April 27, 2011
- in Uncategorized by schooloftrade
Fear is Not a Day Trading Strategy, Use This Proven Technique
Fear is NOT an Exit Strategy:
– Taking profit or exiting the trade requires specific rules:
o Slowing Speed
o Momentum / MACD Against you
o Big Money against you
– Moving your stop too tight
o Just because you have a lot of profit on a trade, does NOT mean you need to tighten your stop, it may be TOO tight
o When do I move my stop?
o As soon as I start seeing the signs of a price reversal
o Speed slows down
o Momentum is overbought/oversold (almost ready to confirm the reversal)
o We don’t see as many big buyers/sellers to help your trade
– Entries:
o You don’t take a trade based on the fear you might miss the opportunity
o You need specific rules to tell you WHEN and WHY to enter
Misc Questions:
– Different Chart Types
o 13range = 13 ticks of trading per candle
o 13minute = 13 minutes of time per candle
o 13 tick = 13 ticks of volume per candle
– Practice drills to keep your emotions away
o Point system with a reward if you follow your rules
o Add a point when you follow the rule, deduct 2 points when you do not
§ Example: take a trade, you follow the rules, you get a point
§ Example: take a trade and you don’t follow your rules, you deduct a point
§ Give you specific rules to follow
– Which momentum indicator holds more value?
– Momentum applies to the chart you’re watching
– Oversold momentum on a 34range chart means the BIG MOVE down as has likely come to an end
– Oversold momentum on a 4range chart means the SMALL MOVE down is likely coming to an end.
– The best scenario is when ALL momentum indicators line up the same direction
– It depends most on the type of trade you are about to take:
– Swing Trade (holding overnight) I want to focus on the 34/55/89-range momentum indicators
– Day Trader (intra-day moves) I want to focus on the 21/13-range momentum
o Slower momentum on the 34range chart is NOT really applicable
o Faster momentum is too fast, not applicable
– Scalper (short term moves) I will focus on the 8/4-range momentum
o Slower 34range has no bearing on this short term move
o I want to use the day trading time frame as my guide, 21 and 13range momentum to confirm the direction
o There’s nothing faster than the 4range, so the next option is to read the tape
Average True Range:
– There is no specific value
– We want to consider if its rising or falling
– Where are we NOW compared to an hour ago
– Where are we @ 10am today, compared to 10am yesterday
– Are we rising? If so, look for patterns and entries
– Are we dropping? STOP trading and wait for better price action
2 mentors:
– Mr. Time: every day I listened to price action
– Mr. Effort: I never gave up. I learned from my mistakes
