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25 Metrics to a Perfect Trading Journal First let’s begin with… What is a trading journal? This is a log book where you plot every trade you make with the metrics to show how your portfolio is performing and will continue to do so. I’m going to briefly list the items you’ll need to track your trading performance. 25 Items to plot in your trading journal… The trade No. The market traded (stock, index, crypto…) The entry date for your trade The exit date for your trade No. of days held Current portfolio value Max risk per trade (currency) Max risk % per trade Initial margin per instrument (CFD Spread betting) No. Volume traded The reason for entry Total margin paid Type of trade (Long / Short) Entry price Take profit price Stop loss price Closing price Risk in trade (Entry – Stop loss) Move in trade (close) Interest costs Brokerage costs Gearing Trade exposure (In and Out) Gross P+L Net P+L Don’t waste your time with calculations. Make sure you have the journal and log book with all formulas in each item. … When you record these details, you’ll be able to keep up to date with whether your portfolio is profitable and sustainable for the long run and where it’s lacking. Hope that helps!
JSE:J200Education
by Timonrosso
What is Holding You Back Trader?So you want to trade, but just not taking action. You’re on the computer and so close to taking a trade or opening an account with a broker. The button is right there. And yet, it feels like there’s a wall between your finger and the button. I get it. It’s a big step to take when you know you’re entering into uncharted financial waters. You know risk is involved… You know time is needed. And you know education is crucial. And yet you’re still hesitant. In this article, we’ll pinpoint what is holding you back from creating your financial freedom as a trader. REASON #1: You’re talking more than doing This is a big one. Maybe you’ve been reading trading and investing articles for years now. And yet, you keep finding excuses to not take action. 1. “I’ll start next month” 2. “I’ll wait for the market to correct before I trade” 3. “I’m stressed with work and family” Listen… Life is going to continue with new problems, stresses and issues. And this will extend your delays and increase the number of excuses you’ll make with any new hobby. You just need to start doing, and the rest will take care of itself. And you’ll find you’ll feel more accomplished and proud of the fact, you took action. REASON #2: You’re concerned of the short term Every trader I know wants their first trade and month to be profitable. I was the same. In 2003, I bought a bunch of Anglo Gold shares. I felt so much panic because I wanted it to be a winner. I didn’t think of the long term effects. Let me tell you, I don’t even remember my first winner. I’ve taken thousands of trades and I’ll tell you, the first trade is over looked and felt. When you have a proven trading strategy, you lose interest in what a few trades will do for your portfolio. You keep your eye on the long term rewards. REASON #3: You are scared of losing This is one humble game, where the market takes a little and gives back to you and then some. It’s all down to one simple method – Risk and reward. You’re in a calculations game now, where you need to lose in order to win. Embrace the losses and own them as you would with any business costs or overheads. REASON 4#: You’re waiting for the right time What does that mean? Are you waiting for enough money? You never start with a lot of money as a trader. You test, you learn and you gain experience. I guarantee you blow more money on a holiday, on petrol and at restaurants than the amount you’ll lose as a start up and humble trader. Are you waiting for the right time? There are thousands of markets that are either in uptrend, downtrends or sideways trends everyday. There is never the right time to get into trading. Why? Because it’s always the right time. REASON 5#: You’re too busy to start I’m sure this article has helped open your eyes to a new spectrum of reasons why you’re holding back. Stop talking, start doing. You do have enough money to start trading. You have more than enough time You need to lose, to win. Nobody is ever too busy to not pursue their dreams and create their freedom. Got it? So stop holding back and listening to some imaginary voice inside your head
JSE:J200Education
by Timonrosso
Risk Less money in Drawdowns. More money in winning streaksA drawdown is a period of decline in the value of a portfolio. This is where you take a number of trades, and the losses drop the portfolio at a marginal level (if you know what you’re doing). During these times, the market is typically more volatile (jumpy) and unpredictable. And so you have a higher chance to risk money in unfavourable times. Risk less with drawdowns When your portfolio drops 6%, 8% or even 11% - This is where you’re not sure when the market will become more favourable. This is the time where you decide to risk less money per trade. You would drop the risk from 3%, 2% to 1.5% or even 1%. Then keep trading until the markets pick up and start to favour your portfolio… Once you’re out of the drawdown then… Risk more money with the winning streak During the winning streaks, the market is typically more stable and predictable, and the chances of making a profit are higher. You can then pump up the risk back to 2% or 3% (if you’re a risky biscuit). When do you do this? When your portfolio is either BACK to an all-time-high. Or when you can see the market has broken out of the sideways consolidation and volatile period. Risk management is an important aspect of successful investing, and adjusting the amount of money being invested based on market conditions is one strategy that can help investors achieve their financial goals. By risking less money during drawdowns and more money during winning streaks, you as the trader can lower your potential losses and maximize your potential gains.
JSE:J200Education
by Timonrosso
Humble yourself or the markets willAs a trader, you must approach the market with humility and an understanding that you are at its mercy. And so you need to remember that the market, doesn't know you, doesn't care about you, and doesn't work to reward you. Let’s break that down. The Market Doesn't Know You The financial market (Mr. Market) is a complex and dynamic system that is influenced by a multitude of factors. These factors are beyond our control and are pretty much impossible to predict. As a trader, you need to remember that the market doesn't know you, isn’t out to get you and that your success or failure is not a personal reflection of your worth. The Market Doesn't Care About You It can be tempting to think that the market is out to get us and that every loss is a direct result of our own mistakes. However, the market doesn't care about us as individual. They don’t have some personal vendetta against us. Every trade is simply a result of supply and demand dynamics along with risk, reward and probabilities. We must accept that sometimes the market will work against us, no matter how skilled or experienced we are. The Market Doesn't Work to Reward You There is such high competition with trading. This environment is very high-pressured. It sometimes feels like we are in some race to make as much money as possible. However, it is important to remember that the market doesn't work to reward us. As a trader, you must be humble and understand that success in the markets takes time, patience, and you must be willing to learn from your mistakes. Also need to approach each and every trade with a level-headed and open-minded perspective. Focus on this, and you you’ll make which will help us to make better decisions and increase our chances of success.
JSE:J200Education
by Timonrosso
Why You Need Humble Pie as a TraderHere's why you need to be a humble trader. REASON #1: Humility is required for losing I’ve mentioned this for the last 20 years. And nothing has changed. We are NOT in the trading game to be right. We are in this process, to follow a proven and winning strategy in order to grow our trading accounts over time. Not in a week, not in a month and not even in a quarter. It is our job to take the trades, bank the medium sized gains and take the small losses along the way. There should be no ego with expecting a trade or a sequence of trades to be right. If you want to be right, go become a lawyer, accountant, swimmer or find another hobby. REASON #2: Humility betters your trading strategy process It can also be tempting to try to change the system. This is where you act on impulse, bank a premature winner or cut a loss quickly. This does nothing to your strategy except turn it into a discretionary, non-tested and a temporary winner in the short term. But in the long run, when the markets rectify and become more favourable your winning, your strategy will stop working. Instead, rather focus on your system, improve on your entries, look for conducive markets and master execution. Your portfolio’s results will then take care of itself. REASON #3: Humility is not trying to avoid drawdowns You need to be humble enough to believe your carefully proven strategy ‘knows’ better than your short-term ‘wise-guy’ ideas. It’s not your job to avoid drawdowns (sequence of losses). It is your job to manage your drawdowns with structured and consistent methods. I have three strategies with drawdowns: 1. Trade your Equity Curve (portfolio) to know when to pause trading 2. Drop the level of risk per trade 3. Look for only high probability trades on other markets REASON 4#: Humility highlights your weaknesses You have to be honest as a trader. You can’t keep thinking you’re best at every aspect of trading. Break down the processes including (Markets allocation, Methods and systems, Money and risk management and Mind and psychology). Then ask yourself… Where am I weak with trading and why? Dig into your personality, traits and preferences. Become vulnerable so you can see the truth where you may be lacking in your success. Here are some thoughts: Do you convince yourself your trades are going to be winners? Do you look for confirmation signals that you don’t need to worry, when your trades move against you? Are you scared your ego will be hurt from taking losses? Are you only looking at a few markets because you’re scared to branch into international markets? Are you feeling old to the point you don’t have time to make slow money as a trader? Find your vulnerabilities, then look for solutions or research on how to improve them. Treat the market with respect and you’ll find the answers you need to win. Final words: Trading is not a race – work on your own time line. Trading might sound like an easy hobby, and it is. But you first need to overcome your demons in order to streamline the process. I tell you this because… You need to be humble as a trader, or the markets will humble you!
JSE:J200Education
by Timonrosso
1
🧠 The Mind Of A Smart TraderTrading psychology is influenced by emotions like greed and fear, which can drive irrational behavior in markets. Greed causes excessive risk-taking and speculation, while fear causes traders to exit positions prematurely or avoid risk. Regret can also cause traders to violate discipline and make trades at peak prices, leading to losses. These emotions can be particularly prominent in bull or bear markets and can have a significant impact on market outcomes. Trading psychology is a crucial factor in determining success in trading securities. It includes aspects of an individual's character and behavior that affect their trading decisions. Discipline and risk-taking are critical components of trading psychology, as is the impact of emotions like fear, greed, hope, and regret. It can be as important as knowledge, experience, and skill in determining trading success. 🧠10 Trading mindset tips: 🔹 Stay informed: Stay updated with the latest market news, trends, and developments, as well as your preferred assets. 🔹 Create a trading plan: This should include a clear set of rules for entry, exit, and risk management. Stick to your plan. 🔹 Manage your emotions: Avoid making impulsive decisions, especially during volatile market conditions. Keep a clear head and stick to your plan. 🔹 Continuously educate yourself: Enhance your knowledge and skills by reading books, attending seminars, and practicing with demo accounts. 🔹 Diversify your portfolio: Spread your risk across different assets and markets to reduce your exposure to any one particular market. 🔹 Stay disciplined: Follow your plan and stick to your rules, even if your emotions are telling you otherwise. 🔹 Set realistic expectations: Be mindful of your limitations and don’t overreach. Accept small losses and focus on long-term success. 🔹 Stay focused: Avoid distractions and keep your mind on your trading activities. 🔹 Keep a trading journal: Record your trades, track your progress, and reflect on what you could have done differently. 🔹 Take breaks: Avoid overtrading, which can lead to burnout. Take time to recharge and come back fresh. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
8
1 Sentence that will RUIN you as a traderWhat if I told you, it can take one sentence to blow it as a trader. Say it once and you’ll set a ripple effect. Before you know it, you’ve given up and leave the trading journey with pure frustration… Wanna know what this one sentence is? “I’ll take the next trade”. Yep that’s it! When you have a winning trading strategy, with strict entry, risk and exit levels – you are no longer the boss. You are a worker. And your job is to follow your job description or risk losing your job. Think about it… The system works with or without you. And if you follow it, you’ll generate a stable and consistent income. So, it is not your place to decide which trades you feel you want to take or not. Think about your back and forward tested statistics. Do you think there’s a robot that says… “Mmm let’s skip that trade my feelings tell me it’ll be wrong.” No, it records each and every trade one the criteria lines up. Here are some ridiculous examples of where traders don’t take trades. “It’s my birthday and I don’t want to lose money”. “I have banked 5 winning trades and I feel the next trade will be a loser’. “I’m on a losing streak and I don’t feel like taking another loser”. “Oooh I’m not going to take a trade, Elon Musk just tweeted ‘stock trading is over rated'”. And I can go on and on… So why will that one sentence ruin you as a trader? Here it is again: “I’ll take the next trade”. Reason #1: You’ll keep looking for the perfect trade Not only will you choose the trades you take, but you’ll also lose the confidence in the trading system and yourself whenever the next trade lines up. Reason #2: You’ll do it again and again You’ll set a precedent for not following your trading setups in the future. Reason #3: You won’t be able to keep a strong track record You won’t be able to jot down your trades with accuracy in your trading journal. Reason #4: Your emotions will get the better of you You’ll start thinking that you know better and refuse to accept the inevitable losses that come with trading. Remember, nothing in life that is rewarding comes without some degree of risk. By taking every trade your strategy yields, you’ll get to the point where you’ll enter into a long-term state of certainty and confidence with your trading.
JSE:J200Education
by Timonrosso
1
10,000 Hours to Master Trading?Welcome to another Trading Myth Buster’s episode. This is where I take the old adages and see if we can bust them or not. Today’s adage goes to… “You need 10,000 hours to master something”. Let’s first break this up into how many days this will take. If you practise an art of something for 30 minutes a day… 10,000 hours equates to 300,000 minutes. We then divide that by 30 minutes and of course we get 10,000 days. Divide that by 365, and here’s how long it will take you to master something… Drum roll… 27 years! However, most professionals practise 8 to 10 hours a day – hence them being able to master the art in a short time. This is definitely plausible if you want to be a professional ballet dancer, golfer, cricketer, rugby player and even a chess champion. But no ways in hell, should it take that long to learn how to trade. I am just the exception but it’s because of what was available when I started… So please bear with me, on this side note… In 2003, when I started, it took me 10s of thousands of hours and years and years, to learn how to be a successful trader. This is because of a number of reasons: I spent two years studying both technical and fundamental analysis Each year I learnt and adapted a new trading strategy I back-tested and forward tested countless systems I had no one to show me the way I made unnecessary and timely mistakes Charting platforms and education were extremely limited I traded from morning up until 4am trading different markets I went back to the drawing board trying to find what works, year in and year out I entered into limbo mode for three years living in doubt and thinking trading was a scam So as you can see, I wasted thousands of hours of finding out HOW NOT TO TRADE… Made countless mistakes and wasted a ton of money – without having someone to direct me. But I pushed through it all and eventually found my feet one day. And so, yes it took me a lot longer than what it should have. So how many hours do you need to learn HOW TO TRADE? If a trader follows a path of a successful trader and method, it should not take more than 10 months to get their feet off the ground. Here’s how I calculated this time for learning to trade: #: 1 Month – Learn the basics to advanced theory #: 1 Week – Adapt and learn a proven and trusted trading strategy #: 1 Week – Back-test and journal 20 trades with different markets #: 4 Months – Forward test 20 trades with the proven strategy using a demo-account #: 4 Months – Real test 20 trades using a proven trading strategy with a LIVE (real money) account Here’s how to follow the foot-steps of successful traders The above is how to master the art of trading on your own… But having said that, you’ll still most definitely need to learn the mechanics of: How to trade CFDs How to take a trade How to adapt money management rules How to develop the mind of a successful trader This is a subjective and introspection journey that you need to run your own marathon. Take your time, go with your own energy and day by day you'll get closer to achieving your trading goals. And the more you do it, the quicker and more effortless it will become.
JSE:J200Education
by Timonrosso
How to be a LASER Trader!Rinse and repeat. That’s it… It’s one simple little acronym you’ll never forget… Ready? LASER your TRADES 1: Look The first thing you’ll need to do, is to go through your watchlist very quickly. A watch list is a list of markets you’ll LOOK through when finding trades. These markets can range from anything including shares, indices, commodities, currencies and crypto-currencies. When you have your watch list, you’ll go through the list and get a feel for how the markets have moved for the day. Example: Before I trade anything, I LOOK at the JSE All Share 40 stocks that are in my watch list. I then run through them briefly to see how the markets are performing. 2: Analyse The second round of going through your watch list, is where you’ll look for specific trading setups. Whether you trade using price action, patterns, indicators, volume etc… This is where you’ll ANALYSE the charts individually. Also with this step you’ll write down potential trades that are lining up. 3: Setup The third step is to go back to the markets that you’ve written down – which you’re looking to trade. You’ll then do your simple trading calculations and place your chart SETUPS so you can see where your trading levels are. EXAMPLE: If I see a trade that’s lined up, I’ll draw horizontal levels showing where my entry, Stop loss (risk) and take profit (reward) levels are… I like to use: Blue for entry Red for stop loss Green for take profit 4: Execute You’re ready to JUST TAKE THE TRADE! And then you’ll place your entry, stop loss and take profit levels. You’ll choose how many CFDs you’ll need to buy according to your money management rules. And then hit trade! 5: Record As soon as you’ve successfully taken the trade, head over to your journal (excel document) and record your trade transaction. That’s how to be a LASER Trader… And on a daily or weekly basis, you’ll repeat those steps…
JSE:J200Education
by Timonrosso
5 Reasons why others trade VS why I tradeIn the last 20 years, I always love asking this one question. “Why do you want to trade?” Have you ever written down the reasons why you want to become a trader and what your true motivations are? When you answer this question, only then you’ll become more clear with the goals you wish to achieve and how to achieve them. Here’s one clichéd answer, I don’t want you to write down… “I want to make money”. This answer is lazy, impersonal and it tells you and me nothing about who you are truly, deeply and emotionally. If you think trading only teaches you one aspect of your life… I believe your eyes are still yet to be opened with the incredible possibilities that trading will bring you. And so, in this article I’m going to share a few reasons for why people want to trade. And then, I’ll share a few reasons why I trade… Here are 5 reasons why people want to trade… Reason #1: Diversification “I want to diverse my portfolio with different asset classes. This way I can produce a stream of income through long-term investing via stocks and property, short term trading with Premium MATI Trader and medium term investing through index ETFs.” Reason #2: Hobby “I have spare time and money. And what better way than to spend my time trading and making an extra income while doing something I love?” Reason #3: Monetizing my ‘down-time’ “I’ve earned the same income for the last seven years and now I want to earn an extra income during my off-hours too. For the first time in my life, trading has helped me make money while I’m watching Netflix and spending time with my wife”. Reason #4: Invest for my family and kids “Most people depend on portfolio managers and hedge funds to invest their money for their family. I’ve decided to trade the funds I have for my kids instead and take control of the growth of their inheritance through trading.” Reason #5: Keeps me sharp and well-informed “Trading might not be making me super rich yet, but I got to tell you this. It is keeping my brain sharp, well-informed and helps with my skills with decision making.” These are some of the reasons I’ve heard, which have stuck. Now I want to share with you five extra reasons why I trade… 5 Reasons why I trade! My reason #1: FREEDOM – Earn your own income when you want I want the freedom to trade and build an income stream on my own terms, times and conditions. My reason #2: Independence – Be your own boss Trading gives me the platform where I am responsible for my own trading results. This gives me full independence where I take pride with my own financial decisions. It gives me the place where I can grow my portfolio in a way that suits my personality and risk profile to a T. My reason #3: Extremely fun – New career Trading is not a job… This means, you don’t have to do it… But rather it’s an extremely productive and fun hobby to make your free time work for you. This hobby is not like sports or gym where your reward is more on the physical side. Trading is where you gain many different mental skills and bank a consistent income once you get it right. My reason #4: Mind control – Control your emotions Trading well means you have to lose at times. and when you do, you need to be able to cut out the ego and ‘baby tantrum throwing side’ away. You learn to grow up, develop a thicker skin and become a mature trader. This is one of the greatest benefits to learning to trade. It gets to the point where, after you’ve taken hundreds of trades, whether you take a loss or bank a profit, you’ll stay content. You embrace failure with open arms, because you know that it’s one step towards winning. My reason #5: Life skills – You learn risk, rewards and probabilities Once you have mastered the four elements to trading success (Markets, Methods, Money and Mind) you develop a very strong understanding of concepts like: Risk & reward management and probabilities. This won’t only apply to trading but to almost every aspect in your life. You start taking accountability of events into your life. Predictions turn into probabilities. Risk evolves into calculated acceptance. And you start to see things as they are, rather than what you want them to be… SO WHY DO YOU WANT TO TRADE?
JSE:J200Education
by Timonrosso
1
20 Checklist Items in 2023 for YOUR TradingI wish you all the health and happiness, this year has to offer. To kick you off this year on a strong note, I’ve prepared a quick 20 item checklist which you can use for your trading. Save this as a guide for 2023. Let’s go… 1. Save and deposit a portion of your money every month, into your trading account to grow it faster. 2. Cut down on social media and save 15 minutes of no distractions a day to trade. 3. Re-look and evaluate your watchlist, which fits your strategy. 4. Don’t let the news, your friends or anyone interfere with your trading signals. 5. Never extend your stop loss in a trade where you can lose more money. 6. Be more mindful and accept when market trends change. 7. Never miss a trading idea that lines up according to your strategy 8. Celebrate taking each trade that lines up according to your proven strategy. 9. Ask trading questions so you’re never left in wonder. 10. Journal and jot down every trade that comes your way to build your trading track record. 11. Screenshot and save every trading setup, to remind you on how your strategy works live. 12. Find the best time that suits your trading personality and system. 13. Stop overthinking everything, once you’re in your trade. Let it be. 14. Watch every reputable trading stream and lesson on TradingView you can, to boost your knowledge. 15. Don’t fall for scams, get-rich-quick schemes and sensationalised marketing copy or posts on social media. 16. Trust and enjoy the process, week by week. 17. Persist and persevere through your own trading time-line and don’t compare yourself to others. 18. Only take trades when your trading strategy gives you signals 19. Only do what you love and love what you do – don’t waste your time on anything else. 20. Remember to say this when you’re feeling down. “YOU CAN ONLY GET BETTER”. I trust these resolutions will help you through the year.
JSE:J200Education
by Timonrosso
Why Trend Lines are Powerful with Trading The closest predictor indicators when it comes to trading are: Price action and volume. I’m going to talk a bit about Price action today as Volume is a whole different cattle of fish. With TradingView charting platform there are a few indicators to identify a trend: Trend lines, Bollinger Bands, Moving Averages, Candlesticks and other bands and channels too numerous to mention. #1: Trend Lines – Trend detector Trend lines are perfect for pointing out the direction of the market. Trend lines are a useful tool for identifying the direction of a market. They are a straight line that is plotted through a series of data points. You can either plot a straight diagonal line to determine whether the market is going up or down. Or you can plot horizontal lines to identify ranges, sideways consolidation areas. That’s because trend lines plot through a series of data points on the charts to help point out whether the trends are moving up down or sideways. There are a number of benefits with using trend lines including: • Trend directions To help identify the overall direction of the market, whether it is trending up, down, or sideways. • S&R levels Point out key support (floor levels) and resistance (ceiling levels) These are great for points of entry. • Chart patterns and breakout levels Chart patterns are also used with trend lines. Especially neck lines, brim levels, box formations etc… • Points of reversals We also use trend lines to wait for a break in structure. Once this happens, we can see if the market is about to change direction and reverse. • Convert chaos into order End of the day all technical analysis and price action is used for confirmation bias. To apply to a strategy and to make calculated and informed decisions on what to do if something happens. Almost like a If this then That! I’ve used trend lines and price action since 2003 and they remain an important element to trading analyses. End of the day, the market can only move up, down and sideways. And you know why? Because the famous psychology of demand and supply will always work. And so they are here to stay and we might as well take advantage of it.
JSE:J200Education
by Timonrosso
3 Awkward Stages for a Trader!There are three awkward stages that every successful trader will go through. You can’t escape them. And let me warn you. The more successful you become the more awkward the stages get. Let’s get to them. AWKWARD STAGE 1: You are ridiculed First when you start out as a trader, you get nothing but doubt from everyone around you. You hear things like “It’s a scam” “You’ll blow your account” “You won’t last long” “Get a real career” This stage is purely based on one reason. Those who doubt you are either not traders and are clueless or they failed themselves and are now basing their failure on others. This can be quite demoralizing for you when you just get started. Also this is the starting stage where you’re trying to find your feet. I’d suggest you go where you are appreciated, rather than tolerated and ridiculed. Find a community of members that are starting out and a group that have been through the trial and error and are now succeeding. Once you’ve passed the ridicule stage, it doesn’t get any better just yet. AWKWARD STAGE 2: You are attacked This to me is the worst stage. Because as you’re finding your trading personality and risk profile, other traders get all up in your business. They tell you how wrong you are. They tell you how you’re not making any money and worse they gang up on you. I remember in 2009, I was doing ok as a trader. I joined a couple of groups on Skype and Facebook. And when I were to buy a trade (based on my strategy), the rest of the members attacked me by saying how wrong I was and that I’m going to lose all my money. And I just felt out of place by being called the contrarian of the group. I never attacked their analyses, I never tried to bring them down and I never interfered with their trading. I was then kicked out of many of these groups and was referred to as an emotionless robot. This once again left me as the loner trader with no community to relate to. Don’t worry about these people. Most of them have blown their accounts by now and still don’t know how to trade. Keep going and just keep trading. You’re doing well and don’t need this negativity. And then you’ll enter another awkward stage once you’ve progressed as a trader. AWKWARD STAGE 3: You are ignored Yep… You can make a living as a trader for over a decade. You can be at the maturity phase of your trading. You can be a multi-millionaire. But you’re still going to be ignored, by a number of groups. First, you’ll be ignored by pretty much all of the people who attacked you in the second stage. Second, you’ll be ignored by the egotistical traders just starting out and think they know better. Third, you’ll be ignored by nearly ALL of the trading companies that sell the false dream of making millions as a Forex trader. I’ve learnt that everyone wants you to do well, but not better than them. And I feel very sad for humanity, who think like this. I celebrate all traders who mean well, whether they are new to trading without any money saved up or are multi-millionaires. I even celebrate those who are much wealthier than I am... Because we are all on our own trading journey to success and time. Don’t worry about others, just focus on you!
JSE:J200Education
by Timonrosso
HOW IT WORKS: RSI (Relative Strength Index) IndicatorThe RSI is a popular momentum indicator used in technical analysis. It was originally developed by a mechanical engineer turned technical analyst J. Welles Wilder Jr. It was first published in a 1978 book, “New Concepts in Technical Trading Systems” and in Commodities Magazine (Futures magazine) in June’s 1978 issue. Today the RSI is one of the most popular indicators used to measure the speed and change of price movements. In other words, it measures the strength of its trend direction (up, down and sideways) on any market by monitoring the changes in its closing price. THE MAKE UP The RSI is a line graph that moves between two extremes… On the vertical axis (Y-Axis) the RSI line moves up and down in a range between 0 and 100. NOTE: As the indicator is between a range, it is considered a closed indicator. On the horizontal axis (X-Axis), the RSI line moves to the right which is plotted as time. NOTE: You can choose your own time frame i.e. days, hours, minutes etc… For all you technical boffins… If you want to know how the RSI is calculated, I’ve saved this at the end of the article. As a trader you won’t need to worry about the maths at all. Three trading signals you’ll use with the RSI 1. Overbought and Oversold levels 2. Patterns and Trend lines 3. Bullish and Bearish Divergences Trading signal 1: Overbought and Oversold levels When we see the market’s price move up, this means the buyers are outweighing the sellers. And the more higher closing prices we see, on a market, the higher the RSI line moves… When we see the market’s price drop, this means the sellers outweigh the buyers. And the more lower closing prices we see, on a given market, the lower the RSI line moves… However… If the buying continues at an unsustainable rate, the RSI will reach a point that traders call OVERBOUGHT (top heavy). This is where we could start to expect the price to drop from these levels and for the market to enter into a correction (dip). If the selling volume continues at an unsustainable rate, the RSI will reach a point that traders call OVERSOLD (undervalued). This is where we could start to expect the price to turn up from these levels and for the market to enter into a recovery (upside). Now that you understand overbought and oversold terms, let’s explain what I mean with the RSI chart. Overbought RSI: 70 (Sell opportunity) When you see the RSI line touch or cross above 70 (Red horizontal line), this is considered an overbought situation. At this point, traders may start to anticipate that the rising trend is about to end. Traders may then start to prepare to sell and short their positions, as they believe the market’s price has run up too much. If the market then turns down and starts to drop in price, the RSI line will drop below 70 and head back to equilibrium at 50 (Black horizontal line). Oversold RSI: 30 (Buy opportunity) When you see the RSI line touch or cross below 30 (Green horizontal line), this is considered an oversold situation. At this point, traders may start to anticipate that the falling trend is about to end. Traders may then start to buy (go long) their positions, as they believe the market’s price has dropped too much. If the market then turns up from the 30 mark and starts to rise in price, the RSI line will move back to equilibrium at 50 (Black horizontal line). Trading signal #2: Trend lines & Patterns The second way to spot buying and selling trade ideas is with trend lines and patterns. Uptrend confirmation To confirm the strength of the market’s uptrend, you should be able to draw a support (floor level) under the high low RSI prices. And when the RSI breaks below the support line, it could signal the end of the uptrend and a start to the next bear market. Downtrend confirmation To confirm the strength of the market’s downtrend, you should be able to draw a resistance (ceiling level) over the lower RSI high prices. And when the RSI breaks above the resistance line, it could signal the end of the downtrend and a start to the next bull market. These are great confirmation and reversal trading signals to use with your strategy. NOTE: You can also base your buy or sell ideas on trading chart patterns… Trading signal #3: Bullish & Bearish Divergence The third signal I use to spot trade opportunities with the RSI is looking at the market’s price VERSUS the RSI’s direction. In short… BEARISH DIVERGENCE – Warning for downside If the markets price makes higher lows, while the RSI makes lower highs – it’s a warning for DOWNSIDE to come. BULLISH DIVERGENCE – Sign for upside If the markets price makes lower highs, while the RSI makes higher lows – it’s a signal for UPSIDE to come. Either way with both bullish and bearish divergences, the RSI fails to accept the current market’s price movements. And so it is making a probability prediction that soon the market will make a reversal in its current trend. Ok so now you know how the RSI works. Let’s sum up what we learnt. RSI Summary in 3 Trading Signs: Trading signal #1: Overbought & Oversold levels Overbought zone X > 70 = Selling opportunity Neutral zone: X = 50 Oversold zone X < 30 = Buying opportunity Trading signal #2: Trend lines & Chart patterns Uptrend confirmation: RSI makes higher lows (draw support line) Downtrend confirmation: RSI makes lower highs (draw resistance line) Breakout confirmation: RSI breaks out of a chart pattern Trading signal #3: Bullish & Bearish Divergence Bullish divergence: Market’s price – lower highs RSI – higher lows Bearish divergence: Market’s price – higher lows RSI – lower highs Here’s how to calculate the RSI The most common (default) settings for the RSI is 14 (Which we’ll use)) There is a two-part calculation with the RSI. Part 1: Calculate the RSI (step 1) RS or Relative Strength is (Average Gain ÷ Average Loss) Average Gain = (Sum of gains over the past 14 periods) ÷ 14 Average Goss = (Sum of losses over the past 14 periods) ÷14 Calculate the RSI (Step 1) Part 2: Calculate the RSI (Step 2) Once you have this result, we then smoothen the RSI result with part 2… And so that’s how the RSI continues with each closing price of the time frame you choose. Trade well, live free. Timon (Financial trader since 2003)
JSE:J200Education
by Timonrosso
5 Signs You’re Doing GREAT As A TraderMoney should not tell you how well or bad you’re doing as a trader. Percentages should reveal that all. It’s all RELATIVE. And so, in this TradingView piece, you’re going to go through a five signs checklist to see how well you’re doing as a trader. Sign #1: You have a personal trading strategy Do you know what: System you’re going to use to enter and exit your trades? Markets you’re going to choose? and Risk management principles you’re going to follow? And have you found that system that matches your personality and time preferences? If so… AWESOME! Tick it off the list. Sign #2: You’ve developed realistic trading goals Once you’ve got your trading strategy in a bag, you should have all your goals written down. Have you jotted down your trading strategy, stats, goals and expectations? This is your game plan that you’ll need to follow when you trade. You need to see what kind of outcomes you’re going to have with your trading. • How many trades will you take per year? • How many winners can you expect? • How many losers will you take? • What is your win rate? • What % of your portfolio will you expect to achieve? Sign #3: You’ve experienced a bad trading patch I feel this is the initiation side to getting to a higher level as a trader. When you have the strategy and goals in a bag, you’ve got to then put it all into play. And during this time, there’ll be once or twice a year a couple of weeks where you’ll go through a bunch of losing trades. If you have the right money management principles, you should be able to EASILY weather through this time. The markets move up and down and sideways… And during one of these periods, it will NOT fit well with your system. But let me tell you this, once you’ve gone through your drawdown period, and the markets become more favourable. It is the most exhilarating feeling, for your portfolio to make new highs once again. Go through this my friend, and you’ve ticked off another sign you’re doing GREAT. Sign #4: You continue to EVOLVE Sure, the trading strategy might not change. The risk management side won’t change. But there are a few things that will change, that you’ll need to adapt into your trading. First, markets, stocks and currencies are unlisting and listing ALL the time. And your trading strategy requires a watch list that works best with your system. So, you have to evolve to dump and add markets into your watch list that complement your trading strategy. You might also find a technique to increase your win rate and ride your winners up. If you can evolve as a trader, TICK it off the list. Sign #5: You are INDEPENDENT Do you care about your family, friends, pets and strangers opinions on the trades you take or have taken? No? GOOD! Tick it off the list. Nobody in this world, can tell you what to is right to buy or sell according to the strategy you use. You have the stats, you have the goals and you have your game plan. So how did you do? Trade well, live free... Timon (Financial trader since 2003)
JSE:J200Education
by Timonrosso
53 Important Trading Acronyms and AbbreviationsHere are 53 trading acronyms and abbreviations to remember and apply to your trading. I’ve also listed them in alphabetical order to make it easier to spot! ATH - All Time High ATM – At the Money ATR – Average True Range BB – Bollinger Bands B/O - Breakout Be - Bearish BE - Break even BOS - Break of Structure Bu - Bullish CFD – Contract for Difference DD – Drawdown DMA – Direct Market Access EMA – Exponential Moving Average E/R - Earnings Report ETF – Exchange Traded Fund FA - Fundamental Analysis FOMC – Federal Open Market Committee FOK – Fill Or Kill FX – Foreign Exchange (Forex) GTC – Good ‘Til Cancelled HH - Higher High HL - Higher Low HOD - High of Day HFT – High Frequency Trading HTF - Higher Time Frame ICO – Initial Coin Offering IPO – Initial Public Offering ITM – In the Money JBTD – Just Buy the Dip LH - Lower High LL - Lower Low LOD - Low of Day L/S – Long or Short LTF - Lower Time Frame MA – Moving Average MACD – Moving Average Convergence Divergence MS - Market Structure OI – Open Interest O/N - Overnight OTC – Over the Counter OTM – Out The Money NFP - Non Farm Payrolls P&L – Profit and Loss PIP – Percentage In Point PRE - Pre Market R/R - Risk / Reward RSI – Relative Strength Index S/R - Support and Resistance SL - Stop loss TA - Technical analysis TF - Time Frame TP - Take profit YTD - Year To Date Can you think of anymore? Let me know in the comments. Trade well, live free. Timon (Financial trader since 2003)
JSE:J200Education
by Timonrosso
1
Don't lose a part of yourself when taking a lossLosing a part of yourself with a loss is a common experience for many traders. When you're in a trade it's easy to get caught up with emotions. When it's going your way, you almost feel like you've banked a winner. When it's going against you it feels like you're a failure and have lost already. You got to work on it and stop both feelings from taking over your trading. There is financial loss but more important emotional loss. Take the financial loss as a simple cost of running a business. But NEVER get caught up with the emotional cost of failure. Rather drop your risk per trade even more, until the point of losing or gaining has no significance to your emotions. Achieve that and you'll know your risk profile and where you are right now as a trader. Work on it and it gets easier over time. Trade well, live free. Timon (Financial trader since 2003)
JSE:J200Education
by Timonrosso
1
BEFORE and AFTER Each Trading Day you shouldA game-plan is a must, to see a potential goal, dream or vision. You got to have a proper POA (Plan Of Action) and execute. Whether it’s selling property, building a business, playing a sport or growing your wealth. You need a BEFORE plan and AFTER plan. Same with trading. You need to have a trading plan BEFORE and AFTER each trading day. BEFORE Each Trading Day: 1. Know the main market’s trend direction The first thing I want to know is, what the main market’s trend direction is. Plot the resistance (ceiling) and support (floor) levels, so you know whether they are in an up, down or sideways trend. If up – look for longs (buys) If down – look for shorts (sells) If sideways – look for potential breakout levels. 2. Scan through your watchlist Once you know the main market’s trend direction, have a quick scan through your watch list (markets you trade). Orientate yourself with where the markets are heading and whether trades are lining up. This way, you won’t go into the trading day blindly. 3. Write down high probability trade setups You know the main market’s trend direction, and have an idea of where the markets are heading – now you can plot your trade ideas. Go through the watch list again, and write down any potential trade setups (with your written entry, stop loss, take profit and reasons for entering the trade). 4. Choose your TRADES for the day Just because you have written down trade setups, doesn’t mean you need to take every one of them. Instead, look at which ones which will yield a better probability at working out and has a better chance at winning. All done before the trading day has even begun… AFTER Each Trading Day 1. Journal every trade When the markets’ have closed, and you have time to breathe, go to your trading journal and jot down the trade/s you took for the day. Each entry should have the (Market name, date, type, margin, entry, stop loss, take profit and reason for entry). 2. Outline lessons of the day If you’re just starting out or you’ve been in the markets for less than five years, I suggest this extremely useful step. Write down any market lessons you learn for the day. Here are some lessons you can write down: How the market reacted to a news event How you felt taking a trade or holding onto current trades Mistakes of the day you learnt or made Trading lessons that you want to incorporate into your trading… Write these lessons down, as they will forever be part of your experiences to become a successful trader. 3. Re-check & confirm your open trades This is extremely NB*. Make sure your entry, stop loss and take profit levels are still in the trading platform with all open trades, at the end of the day… Sometimes, brokers have certain glitches in their systems, that can remove your trading levels (automatically). It happens on a continuous basis and it’s our job, to make sure everything is running smoothly and our levels are still in place. 4. Quick scan your watch list & look for potential trades for tomorrow Last action you can take for the day, is preparing for tomorrow. Go through your watch list, look for the next batch of trade setups and write them down. This is so you know what to do for the next day… Trade well, live free. Timon
JSE:J200Education
by Timonrosso
Why the INNOCENT traders always get scammedI received a very important question from a dear member named Bakang. He asked "Why do people who show the most dedication are the ones who gets scammed most of the time". Now, I have given an indepth answer with certain reasons and a book I wrote, because of how important this topic is... Please read it and share it to your friends, family and groups. You just might be helping them avoid being scammed themselves. Here is my answer: Thank you for your question and it is a very common problem in society. There are many reasons why innocent people tend to fall for scams when it comes to the stock market and other high promising schemes. Reason #1: Humans are just too trusting Humans have a tendency of trusting the fellow man and believing in the greater good of them. They read about how they’ll make fortunes with them using secretive and insider information – and they make you feel a part of something. Then as soon as they have your money, they leave you and head over to the next victim like a snake in the grass. Reason #2: Hot next thing Every scammer tries to outwit another scammer’s intention. They see what one scammer is offering and they make even more false promises, lies and tendencies. Then the innocent person is lured in because they don’t want to MISS this ‘once in a life time opportunity’. This has been happening for thousands of years, and human nature is unlikely to change. Reason #3: Being persuaded by top marketers The biggest type of scammer is the loudest, most charismatic and they show off things that they don’t have. Or the money they do have it’s from the people who have been scammed. This is where you read the loudest promos, false and misleading information and advertising. Also, my favourite is where people read FAKE testimonials with life stories on how something changed their lives… Reason #4: Fear, Greed and Ego Most people who are scammed fall for the two big sins of life. Fear and Greed. They fear to miss out on these opportunities and fear that it will never come again. They have greed where once they’re lured in, they believe in it and deposit a lot more money having this undeniable faith they will be rewarded. EGO is the one that is hardly spoken about but I think it’s equal to fear and greed. Ego is where they refuse to believe it’s a scam. They believe they made the right choice joining them and where they want to prove to everyone, he/she was right and they were wrong. Reason #5: Lack of education The first way people are scammed is when they don’t have the starting education and understanding of the true and real principles that come with the venture they’re in. They think, because they have money they will win. But when you dig into the actual principles and education, you’ll realise that there is and has never been a get rich quick way into anything. Everything requires risk and probabilities to achieve some kind of reward in the medium to long term. Other reasons! There are other reasons like feeling desperate to do something, acting urgently without thought, being persuaded by others and believe wrong and false information on a website. It is up to you and me and all of us to better educate ourselves, avoid any scams and to choose the right people to trust and learn from… Hope this helps and feel free to share this to spread awareness to fellow traders. Trade well, live free. Timon MATI Trader (Trader since 2003)
JSE:J200Education
by Timonrosso
How do you calculate Bitcoin's Market Capitalisation?It’s quite similar to calculating the market cap of a share. To calculate the market capitalization of a cryptocurrency, you need to know two things: 1. The current market price of the cryptocurrency 2. The total number of coins or tokens that have been issued. Then all you do is multiply the market price and the total number of coins or tokens. Let’s calculate the market cap of Bitcoin… The current market price for bitcoin is $16,939 and the current number of tokens in circulation are 19,255,318. To calculate the market capitalization of Bitcoin, you would multiply the market price by the total supply. Bitcoin market cap = $16,939 X 19,255,318 = $329,021,194,902 You can go on Google and type in what the price of a Crypto coin is and then what the number of tokens are in circulation. Then multiply the two and you’ll have the market cap. If you have a trading question, ask in the comments. Trade well, live free, Timon MATI Trader (Trader since 2003)
OANDA:BTCUSDEducation
by Timonrosso
3 Amazing Lessons I learnt from McDonaldsI love McDonalds. There was a time where I was ranking different burgers from around the world. UK, France, South Africa, Dubai, America, Switzerland and Greece. And I only ranked about 4 burgers an 8 out of 10. I know you’re going to hate but… McDonalds Big Mc remains one of them I ranked 8 out of 10 – Delicious!. Anyway, so I love the burger, I love the story – if you’ve seen “The Founder” movie. And I love the lessons learned from the success story. And since 2013, I always enjoy writing articles on how other companies, entities and even individuals can teach you indirectly about trading. McDonalds is the one in the spot light for today! 3 lessons I learnt from McDonalds! The fast-food giant has been able to achieve massive success by keeping things simple, sticking to a proven system, and adapting to changes in the market. These same principles can be applied to trading the financial Lesson #1: Less is more… The company has built its success on a relatively small menu of simple, easy-to-understand options. Also the way to make the meals are so simple with easy ingredients you probably have at home. Well, traders can achieve better results by focusing on: • Small number of markets or securities • One or two systems • One or two time frames • One to three money management rules • Less time trading and more time holding Lesson #2: Find a System to Repeat The company has built a highly efficient and repeatable system for making and delivering food. Remember the scene in the movie “The Founder” where Ray Croc organised his system within a tennis court until mastered? It’s simple, it works – and it’s never died out. This has allowed them to replicate their success across thousands of locations worldwide. With trading, you should also look for a system that you can repeat and stick with it. I mean, by now my MATI Trader System – must feel like child’s play to you because of how I have taught you the system in and out. And I have shared with you hundreds of trade line ups already with Trading View. And with you seeing it the system everyday, it must feel second nature for spotting a trade by now right? Well, just like Rocket Science isn’t rocket science to a rocket scientist – That’s why you feel that way about my MATI Trader System… And if you have a system that you swear by, you’ll feel the same way I do. This can help you to avoid the pitfall of constantly switching strategies and missing out on long-term gains. Lesson #3: Adapt to Change McDonald's has also been able to adapt to changes in the market, such as: • Environment concerns • Consumer demand for healthier options • Relevant and trendy toys in Happy Meals • New neutral colour style restaurant catering to all nations and cultures around the world • More options for vegans and vegetarians They have and has been able to stay relevant and successful for decades. Similarly, traders need to be able to adapt to changes in the markets, whether it: Adding new markets to your watchlist Adjusting your Risk to Reward during favourable and unfavourable environments Shifts in economic conditions or changes in consumer preferences. This might mean adjusting your trading strategy slightly or seeking out new opportunities in different markets. You need to be able to adapt to change which is crucial for long-term success in the financial markets. And so, McDonald's has been successful by keeping things simple, sticking to a repeatable system, and adapting to change. Apply these principles to your own trading and you’ll find trading to be a walk in the park in the medium to long run… Do you like McDonalds and what would you rate the Big Mc? I won’t judge. Trade well, live free. Timon MATI Trader (Financial trader since 2003)
NYSE:MCDEducation
by Timonrosso
3Cs of trading - Must readI call it the 3 Cs of trading Trading the financial markets can be a challenging and rewarding endeavor. One of the keys to success in trading is making informed... Choices - Choose the markets you want to trade, the strategy, the time frame, choose your mentor and choose your times and plans... Next you need to take calculated: Chances - Take a chance to execute, to deposit money in your account, to set up your trades and lineups. And then be willing to adapt and make. Changes - Changes to your strategy, journal, system and whatever you need to evolve with the current market conditions and environments. Did you find this helpful? I'd love to hear your feedback Trade well, live free. Timon MATI Trader
JSE:J200Education
by Timonrosso
How To Handle And Minimise Your Losses in A DrawdownI want to cover different ways to handle yourself during a drawdown to minimise your losses. Minimise Drawdown Part #1: Lower your risk per trade There are times when the market will be in a bad market environment… This is when no matter whether you buy or sell, you end up just taking a whole bunch of losses. The first trick is to pinpoint when the market is in a bad environment. For me as a breakout trader, I wait for the main index to move in a sideways trend. This way, I know I have a medium to low probability of the trades to work out. If you can find out when the market is in a bad environment, then you’ll know when to lower your risk. In my case, I drop the risk from 2% per trade – down to 1.5%. If my portfolio continues to drop, I will lower the risk further to 1% per trade until the market rectifies itself. This is the first way to minimize your losses. Minimise Drawdown Part #2: Lower the number of trades you take You’ll know when the markets are looking S#@t all around. This is because the large stock markets tend to lead the emerging markets. And when this happens, the second best thing you can do is limit the trades you take. If you find you’re averaging around five to nine open trades at a time, it might be time to start cutting down. Because what if all nine trades end up to be losers, due to the bad market environment? Well you’ll find yourself down around 18% of your portfolio. So instead, limit the number of trades you’ll hold during the drawdown phase. Maybe it will four to five instead… Just remember that being neutral and holding cash is ALSO a trading position. Minimise Drawdown Part #3: Hedge your positions This doesn’t always work, but it has saved my ass a couple of times. When I find I’m long (bought) five stocks. And I see that the market has completely changed direction to the downside. I know that there is a higher chance that I’m going to get stopped out. So to limit my risk, I’ll immediately look at stocks that I can trade short (sell). For example, I am currently long four stocks. And all four stocks are in a the negative. So, in the last two weeks I’ve decided to short three resource stocks (as a hedge). This way, I’m now down only 3% of my portfolio rather than 5% since the drawdown… Minimise Drawdown Part #4: Other ways The other powerful way to control your drawdown is to lock in profits when the trades are going your way. You can think of it as a trailing stop loss. I personally often raise my stop loss when the market moves where the risk to reward is 1:1… This way I know I’ll lock in a gain, should the market turn against me. There are many ways you can adjust your stop loss including: • Trail the stop loss as the price moves further away from the trending Moving Average • Trail the stop loss after the market’s price moves a certain percentage • Trail the stop loss when you see volume starting to drop • Trail the stop loss when an indicator is oversold or overbought • Trail the stop loss after the market’s price moves to a certain risk to reward FINAL WORDS Drawdowns are inevitable. And you need to know how to manage your Drawdowns… You now have some ideas on how to handle your drawdowns better. Trade well, live free. Timon MATI Trader (Financial trader since 2003) Feel free to follow my socials below. I love writing about trading and sharing my 2 decade experiences.
JSE:J200Education
by Timonrosso
1