Timing The Exit Of A Trade After A Large Move
Monday, March 17th, 2008There are many examples of market blow-offs and subsequent crashes. It is a very difficult balancing act trying to decide whether to get out during the parabolic move, and possibly leaving huge gains on the table, or to hold on with the risk of overstaying the market and giving back much or all of the gains. There is no easy answer. However, many lessons can be learned from observing past large market moves and the inevitable crashes that followed. Gold in 1980 was a good case study, as was the Nasdaq blow-off in 2000. Many individual stocks make great studies as well, including many recently.
Using Adaptive Parameters In Technical Indicators
Sunday, March 9th, 2008Most indicators that come pre-programmed in technical analysis charting software use static input parameters. This is the simplest solution, but not necessarily the best.
Many indicators were originally designed for use on daily data, so an average cycle length was estimated based on a monthly cycle. Many momentum indicators by default had an input parameter, or lookback period, of 14 bars, supposedly reflecting a half cycle of 28 days in the month, since most momentum indicators are best using one half cycle period. However, there are only about 21 trading days per month, and a cycle measure of 20 is more accurate than 28 as an average on most daily charts. In my opinion the 14 period parameter just stuck because so many people started using it, even though it was probably based on a false assumption. Some charting software, by default, used a 9 period lookback rather than 14, probably in an attempt to reflect a more accurate monthly cycle.
Learning How To Trade
Saturday, March 1st, 2008Do you want to learn how to trade profitably?
If you’re considering trading as a means of making money, or if the idea of Trading for a Living appeals to you, there are some things that you might want to consider before starting.
The idea of trading for a living is very appealing. The fact that you have no one to report to, you can work from home, there is the potential of unlimited profits, and the dream of becoming a millionaire makes trading a very attractive business.
7 Things to Know Before Trading
Learning How To Trade
Thursday, February 14th, 2008Do you want to learn how to trade profitably?
If you’re considering trading as a means of making money, or if the idea of Trading for a Living appeals to you, there are some things that you might want to consider before starting.
The idea of trading for a living is very appealing. The fact that you have no one to report to, you can work from home, there is the potential of unlimited profits, and the dream of becoming a millionaire makes trading a very attractive business.
7 Things to Know Before Trading
Learning How To Trade
Monday, February 4th, 2008Do you want to learn how to trade profitably?
If you’re considering trading as a means of making money, or if the idea of Trading for a Living appeals to you, there are some things that you might want to consider before starting.
The idea of trading for a living is very appealing. The fact that you have no one to report to, you can work from home, there is the potential of unlimited profits, and the dream of becoming a millionaire makes trading a very attractive business.
7 Things to Know Before Trading
Prevent Trading From Turning Into Gambling
Tuesday, January 29th, 2008A common view of trading is that it’s the same as gambling.
While gambling itself can be harmless when done is small doses and for harmless excitement, it becomes a problem when it’s an addiction, and causes grievous harm to a person and/or other people involved.
As a result, gambling has negative social connotations.
The actual definition of gambling is:
“Betting or staking of something of value on the outcome of a game or event.”
Trading in essence is betting or staking something of value on the outcome of a trade, but the difference is that we can take trades that place the probability of winning in our favor.
Learning How To Trade
Monday, January 21st, 2008Do you want to learn how to trade profitably?
If you’re considering trading as a means of making money, or if the idea of Trading for a Living appeals to you, there are some things that you might want to consider before starting.
The idea of trading for a living is very appealing. The fact that you have no one to report to, you can work from home, there is the potential of unlimited profits, and the dream of becoming a millionaire makes trading a very attractive business.
7 Things to Know Before Trading
Basic Money Management For Your Trading Portfolio
Wednesday, January 16th, 2008A key part of becoming a successful trader is the knowledge of money management. Without a proper understanding of Money Management is and is not, you can have the best trading systems and still blow your account out of the water.
What is Money Management?
Money Management is a big area, and can be confusing if you’re just starting out in trading. Money Management is simply the practice of how you allocate your money to certain trades or trading systems. I find it easier to break down money management into 2 areas, each with its own principles and concepts.
Surviving The Commodity Markets, Part 2 - Trading Guidelines For Different Account Sizes
Tuesday, January 15th, 2008Of all the important skills in trading, survival is number one. For unless we make it through the inevitable bad times, we won’t be around to capitalize on the good. I’ve laid out some trading account guidelines that specify the account size required to conduct various commodity futures and option trading activities. Stick within these guidelines and you will have an edge on most of the commodity trading public.
When buying commodity options, I usually think in terms of them expiring worthless. This is the worst-case situation and will keep us honest about the real risk. With a $10,000 account buying a $500 option, this would permit us to make 20 losing trades in a row. The chances of trading this poorly are remote, but it’s still possible.