Fulfilling a promise to share my trading Part 2Hello everyone, i haven't been publishing much this week due to some platform migration issues. So, keeping my fingers
cross that all will be resolved next week, Now, i'd just concentrate on delivering my educational series and hope to
continue to benefit the trading public.
In the first part, i shared a very simple momentum trading strategy. Simplicity works and allow you to make quick decisions
if you are doing day trading. However, it does work on longer time frame as well. Do your own back testing and see how to
make a strategy yours.
So, after the strong up move, which i defined as the "impulse" move the instrument will come to a point where it loses the
momentum. Profit taking, sellers taking up new positions, some news announcement whatever the case is. It doesn't really
matter why. As a trader my thoughts are: "i want to go long assuming a longer uptrend is forming". Start to build a case
around it. You can be on the sell side if you want to but my experiences tells me the chances of it going higher is there.
What if it doesn't? Well, that is why I have a stop loss in place.
So, if you refer to the chart above, the market is in the 3rd stage of the impulse move. Usually from the 3rd to 5th move,
i don't bother too much until the uptrend line broke. So, the market has pierce through several structural resistances before
a nice shooting star formation ended the impulse up move. Why do i still want to long? Again simplicity is at work. As long as
the previous "New Structure High, Higher Low" remains intact my view does not change. There are tons of information which
you can google on these terms. Feel free to study it.
I'd be back on Part 2.1 with the actual trading plan as soon as possible! Till then, try to understand not the trading but how i
shape my thinking before i trade it. Nothing is more important as developing the thought process.
Psychology
Fulfilling a promise to share my trading Part 1. (Education)This will be a relatively shorter post and is a follow up on Part 1 (phew.... Good for me and you LOL)
So, i got this situation where there was a breakout on the 4 hour, mark with a dash line on the 1 hour.
The first thing that came to my mind will be:
A) I want to long
B) I will not short even if there is a reversal (Unless 7700 is broken)
C) Where will i long? What is my initial risk to reward?
So, instead of chasing price action, i'd use a very simple method for a certain completion of the latest low.
The key part to succeed here is you have to start watching the market and wait for a classical higher high
higher low formation usually in the form of 2 candles.
You might be asking "Don't you use some sort of indicator"? As a matter of fact, i rarely use it because i find
it too troublesome. I'm watching a lot of markets and i'm not going to throw all my eggs in one trade.
But if you want, i could use an ATR (for stop distance placement) or RSI (below 80 or above 20). That's it.
So, after the formation of "higher high, higher low", my entry is 2 pips above its last high, and 3-5 pips below
the swing low. Don't worry about it because my first target is usually conservative at 1:1 risk to reward and
likely i'd take half or one third. No right or wrong but try to fix at predetermine amount to exit.
The position size i take is never more then 2 percent of my equity but the actual size depend on the stop
placement.
Once this is achieved, i simply move my stop to break even and target 1:2 risk to reward. I may have exited fully
or still have one third of position left. I'd simply trail it with swing highs and low. Remember the golden rule that
stop can only move when it is meant to lock more profits then before.
I felt this is a very simple way to trade and is easily executable by anyone although it does take a lot of practise to
do so. Why rush anyway? Trading is a marathon and the longer you are in the race, the more you are likely to succeed!
I hope this simple method helps you. Free free to drop me any questions i'd try to answer as much as possible!
Fulfilling a promise to share my trading Part 1. (Education) Please ignore the previous post as I lost internet connection
Dear all, as mentioned i not only want to share trading signals and ideals but more on my psychology.
There are tons of signals and ideals just on this platform itself. I do not see I'm the best out there, nor
am I not trying to be special or trying to sell something. I have always been wanting to contribute to
the community and this is one of the best way to do it. The more I share, the more i learn as well.
My view of a trading career is that it'd be one of the toughest endeavor you undertake in your life
because you need to be constantly aware of your own emotions, keeping your actions in check and
be patience. I mean, who can do this day to day? I can't for sure. There are countless days where
emotions creep in and before I knew it, I did something totally contrary to my plan. My honest
opinion is, I can never be perfect. What I do is to admit that and find ways to be better, but stop
trying to be perfect because the market never is as well. HAHA.
*** Please bear with my "English", I've a lot to improve on for myself on that. ***
I'm breaking down this into a few series because it can be very dry to read all at one shot.
OK, let me start by going back to the very beginning in which a 4 hour Bullish Bat is discovered. If I
go to a larger time frame, we can see that A6 has been on an uptrend on a longer term basis when
it broke 7700. Momentum was good. This move began on 13th July and lasted all the way to 27th.
(The first part is dedicated to momentum and swing traders)
It's always easy when we are conducting post mortem analysis on price action. Who can't see its an
uptrend and we should go long? While that is true, there ain't much ways to learn besides that.
I don't see much of a issue if, you already have a trade plan that encompass a entry, stop loss
and viable risk to reward ratio. Such post mortem exercise are only useful if you do it in a meaningful
way.
So, with the beginning of the break on 7700, this instrument should already be on your radar.
The first thing that comes into my mind is:
1) This breakout is confirmed as the close above 7700 is confirmed.
You have to believe in it because you can't execute or take action if you don't. This is the point
where previous false breakout creeps into your mind and says: "haha you are not going to fool me!".
If you develop such habitual thinking, you are going to face a lot of execution problems and this
is where many attempt to trade "tops" or reversals, in total contrary to a swing trade long.
Trading requires a lot of muscle memory. To be successful trading momentum and swing, you must
constantly cast away contradicting signals and focus on your predetermined swing or momentum quantifiers.
Build it into your subconscious by practice.
2) Accept that the best plan will fail.
Having said the first point, are we going to be stubborn and keep trading?
The answer is no. You see, even the best get it wrong. So, I personally propose let the market decide on that.
If you have a plan, you always have a stop loss. A stop loss is there to tell you to review your trade plan if
you got stop out. By the way, if you have the habit of moving your stops, I'd suggest you practice to keep it.
Personally, I only move stops when my trade becomes profitable. Once an entry is triggered, believe in your
plan and let the market decide.
3) Do not be greedy.
Again, I cannot emphasize enough on sticking to the plan. In the last 10 years, greed has been one of the emotions
that affects my trades a lot. Who doesn't want a winner? Umpteen times with good profits I failed to capture and
ended up being stop out. "Revenge" is sweet. The vicious cycle of doubling up, moving my stop loss began and by
the time I realize it, I had a big loss. So, when you enter the market, a stop loss and profit targets is a must.
WHICH BOOKS DID YOU READ? I don't see anyone talking about trading books so I'd like to share a few books that I read over the years and invite you to comment below with yours.
Regardless of whether you are a novice or an experienced trader every book has something to teach and it is quality time to spend off the charts.
Top 10 Trading Psychology RulesTop 10 Trading Psychology Rules:
1. Plan the Trade & Trade the Plan
-Plan all the potential trades beforehand, and trade accordingly with your plans
2. Always be Disciplined
-Do not create excuses to break your own trading rules
3. Expect Losses
-Do not take a trade unless you are willing to accept the risk
4. Emotion Management
-Always analyze your trade objectively and with a neutral of mindset
5. Focus on Trading Well
-As a trader, your focus is on making the good trades, not focus on making the money
6. Patient, Patient and Patient!!!
-Patient to wait for the Best Setups to trade, do not trade when there are no good setups
7. Trade What You See, Not What You Think
-Concern with the effects, not concern about the reasons behind of what are happening. Everything is on your charts!
8. The Trend is Always Your Good Friend
-The easiest money is made trading with the trend
9. Trading Evaluation
-Record down your trades, why are you entry and why are you exit, continuously improve yourself
10. Trading is a Marathon, not a Sprint!
-Be realistic, trading takes time to build experience
