LNG Chart, page-265

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Evansdrawings

32 Posts.

12/11/14

10:51

Post #: 14275078
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Originally posted by Naish ↑

Thanks - I will try and explain how you guys and real traders trade. Please correct me if I'm wrong.

Lets say over the last 12 mths the SP has retreated back to $1 - 10 times and it's back down there again. Because it has bounce 10 times from $1, the odds would be very favourable for it to do it again So we want to enter with a buy

Now we apply the 2% rule for how many shares we buy. The price is 1.05. We have a trading account of $100K - so we can lose 2% that is $2000. So we set a stop loss at 95c. Now the difference between the stop loss and entry price is 10c. So divide $2000 by 10c and get 20,000 shares.

So we buy 20,000 shares at 1.05 with a stop loss of 95c. Now if the SP goes to 95c we are closed out with a $2000 loss. BUT we have just stumble on LNG and we have hit the gold mine. This time the SP skyrockets to $3.50. As it goes up we have a trailing profit protect. The price turns down and we are closed out at $3.05.

We have made $2 per share on 20,000 shares. Bl**dy $40,000 profit. You beauty!!!

That is how "real" traders use charts and money management to trade. Take small losses but let the profit run.

It's a long time since I looked at the money management rule, I may have it a bit wrong.

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Naish

What makes it more likely to bounce off the 1 dollar support line on the 11th time? I guess what I'm asking is what differentiates it from an independent event. If I flip a coin and get heads 5 times in a row, the 6th flip doesn't care about the previous 5. It's still 50/50. Is it because of the psychological aspect of trading, and or because traders expect that because they view support in a similar manner? I'm new to this and really want to understand these things. You guys have provided much education. Thank you.

LNG Price at posting: $3.75 Sentiment: None Disclosure: Unspecified
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LNG Chart, page-265

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