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Casual Articles - Protocols for Successful Trading
Just about every nine to fiver has dreamed of leaving the world of office politics or the factory floor behind and starting a business of his or her own.There are many reasons why owning a business is such a common dream. For one thing, owning a business puts you in solid control of your future and your earning power. Instead of tying your financial future to the fortunes of another, an entrepreneur takes matters into their own hands and takes charge of their financial future.== Making Sure Your Business Is Successful ==It is a good idea to make sure your business is successful before you quit your day job. Why not work on your present job and build a part time business on the side?Of course starting a new business is never easy, and the failure rate for a new business has historically been high. It is vital, therefore, to create a solid, detailed and complete business plan before quitting your job and striking off on your own.== Financing Your Business ==A business plan is a very important document, and it is necessary in order to obtain the financing that every new busi
13. Know what you want, trading or investing
This is the same as rule 6. Many a time, I see people who got into a position with the intention for a quick buck end up becoming a forced investor. Their stocks declined instead of incline as anticipated and they sat on paper losses telling themselves it is a great company and soon the price will rebound. If you want to trade, make sure you follow your plan. Same for investing, if you are an investor, do not be bothered about the daily volatility. Business fundamentals do not change as sudden as the chart changes. But it will be a shame on you if you refuse to cut loss if the fundamentals have changed.
14. Understand relationship between price actions and volume
When looking at charts, be sure to count the number of up days on heavy volume and vice versa for down days. It is helpful to read at past price and volume relationship to form an anticipation of what will happen next. Price and volume tells consolidation and distribution.
15. Beware of 1 day volume spike of more than 50% forming the shooting star
If the stock price touches a high during intra day but closes near or at its l
Ever since the Internet became available to any household with a dial-up connection, there has been the dream of easy wealth. The long-standing stereotype is the easy-going character who sits at home in his bathrobe and slippers, doing a few minutes work at his kitchen table, and spending the rest of the day out windsurfing while a river of cash pours steadily into his bank account - making him a millionaire by the time he's twenty.How much of this is truth? How much is myth? While it's definitely not all true, some of it is quite achievable. In fact, you can get quite rich on the Internet, but it's not as easy as the hucksters and biz op sellers will try to convince you it is.You Can Become A Millionaire On The InternetThere are many Internet marketers who have made millions of dollars selling everything from vitamins to porn to information. The Internet is a vast market, with large amounts of money changing hands over it every day.If you can divert a large stream of that money, you can indeed become a millionaire. And yes, you can be a millionaire by the time you're twenty, but realize that thi
Survival – Learn to survive in the market. Trading is never easy, if you have to pay for your mistakes, make sure it is an affordable mistake and that it will not wipe you out of the game. Trading is a lifelong game. Money is your oxygen, if you lose it; you are out of the game.
Profits – Once you can survive in the market, you will notice you have the ability to make small profits from time to time. Reinvest and see how your account grows in this stage.
Massive Profits – This final stage comes when you can take bigger positions in the market. As your trading account grew in the “Profits” stage, you will be able to take position of bigger size and hence your profits will be more. Also, this is when you will be able to spot and sit on big runners consistently.
Passing through each stage requires patience. If you are too hurried, just like speeding, it will kill you.
2. Money management , Trading System , Manage your emotions
Every trader must know these 3 critical success factors in trading.
Money Management
Money to us is what oxygen is to a diver. He must know how to use it wisely in order to last a diving trip. Just like in the stock market. You must pace yourself and manage your losses wisely. Always know how much you can afford to lose. A sound money management rule is to enable you to trade even if you suffer multiple trading losses.
Trading System
No matter what technical indicator you use, make sure you have a cut loss and a profit taking target. A sound system will also include a sensible risk and reward factor. Reward should always be more than the risk you are taking. Also, the trading system that you use should be personalized to your lifestyle and personality.
Manage Your Emotions
There will always be hope, greed and fear. Many hope that their stocks will move further north or rebound from a decline even though the charts tell a different story. When a sell signal occurs, they are greedy for more profits and choose to ignore the signal. After many losses, they are fearful to buy when their trading system tells them there is a strong buy signal and thus they miss a stock! After the stock moves, they got greedy and jumped in. Stock declines and they hope it will rebound for them to get out. This is what we always call emotional trading. Learn to keep them under control and do not base any of your trading decisions on them.
3. Disciplined Cut Loss
While we dare to buy when there is a buy signal, not many people are willing to take losses when there is a sell signal. This is human nature, when it comes to pocketing profits, everyone did it very fast! When it comes to losing something, everyone will be hesitant. It is high time you start to think differently.
4. Exercising patience
There are times to buy, time to hold and not do anything and there is time to sell. These are the 3 things that we can do in the stock market. It is when the time where we shouldn’t do anything that requires us to practice patience. When I miss a trading chance, I tell myself, patience, if I chase after the stock, the risk is not worth the reward. There will always be another opportunity. Stock market will still be around even after I die! Stock market is a marathon and is not a short sprint (quick buck). Those who tried to go for quick bucks without giving themselves enough time to understand trading often gets killed.
5. Always consider Risk/Reward in every trade
Before you put in a trade, make sure you have a sensible risk/reward factor working for you. This risk/reward is defined as a small loss when I’m wrong and a big profit when I’m right.
6. Have a plan, Stick to your plan
When you put on a trade, make sure you have defined a cut loss price and a profit target. Just like a flight path, there is a take off and a destination. Trade without a plan is like flying towards the Ocean hoping to see land. You will crash if you run out of fuel (money) or you met a storm (Sudden sell down due to crisis).
7. Look at both weekly and daily charts
Weekly chart shows the longer term trend and daily chart shows the “noise” or volatility. While we may find entries on daily chart, it is often important to look at the weekly chart for an idea of the “real” trend. It’s like looking at the bigger picture.
8. The longer time frame for the support or resistance the better
A support not broken for a few weeks or months is stronger than the support of a few days. This is especially true if the support of the longer term is tested and not broken. The same goes for resistance.
9. Never make decision during intra day unless unusual volume or news
I will never make decision during intraday. As mentioned earlier, a plan has to be formularized before putting on a trade. It is advisable to follow the plan and not be affected by the “noise” during intraday. Unless there is a sudden spike in volume which usually means something is brewing. Or there is some news about the stock.
10. Focus on market leader stocks and the sector in play.
Very often, the biggest gains are the stocks that are in play or from the sector in play. Pay attention to the top volume everyday and watch what group of stocks keeps hogging the list. You should be able to smell the play of the day or week. After that, look at the top stocks in this sector.
11. Livermore’s probing method
When a stock breakout at 0.300, I will buy 50% of what I intend to buy at 0.300. After that if it continues to 0.305, I will buy the remainder 50%. This helps to minimize loss if the breakout is false alarm.
12. Symptom of a Stock Market Crash
If everyone is talking about stocks especially people you know who were never in the stock market, it will mean everyone has invested and there will be no new buying to sustain a bull market. The same goes for bear market, if everyone has sold and got out of the market, there are no more selling to sustain the downward momentum.
13. Know what you want, trading or investing
This is the same as rule 6. Many a time, I see people who got into a position with the intention for a quick buck end up becoming a forced investor. Their stocks declined instead of incline as anticipated and they sat on paper losses telling themselves it is a great company and soon the price will rebound. If you want to trade, make sure you follow your plan. Same for investing, if you are an investor, do not be bothered about the daily volatility. Business fundamentals do not change as sudden as the chart changes. But it will be a shame on you if you refuse to cut loss if the fundamentals have changed.
14. Understand relationship between price actions and volume
When looking at charts, be sure to count the number of up days on heavy volume and vice versa for down days. It is helpful to read at past price and volume relationship to form an anticipation of what will happen next. Price and volume tells consolidation and distribution.
15. Beware of 1 day volume spike of more than 50% forming the shooting star
If the stock price touches a high during intra day but closes near or at its lo
Every Affiliate Marketing Opportunity At Your FingertipsMaking the decision to start up a web-based business is one of the best ways to take your financial future into your own hands. The dream of starting your own business is finally coming true and when you learn to take full advantage of your website by making use of every affiliate marketing opportunity available, your dreams will come within reach. Every affiliate marketing opportunity you take advantage of when building your website presents a potential windfall of earnings that all start with a few links.Every affiliate marketing opportunity you take advantage of is basically pure profit. Utilizing space on your personal or business webpage you can earn money by simply placing a few links or banner adds that will transport visitors to your partner sites. Many partners pay per click through while others pay for successful referrals and even offer revenue sharing and bonuses for large volumes of consumers. For a directory of such programs, take a look at:http://www.affiliatemarketin
No matter what technical indicator you use, make sure you have a cut loss and a profit taking target. A sound system will also include a sensible risk and reward factor. Reward should always be more than the risk you are taking. Also, the trading system that you use should be personalized to your lifestyle and personality.
Manage Your Emotions
There will always be hope, greed and fear. Many hope that their stocks will move further north or rebound from a decline even though the charts tell a different story. When a sell signal occurs, they are greedy for more profits and choose to ignore the signal. After many losses, they are fearful to buy when their trading system tells them there is a strong buy signal and thus they miss a stock! After the stock moves, they got greedy and jumped in. Stock declines and they hope it will rebound for them to get out. This is what we always call emotional trading. Learn to keep them under control and do not base any of your trading decisions on them.
3. Disciplined Cut Loss
While we dare to buy when there is a buy signal, not many people are willing to take losses when there is a sell signal. This is human nature, when it comes to pocketing profits, everyone did it very fast! When it comes to losing something, everyone will be hesitant. It is high time you start to think differently.
4. Exercising patience
There are times to buy, time to hold and not do anything and there is time to sell. These are the 3 things that we can do in the stock market. It is when the time where we shouldn’t do anything that requires us to practice patience. When I miss a trading chance, I tell myself, patience, if I chase after the stock, the risk is not worth the reward. There will always be another opportunity. Stock market will still be around even after I die! Stock market is a marathon and is not a short sprint (quick buck). Those who tried to go for quick bucks without giving themselves enough time to understand trading often gets killed.
5. Always consider Risk/Reward in every trade
Before you put in a trade, make sure you have a sensible risk/reward factor working for you. This risk/reward is defined as a small loss when I’m wrong and a big profit when I’m right.
6. Have a plan, Stick to your plan
When you put on a trade, make sure you have defined a cut loss price and a profit target. Just like a flight path, there is a take off and a destination. Trade without a plan is like flying towards the Ocean hoping to see land. You will crash if you run out of fuel (money) or you met a storm (Sudden sell down due to crisis).
7. Look at both weekly and daily charts
Weekly chart shows the longer term trend and daily chart shows the “noise” or volatility. While we may find entries on daily chart, it is often important to look at the weekly chart for an idea of the “real” trend. It’s like looking at the bigger picture.
8. The longer time frame for the support or resistance the better
A support not broken for a few weeks or months is stronger than the support of a few days. This is especially true if the support of the longer term is tested and not broken. The same goes for resistance.
9. Never make decision during intra day unless unusual volume or news
I will never make decision during intraday. As mentioned earlier, a plan has to be formularized before putting on a trade. It is advisable to follow the plan and not be affected by the “noise” during intraday. Unless there is a sudden spike in volume which usually means something is brewing. Or there is some news about the stock.
10. Focus on market leader stocks and the sector in play.
Very often, the biggest gains are the stocks that are in play or from the sector in play. Pay attention to the top volume everyday and watch what group of stocks keeps hogging the list. You should be able to smell the play of the day or week. After that, look at the top stocks in this sector.
11. Livermore’s probing method
When a stock breakout at 0.300, I will buy 50% of what I intend to buy at 0.300. After that if it continues to 0.305, I will buy the remainder 50%. This helps to minimize loss if the breakout is false alarm.
12. Symptom of a Stock Market Crash
If everyone is talking about stocks especially people you know who were never in the stock market, it will mean everyone has invested and there will be no new buying to sustain a bull market. The same goes for bear market, if everyone has sold and got out of the market, there are no more selling to sustain the downward momentum.
13. Know what you want, trading or investing
This is the same as rule 6. Many a time, I see people who got into a position with the intention for a quick buck end up becoming a forced investor. Their stocks declined instead of incline as anticipated and they sat on paper losses telling themselves it is a great company and soon the price will rebound. If you want to trade, make sure you follow your plan. Same for investing, if you are an investor, do not be bothered about the daily volatility. Business fundamentals do not change as sudden as the chart changes. But it will be a shame on you if you refuse to cut loss if the fundamentals have changed.
14. Understand relationship between price actions and volume
When looking at charts, be sure to count the number of up days on heavy volume and vice versa for down days. It is helpful to read at past price and volume relationship to form an anticipation of what will happen next. Price and volume tells consolidation and distribution.
15. Beware of 1 day volume spike of more than 50% forming the shooting star
If the stock price touches a high during intra day but closes near or at its l
Whenever our firm is implementing change in an organization, we emphasize to the executive and middle managers that truth telling and truth facing will be the hallmark of our process. If the people with whom you are working can’t trust that you’ll tell the truth, you can’t get commitment, and when you make commitment, you build hope…when you keep that commitment, you build trust, when you have trust and commitment, you get ownership of the work performed and results!Respect guides you to tell the truth and adds momentum to do the right things well. If you can’t establish respect, you can’t get trust. If no trust, no commitment. If no commitment, results are poor and time is wasted.It’s difficult for most to embrace changes in the way things need to be done. For business ownership, they are naturally concerned about changes to the way the business got to where it is now, will key personnel quit, the cost, will it really make us better? Thus, for our firm, we establish trust as an immediate goal. We do this by delivering the results intended and by accomplishing what we were hired to do on time and within budget. To es
5. Always consider Risk/Reward in every trade
Before you put in a trade, make sure you have a sensible risk/reward factor working for you. This risk/reward is defined as a small loss when I’m wrong and a big profit when I’m right.
6. Have a plan, Stick to your plan
When you put on a trade, make sure you have defined a cut loss price and a profit target. Just like a flight path, there is a take off and a destination. Trade without a plan is like flying towards the Ocean hoping to see land. You will crash if you run out of fuel (money) or you met a storm (Sudden sell down due to crisis).
7. Look at both weekly and daily charts
Weekly chart shows the longer term trend and daily chart shows the “noise” or volatility. While we may find entries on daily chart, it is often important to look at the weekly chart for an idea of the “real” trend. It’s like looking at the bigger picture.
8. The longer time frame for the support or resistance the better
A support not broken for a few weeks or months is stronger than the support of a few days. This is especially true if the support of the longer term is tested and not broken. The same goes for resistance.
9. Never make decision during intra day unless unusual volume or news
I will never make decision during intraday. As mentioned earlier, a plan has to be formularized before putting on a trade. It is advisable to follow the plan and not be affected by the “noise” during intraday. Unless there is a sudden spike in volume which usually means something is brewing. Or there is some news about the stock.
10. Focus on market leader stocks and the sector in play.
Very often, the biggest gains are the stocks that are in play or from the sector in play. Pay attention to the top volume everyday and watch what group of stocks keeps hogging the list. You should be able to smell the play of the day or week. After that, look at the top stocks in this sector.
11. Livermore’s probing method
When a stock breakout at 0.300, I will buy 50% of what I intend to buy at 0.300. After that if it continues to 0.305, I will buy the remainder 50%. This helps to minimize loss if the breakout is false alarm.
12. Symptom of a Stock Market Crash
If everyone is talking about stocks especially people you know who were never in the stock market, it will mean everyone has invested and there will be no new buying to sustain a bull market. The same goes for bear market, if everyone has sold and got out of the market, there are no more selling to sustain the downward momentum.
13. Know what you want, trading or investing
This is the same as rule 6. Many a time, I see people who got into a position with the intention for a quick buck end up becoming a forced investor. Their stocks declined instead of incline as anticipated and they sat on paper losses telling themselves it is a great company and soon the price will rebound. If you want to trade, make sure you follow your plan. Same for investing, if you are an investor, do not be bothered about the daily volatility. Business fundamentals do not change as sudden as the chart changes. But it will be a shame on you if you refuse to cut loss if the fundamentals have changed.
14. Understand relationship between price actions and volume
When looking at charts, be sure to count the number of up days on heavy volume and vice versa for down days. It is helpful to read at past price and volume relationship to form an anticipation of what will happen next. Price and volume tells consolidation and distribution.
15. Beware of 1 day volume spike of more than 50% forming the shooting star
If the stock price touches a high during intra day but closes near or at its l
What IS an OODA loop?John R. Boyd was a U.S. Air Force fighter pilot active during the 1950's. In the 1970's he helped design the F-16 and then went on to promote a concept called the OODA loop.OODA stands for Observation, Orientation, Decision and Action. This is a basic pattern for how we make tactical decisions. Col. Boyd is credited with coining this term, originating and promoting the concept which has become a strategic centerpiece for multiple military campaigns.Many acknowledge that the OODA loop concept is just as powerful in business as it is in the military. But it is just as powerful and simplistic a tool for an individual as it is for these larger venues. Particularly when it comes to decreasing the downtime of employees…particularly revenue producing employees.An organized OODA loop In a paper written by Drs. Ray Curts and Douglas Campbell, they state that "The dilemma of the decision maker within the OODA loop is largely a problem of data collection, storage, retrieval, manipulation and comparison." Isn't this equally true of someone who is sitting at their desk trying to work th
8. The longer time frame for the support or resistance the better
A support not broken for a few weeks or months is stronger than the support of a few days. This is especially true if the support of the longer term is tested and not broken. The same goes for resistance.
9. Never make decision during intra day unless unusual volume or news
I will never make decision during intraday. As mentioned earlier, a plan has to be formularized before putting on a trade. It is advisable to follow the plan and not be affected by the “noise” during intraday. Unless there is a sudden spike in volume which usually means something is brewing. Or there is some news about the stock.
10. Focus on market leader stocks and the sector in play.
Very often, the biggest gains are the stocks that are in play or from the sector in play. Pay attention to the top volume everyday and watch what group of stocks keeps hogging the list. You should be able to smell the play of the day or week. After that, look at the top stocks in this sector.
11. Livermore’s probing method
When a stock breakout at 0.300, I will buy 50% of what I intend to buy at 0.300. After that if it continues to 0.305, I will buy the remainder 50%. This helps to minimize loss if the breakout is false alarm.
12. Symptom of a Stock Market Crash
If everyone is talking about stocks especially people you know who were never in the stock market, it will mean everyone has invested and there will be no new buying to sustain a bull market. The same goes for bear market, if everyone has sold and got out of the market, there are no more selling to sustain the downward momentum.
13. Know what you want, trading or investing
This is the same as rule 6. Many a time, I see people who got into a position with the intention for a quick buck end up becoming a forced investor. Their stocks declined instead of incline as anticipated and they sat on paper losses telling themselves it is a great company and soon the price will rebound. If you want to trade, make sure you follow your plan. Same for investing, if you are an investor, do not be bothered about the daily volatility. Business fundamentals do not change as sudden as the chart changes. But it will be a shame on you if you refuse to cut loss if the fundamentals have changed.
14. Understand relationship between price actions and volume
When looking at charts, be sure to count the number of up days on heavy volume and vice versa for down days. It is helpful to read at past price and volume relationship to form an anticipation of what will happen next. Price and volume tells consolidation and distribution.
15. Beware of 1 day volume spike of more than 50% forming the shooting star
If the stock price touches a high during intra day but closes near or at its l
Domain Name = Website Name The best domain name for your site is to name it the same as your website name or your business name. For example, my site is called Simple Strategy Online, so I choose domain name SimpleStrategyOnline.com. Other example, if you sell photo frame called Shikaku, so your best domain name would be shikaku.com.Using Keywords Keywords on domain names are important to help you get high ranking on the search engines. For my previous example you can use domain name such as: shikakuphotoframe.com OR cheapphotoframe.com. Shikaku.com will still the best to use, but then again, you also want to think a strategy to get your site listed high on the search engine. Thus I suggest you get 2 domain names, shikaku.com and cheapphotoframe.com that both point to your website. SO, one domain that is your website / business name that people will remember it easily, and one domain that is specially used for search engine promotion.Long or Short? You can have up to 67 characters for a domain name. It is really up to you, for easy to remember domain name, sure you need a shorter
13. Know what you want, trading or investing
This is the same as rule 6. Many a time, I see people who got into a position with the intention for a quick buck end up becoming a forced investor. Their stocks declined instead of incline as anticipated and they sat on paper losses telling themselves it is a great company and soon the price will rebound. If you want to trade, make sure you follow your plan. Same for investing, if you are an investor, do not be bothered about the daily volatility. Business fundamentals do not change as sudden as the chart changes. But it will be a shame on you if you refuse to cut loss if the fundamentals have changed.
14. Understand relationship between price actions and volume
When looking at charts, be sure to count the number of up days on heavy volume and vice versa for down days. It is helpful to read at past price and volume relationship to form an anticipation of what will happen next. Price and volume tells consolidation and distribution.
15. Beware of 1 day volume spike of more than 50% forming the shooting star
If the stock price touches a high during intra day but closes near or at its low of the day with high volume of more than 50% of average volume, time to get that parachute in your hands.
16. Buying at break out from resistance or buying near support
You should only buy at 2 locations on the chart. Firstly you can buy if the stock breaks out from the resistance. Lastly you can buy very near to support. If you buy between support and resistance, you will be squeezed.
17. Chart formation cup & handle, double bottom, triangles, box range
Chart formations show the consolidation and distribution of a stock. Always look for the shapes and pattern on the chart when analyzing.
18. Psychology of stocks breaking new highs (A reason why blueline theory works!) Holders missed the chance to sell high. Price retraced and they hold on to it waiting for the next high. When price reached the high, these holders sell. It flushed out all these stale holders thus creating a clear road for more upside.
19. Go through past trades to review mistakes
Looking at past trades enable you to know your mistakes. It is highly important that you should avoid the same costly mistakes from happening. It also gives you the ability to spot the danger signs on a chart quickly as you get familiar with them. The same goes for remembering what you did right hence you will be very familiar with charts that are gold mine!
This list will certainly grow longer as I continue my trading journey. But it is by far the most useful rules that enable me to crawl back to the black from a negative trading account. Remember, rules are simple to create but not many people have the discipline to follow. To be successful, you must have that discipline.
You can join me at my blog at http://growmoney.blogspot.com daily to understand how I apply these rules to my trading. See you there!
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