1)Nobody is bigger than the market.
2)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.
3)Trade with the trends, rather than trying to pick tops and bottoms.
4)There are at least three types of markets: up trending, range bound, and down. Have different trading strategies for each.
5)In uptrends, buy the dips ;in downtrends, sell bounces.
6)In a Bull market, never sell a dull market, in Bear market, never buy a dull market.
7)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.
8)A buy signal that fails is a sell signal. A sell signal that fails is a buy signal.
9)Let profits run, cut losses short.
10)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.
all your well-deserved profits back to the market.
11)Use protective stops to limit losses.
12)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.
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.
13)Placing stop loss is an art. The trader must combine technical factors on the price chart with money management considerations.
14)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.
15)Stay out of trouble, your first loss is your smallest loss.
16)Survive! In Stock Market trading, the ones who stay around long enough to be there when those “big moves” come along are often successful.
17)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.
18)Be more objective and less emotional.
19)Use money management principles.
20)Money management increases the odds that the trader will survive to reach the
long run.
long run.
21)Diversify, but don’t overdo it.
22). Employ at least a 3 to 1 reward-to-risk ratio.
23) Calculate the risk/reward ratio before putting a trade on, then guard against
holding it too long.
holding it too long.
24) Don’t trade impulsively ; have a plan
25) Have specific goals and objectives.
26) 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.
objective rules. c) Visually check it out on the charts d) Formally test it with a demo
e) Evaluate the results.
27) Plan your work and work your plan.
28) 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.
market, how much you will risk on the trade, and where you will take your profits.
29) 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.
get out unless the stop is reached or the fundamental reason for taking the position
changes.
30) 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.
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.
31) Don’t cherry-pick your system’s set-ups. Trade every signal.
32)Trading systems that work in an up market may not work in a down market.
33) 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.
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.
34) Double-check everything.
35) 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.
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.
36) The place to start your market analysis is always by determining the general
trend of the market.
trend of the market.
37) Trade only with a strategy that you’ve proven to yourself.
38) When pyramiding (adding positions), follow these guidelines.
a. Each successive layer should be smaller than before.
b. Add only to winning positions.
c. 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
d. 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.
e. Adjust protective stops to the breakeven point.
39) Risk Control
A)Never risk more than 3-4 percent of your capital on any trade
B)Predetermine your exit point before you get into a trade
c)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
A)Never risk more than 3-4 percent of your capital on any trade
B)Predetermine your exit point before you get into a trade
c)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
40) 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 forex
trading
can honestly answer this question, you may be on your way to successful forex
trading
41) Never meet a margin call; don’t throw good money after bad.
42) Close out losing positions before the winning ones,
43) Except for very short term trading, make decisions away from the market,
preferably when the markets are closed.
preferably when the markets are closed.
44) Work from the long term to the short term.
45) Use intraday charts to fine-tune entry and exit.
46) 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.
patterns and breakout patterns appear often. Learn to look for the pattern in any
time frame.
47) Try to ignore conventional wisdom; don’t take anything said in the financial
media too seriously.
media too seriously.
48) 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.
what’s going to set off a particular currency on any given day.
49) 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).
most people will disagree with you. (90% losers,10% winners).
50) Technical analysis is a skill that improves with experience
and study. Always be a student and keep learning.
and study. Always be a student and keep learning.
51) 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.
if the information you’ve obtained is accurate, then take a position with the
developing trend.
52) Buy the rumor, sell the news.
52) – Keep It Simple Stupid, more complicated isn’t always
better.
better.
53) 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.
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.
54) 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.
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.
55).”Rome was not built in a day,” and no real movement of importance takes place
in one day.
in one day.
56) Do not overtrade.
57) Patience is important not only in waiting for the right trades,but also in staying
with trades that are working.
with trades that are working.
58) You are superstitious; don’t trade if something bothers you.
59) Technical analysis is the study of market action through the use of charts,for the
purpose of forecasting future price trends.
purpose of forecasting future price trends.
60) The charts reflect the bullish or bearish psychology of the marketplace.
61) 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
early stages of their development for the purpose of trading in the direction of those
trends
62) The fundamentalist studies the cause of market movement, while the technician
studies the effect.
studies the effect.
63) 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.
inflationary pressure. Falling commodity prices usually warn that the economy is
slowing along with inflation.
64) 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.
,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.
65) 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.
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.
66) The minimum requirement for a triangle is four reversal points. Remember that
it always takes two points to draw a trendline.
it always takes two points to draw a trendline.
67) 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.
reacts. The moving average follows a market and tells us that a trend has begun, but
only after the fact.
68) 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.
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.
69) 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.
generated. A sell signal is given when prices move below the moving average.
70) 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.
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.
71) 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”.
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”.
72) Cutting losses is painful for every trader.The ability to cut one’s losses in time is
the sign of a seasoned trader.
the sign of a seasoned trader.
73) 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.
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.
74) Common Points All Of Reversal Patterms
A)The first signal of an impending trend reversal is often the breaking of an
important trendline.
B)The larger the pattern,the greater the subsequent move
C)Topping patterns are usually shorter in duration and more volatile than bottoms.
D)Bottoms usually have smaller price ranges and take longer to build
A)The first signal of an impending trend reversal is often the breaking of an
important trendline.
B)The larger the pattern,the greater the subsequent move
C)Topping patterns are usually shorter in duration and more volatile than bottoms.
D)Bottoms usually have smaller price ranges and take longer to build
75) 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.
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.
76) 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.
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.
77) 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.
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.
78) A Breakaway gap provides the direction of the market.
79) The runaway or measurement gap provides the direction of the market. This gap
confirms the health and velocity of the trend.
confirms the health and velocity of the trend.
80) 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.
objective. The price objective is the previous length of the trend, measured from the
runaway gap, in the same direction as the original trend.
81) The exhaustion gap provides the direction of the market.
82) 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.
can be misleading. Toward the end of market moves ,however ,oscillators become
extremely valuable.
83) 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 band, this suggest that the current price move have gone too far too fast and is
due for a correction of some type.
84) 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.
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.
85) A divergence between the oscillator and the price action when the oscillator is in
an extreme position is usually an important warning.
an extreme position is usually an important warning.
86).-Oscillator-The crossing of the zero line can give important trading signals in the
direction of the price trend.
direction of the price trend.
87)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.
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.
88)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).
signal is followed only when it agrees with the weekly signal. (daily-weekly, 4
hour-daily,4 hour-1 hour).
89) 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.
90) -Elliot Wave Theory- A complete bull market cycle is made up of eight waves,
five up waves followed by three down waves.
five up waves followed by three down waves.
91)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.
points. For purposes of placing stop loss, support and resistance levels are most
valuable.
92) Don’t use the markets to feed your need for excitement.
93)Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.”
94)Emotions are your worst enemy in the stock market.
95)If you hear that everybody is buying a certain stock, ask who is selling.
96)If Investmens are keeping you awake at night-Sell down to sleeping points.
97)A stock does not know that you own it.
98)Experienced traders control risk, inexperienced traders chase gains.
99)When speculation has done its worst, two and two still make four.
100)There are two times in a man’s life when he should not speculate: when he can’t afford it, and when he can.