Three Trading Principles

Three Trading Principles to aid in your success as a Trader.

Read this articles in June issue of TFJ and the 3 principles that can aid in anticipating and avoiding mistakes are:-

1.   Probability
Traders must train themselves to think in terms of probability for three very important reasons:-
a.   No one knows 100% whether a trade will be profitable or not.
b.   No one knows how much money will be made or lost on a trade.
c.   If a trader does not control the profit outcome and does not know with 100% certainty which trade will work, he should spend 100% of his time concentrating on the only element of trading that he can control - the risk.

2.   Self-Discipline
Discipline is a two part process:-
a.   Preparation - mental preparation, technical preparation, fundamental preparation, etc.
b.   Execution - Risk control and profit protection.

3.   Responsibility
Adopt the attitude that he is responsible for his trading.  The market, the brokers or computers are not responsible - only the trader.

Tips for Active Traders and Investors

Find this an interesting articles in the May issue of The Forex Journal (TFJ) and decided to write it down in my blog as a reminder to myself as well as for interested reader.

1.   Evaluate your trading

Record the results of your trading activities diligently.  What is your hit rate, average profit and loss?  Be honest with yourself and assess what you did right and what went wrong.  What can I learn from this?  And most importantly of all - what am I going to do about it and when am I going to do it?  For instance, if you discover that you struggle to continue trading during a losing streak, try to learn how to deal with the stress.  If that fails, maybe you should consider a system with slightly lower earnings expectations but with a higher hit rate.

2.   Do not lose your cool

The moment the market turns tense is the point at which the biggest profits are made - and the biggest losses!  It is important that you do not allow yourself to be distracted regardless of the height of the waves.  This is precisely the time you should be profiting from fluctuations and not being dragged along with the herd.  Make sure you and your trading plan are the one stable factor amidst all the chaos.

3.   Make sure you are 'fit'

Trading, especially day trading, is hard work.  Make sure that you are not distracted by other matters and that you remain relaxed but alert.  For a trader, being fit also means that his technical trading system and his expertise are up-to-date.  It is not a good idea to sit and read your order system's manual during a stock market crash.

Placing orders and trading should come as naturally to you as accelerating and braking.  Make sure you have an alternative for placing orders if your computer crashes unexpectedly.  Put simply, being a fit trader means you can implement your trading plan with confidence and without misgivings.  But do not forget, your biggest losses have yet to come!

Trading with Pivot Points

What are Pivot Points?

A Pivot Point is nothing more than a level or point where market direction changes.  Once calculated, Pivot Points can yield some important support and resistance levels to work off of.  So think of Pivot Points as markers on a map or markers on a chart.  In the case of FOREX Trading, they can be viewed as points of interest that you can use to trade from or as potential future trading opportunities.

Pivot Point Calculation

Pivot Point = (Daily High + Daily Close + Daily Low) / 3


Support 1 = 2 * Pivot Point - Daily High
Resistance 1 = 2 * Pivot Point - Daily Low

Support 2 = Pivot Point - (Resistance 1 - Support 1)

Resistance 2 = Pivot Point + (Resistance 1 - Support 1)

Pivot Point Trading Strategy

One of the easiest trading strategies is simply to see what the day may look like right at the open.  If the market opens above your calculated Pivot Point, you will want to buy.  On the flip side if the market opens below the Pivot Point, you will want to sell.  You will remain a buyer / seller as long as the market stays above / below the Pivot Point.  This is the most basic level of Pivot Point trading.

There are more strategies and methods involving trading with Pivot Point and can be easily found when you do a search on the internet.

Triangles...

ASCENDING TRIANGLE


Ascending Triangles is a bullish continuation pattern that is shaped like a right triangle consisting of two or more equal highs forming a horizontal line at the top.

DESCENDING TRIANGLE


Descending Triangles is a bearish continuation pattern indicating distribution consisting of two or more comparable lows forming a horizontal line at the bottom. Descending triangles are bearish patterns that indicate distribution. The definitive bearish signal of a descending triangle is when support on the lower rung of the triangle is broken.

SYMMETRICAL TRIANGLE


Also referred to as a coil, usually forms during a trend as a continuation pattern. It contains at least two lower highs and two higher lows. At the time these points are conjoined, the lines converge as they are extended and the symmetrical triangle takes shape. One can also think of it as a contracting wedge, wide at the beginning and narrowing over time.

EXTENDING TRIANGLE


Extending triangle does not occur frequently and is likely to be detected at tops and bottoms after lengthy price moves. Again a minimum of two tracking points for each trendline is needed before a breakout.

Determined to be a Spot Forex Dealer

I was told about this opportunity by Ruilong who had seen the advertisement in Straits Times.  We sent our resume to the email address and attended the career briefing.  Thereafter, I decided to take on the training program and learn to trade forex profitably and earn a rewarding income monthly.

I started the training program since 5 Apr 2010 and is presently going through nothing else but trading sessions, just like what the advertisement had said, Training in Forex Trading is in the Trading itself.  I have yet to reach the stage where I am profitable, but I am determined to be one day.  I also want to become one of the proprietary forex dealer for the company to trade for institutions.

For now, I am just going to concentrate and stay focus on my trading to be profitable. ;p

FOREX end-of-week update (29 Mar - 2 Apr 10)

Yet another week of negative gradient, time to stop trading LIVE and back to DEMO.  Anyway started the training program with Six Capital and should slowed down my trading frequency on this account.

Learning the six mindsets and the six steps in Spot FX trading.  Will be going through one week of lectures followed by five weeks of supervised DEMO trading before starting supervised LIVE trading for 18 weeks.  I should be able to trade profitably by the end of this 18 weeks. ;p

Trade of the Day 31 Mar 2010

Trade of the day 31 Mar 2010 - LONG EURUSD
Price break previous swing point (high) @ ~ 1.3428-1.3430, hence took a trade with protective stop at 1.3390.  Subsequently moved my SL to secure profit at 1.3500, trade still in progress. ;p

Price rise progressively before 8:00am, Sydney opening, but got rejected near resistance 1.3570 area and falls...