a) Her/his face. b) Her/his body. c) CNBC

8. "Beating the spread" refers to:
a) The way whipped cream cheese is made. b) The way Honduran peasant women clean their bed coverings. c) Don't know/care.

9. "P/E ratio" means:
a) Something to do with, like, stocks and junk like that. b) The number of times per hour that a day trader has to use the bathroom. c) Like I care?

10. A "tick" is:
a) A nervous syndrome common to day traders. b) Something that often lives in a day trader's hair. c) These questions are really starting to make me mad, dude!

If you answered (c) to any of the above questions ...
Congratulations!!! ...

You do have what it takes to succeed in the fast-paced, action-packed world of the day traders!

Common Trading Mistakes :

Dear Readers &Traders ,

Have you been known to make mistakes when trading? We all slip-up, even the best of traders. However, the traders who make the cash also make the least of these common trading mistakes.
The trend is your friend. If the stock is climbing up and up, and you keep shorting the stock,time to look again at what you're doing.

Use a stop loss! Being disciplined is imperative in this business. By using stop orders, you can protect yourself against a dangerous loss. However, don't make them too tight, the market might not have a chance to move, and you'll miss out on the profits! A rule of thumb is to set stop losses just below the low of the day or just below a support level.

Don't let the cookie crumble! Don't ever be afraid to admit defeat. Just take your loss, and move on. Make your decision to either stick to your plan in the next trade, or get out if the market takes a dive. Most traders who hold out on losses, expecting the market to turn around, just end up waiting and waiting, and loosing more money in the meantime.

Don't follow the crowd! "Safety in numbers" almost never applies to trading. It is always better to lead the pack than follow the herd. You don't want to chase the others. It will correct sooner or later (to a certain degree). You need to form your own opinions, and then act with confidence! You will make profit more by making your move before the crowd can react.

Don't reverse your position! If your position is wrong, resist the temptation of turning it all around. Get out and take a rest before you make another move. Think to yourself about what went wrong.

Don't pick tops and bottoms! Let the market pick them for you. If you try to pinpoint exact tops and bottoms, you will be left frustrated. It is also risky business! Use your patience to wait for highs and lows, and that will increase your odds of making a profit. Your goal should be to get the price movement between the bottom and top. You will never go broke with a profit on each trade. Keep your emotions balanced! Don't loose your cool on bad trades, we've all made them. Try not to get too upset, as it might affect your judgement in other trades. You'll make more intelligent trades if you keep a level head on your shoulders and stay focused. If you are an emotionally driven person, you might want to invest in other areas.

Watch out for your greed! Swallow that appetite! The emotion that will kill you is greed. It's a good idea to let profits ride, but once you've made a considerable profit, it's a good idea to take the money and run. How well you take control of your greed and fear will determine the level of success as a trader.

Trading too many stocks at once. Don't try to be a "Jack of All Trades." You'll be a master of none. By spreading yourself too thin, you have too much information to look after, and won't be able to keep on top of things as well. Focus on one position at a time, until your confidence has matured.

Do your homework! Research, research, research! Trading is demanding, you have to put the time in to get good results. You also need to have a good plan.

Don't sell to cover a short position or buy to cover a long position! Do the opposite! Always BUY to cover a short and SELL to cover a long.

Don't average down. Buy a stock that is going up, not down! Short the stock that is going down! If you have to average down, that means you didn't cut your losses at your stop loss point.

Check out the risk factors! Always check the spreads, volume and charts. Don't take big risks if your wallet (or your livelihood) can't back them up.

Lack of concentration ... wake up! Don't trade if your life is in an upheaval. You need to be focused when trading, not distracted. Make sure you're getting enough sleep.


Trade Well
Regards

:: Jinvani Advisors ::

EGO :Affect your Trading :

What we believe about ourselves - whether it's true or not prevents us from seeing and acting on what the market is really telling us. Read on below for details on how to not let ego take over in your trading.



1. Master The Internal Ego :

The idea is a simple one - you must precisely recognize what is keeping you from taking your trading success to the next level.The vast majority of the time, it's your ego getting in the way.

This isn't the arrogant or over-confident type of ego. Instead, it's more along the lines of a defensive, protective ego. The problem is, that kind of self-shielding ego is what prevents real learning. Let's take a closer look.

We're all human, and being human, we don't want to admit that we are wrong about a trade. The ego wants to uphold an ideal version of self that allows for only successes and not failures. Some traders lose millions of dollars trying to protect the ego's version of reality. Your goal should be to trade without ego, without personal judgment of your self worth.

Trading is a business, and the businessmen who do the best are the ones who treat it as such. It's not a reflection of them personally. In fact it's usually just a reflection of a mostly-mechanized trading system.

In order to make money trading, your goal is to keep losses small while letting winners run. Your ego is not equipped to do that naturally, but a trading system is.

But aren't you up against traders with a ton of experience and great trading systems? Absolutely. But remember, everyone follows the same learning curve, and nothing is free. You'll have to spend time and effort to get good at this. How do you do that? Learn!

The reality is that you chose to enter each and every trade.

Examine why the losing trades failed, and why the winners were successful. This can be painful, at least initially, since the ego is built to deflect blame yet accepts praise (this is why we said the ego can create problems).

That's a trap. If you find yourself saying "that was a good trade entry but..." then stop yourself immediately.

Either everything before 'but' or after 'but' is inaccurate. If you rationalize or justify poor trades, then you'll never learn from them.

This is an important reality - the ego can prevent real learning.

If you can learn to accept some failure without being emotionally devastated, then you'll be a good trader. In fact it's been said that the world's top traders aren't necessarily geniuses - they're survivors. They lasted longer because they could handle their ego, and in so doing learned a great deal just by being able to stay in the game longer.


2. Defend The External Ego :

So what can you do today to start managing your ego? There's not enough space here to even really begin. However, there is one characteristic that seems to separate the great traders from the average ones. The great ones realize what kind of problems that a lack of confidence can present, so they don't even risk a shattered ego. How?

They keep their trading activities to themselves. While the amateur trader will often tell friends, neighbors, and total strangers about trades he may have entered, it's all too often a setup for disaster.

Call it Murphy's Law if you want, but one of the 'sure-fire' trades you just entered and told your neighbor about will turn against you soon. And like clockwork, the neighbor will ask how it panned out.

You have one of two options at that point: tell the truth, or lie. You could lie to the neighbor and say the trade went fine. However, even though the neighbor may not know any better, the damage to our own ego is still a reality. Instead of acknowledging a losing position, we're forced to conceal the trade, which hurts your internal self-image.

On the other hand, you could tell the truth and own up to a bad trade, but that would negatively impact your confidence in a slightly different way.

You see, our perception of how others see us has a far greater impact (for better and worse) than our perception of ourselves.

It may not be fair or logical, but it's a fact nonetheless. And when we fail publicly (even at our own hands), we start to internalize and misinterpret external data, whether or not it's accurate. In other words, our damaged ego affects our judgment.

For instance, the neighbor may ask "How much did you lose?", while the trader may hear "Why didn't you use tighter stops?" The neighbor may ask "Why did you buy it in the first place?", while the trader may hear "Can't you do adequate research?" The neighbor may say "Better luck next time.", while the trader may hear "You have no business being in the market."

You get the idea - enough of those innocent questions and the trader is no longer trading. Or worse, the trader has changed his or her trading strategy in an effort to salvage some confidence. And all because he opened the door to his ego!

The only real defense against such an attack is to simply not share the details of your trading with others. There's nothing wrong with telling others you trade, but in no way will detailing your trading activity enhance your return. In fact, it may potentially do the opposite. If you profess a trade position to someone else, you have made a subconscious commitment to it - maybe one you shouldn't have.

If you know someone may ask you about that position later, you're more apt to hold it, even if it's a loser you'd normally get rid of.

By not sharing your trades with friends and colleagues, you allow yourself to make mistakes free of criticism. You allow yourself to fail.

You allow yourself to focus on finding better trades rather than proving someone else wrong. When you don't have to worry about protecting your psyche, you can shift the focus from defense to offense - a necessary trait for all traders.