Her background in mathematics and econometrics from her undergraduate degree however, did not prepare her for what would be an interesting career path. Left with the choices of many options available to her after 12 years in the recruiting industry, she opted for a change into the world of trading after seeing a public seminar on technical trading with her husband in Although her mathematical background made understanding the indicators simple, she struggled for her first two years as a retail trader, like many others who enter the trading world without education in the trading environment. She found a few bright and successful traders who were willing to impart their knowledge to her and she set her mind to accumulating and synthesizing as much information as possible from them. Two and a half years after starting her journey, she began to achieve consistent and reliable results from from strategies she has designed centered around market cycles and measured movements between support and resistance.
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Bollinger bands Day trading: 25 SMA, 2. We are going to be studying a momentum-based trading system, and without momentum, our trades will fail. If there is no directional slope, a good trade is not available. Entries Are More Important Than Exits The entry of a position is vastly more important than the exit, because the entry manages the risk threshold.
Moreover, very often we will enter a position that will go against us. However, the sharper the acceleration, the less likely the pullback to the slower moving average. Hence if the move is sharp, enter on the pullback to the 8 EMA. Bollinger bands Entry on a squeeze of the bands with a candle above the midpoint line of the band. Fibonacci To be conservative, enter at the re-test of breached levels, unless you have a great deal of volume or a breakaway formation.
Trading 4-hour charts, make sure daily and hourly charts are following the same trend. Trading min charts, make sure hourly and 5-min charts are following the same trend. Trading 5-min charts, make sure min and 2-min charts are following the same trend. Scale In and Scale Out Enter a half position initially. Add when there are more entry opportunities later.
Exit half position at tests of overcoming new levels in the direction of the trend i. Set Different Stop Levels for Portions of the Position The rule of thumb here is — the longer the time frame of the trade, the wider the stop necessary. When I stalk an entry, my initial stop is usually quite tight, and when I have assumed a full size, I will frequently set a very tight stop for a quarter of the position, a midrange stop determined by recent wave retracement in my time frame for one-half, and finally a longer wave retracement in my time frame for the last stop.
Stable patterns — few gaps, no unfilled gaps, good clear linear trend No earnings releases nearby Identify entry Draw weekly, daily, four-hourly Fibs. Identify probable entry, either at the breach of a nearby Fib or moving-average formation. Premium long entries are usually found when the stock price is bouncing off support levels, not breaking over resistance.
Vice versa for short entries. Identify the stop, set alerts to be aware when the event is about to occur. Calculate the number of shares to trade based on distance between entry and stop. Enter Wait for confirmation candle to complete if using the moving averages to trade.
If Fibs are used, isolate a breakout formation around the level if there is congestion or go to the time frame just beneath the one chosen to trade to see the break above or below just a little earlier.
Raise your stops as new areas of support or resistance form. At the probable target, remove some of the position. Daily Preparation Routine Check economic calendar, watch out for conference calls, earnings, etc. Is your trade with trend or countertrend? Any nearby overhead support or resistance? Warning signs Look for unusual volume changes. Are you in a low volatility area that might whip you around? Is it a low or high probability trade?
How would you know if the trade is broken? Risk management Set a reasonable stop? The dedicated trader uses a journal to chronicle the market and her actions through the day.
The trader examines the market in different ways and makes the decision to learn something new every day that makes her a better person and a better trader. The dedicated trader studies after hours. She will review trades, scrutinize charts, and work to discover what she had missed during the work day. Keep Being Better Every Day The strongest mindset comes from those who are willing to work at being better than they were yesterday. Why You Repeat Mistakes One reason is that you have trained yourself to respond to the wrong cues, this being the rational element; and the second is that, at the end of the day, you have not anchored a truly distasteful memory to your actions.
I believe the psychological term is aversion behavior therapy, and it is most effective. Whether this happens on one trade or four, the number is fixed and should not fluctuate. Unless we rapidly assess where we have gone wrong in a series of trades, we must stop trading after we breach the maximum we are willing to lose in a day.
If we are trading without a maximum daily loss threshold, we are being exceedingly poor money managers as day traders. Losing trade after trade is a sign of something being very wrong. Stop trading until the problem is isolated, analyzed, and properly corrected, or more losses will mount.
Book Review of The Trading Book by Anne-Marie Baiynd
Now, with her popular website and this brilliant new book, she teaches other traders how to master the market using her proven combination of analytics and psychology. The Trading Book shows you how to: Master the power of technical trading Increase profits using probabilities and pattern recognition Focus on precision trading for consistent results Discover the benefits of waves and fibs Embrace the habits of highly effective traders This one-of-a-kind guide goes beyond the numbers and statistics to show you the complex psychology behind the trades—from the greatest gains to the hardest losses. Filled with insightful case studies, interviews, exercises, and guidelines for keeping a personal trading journal, this is more than a crash course for beginners or an industry guide for experts. This is the book on trading. She knows it makes her smarter and so sharing is not really giving away anything.
The Trading Book