Technical Trading Rules and Psychology Collated by xela.hc...

Technical Trading Rules and Psychology
Collated by xela.hc

Poster: telamelo
Date:25/03/16
Time:21:26:43
Post #:17362538

A bit off topic... but thought I'd share Mitta's quality post #: 17361551 from w/end day trading thread - compliments to Mitta!

'Market Wizard Linda Raschke’s Technical Trading Rules':
1. Buy the first pullback after a new high. Sell the first rally after a new low.
2. Afternoon strength or weakness should have follow through the next day.
3. The best trading reversals occur in the morning, not the afternoon.
4. The larger the market gaps, the greater the odds of continuation and a trend.
5. The way the market trades around the previous day’s high or low is a good indicator of the market’s technical strength or weakness.
6. The previous day’s high and low are two very important “pivot” points, for this was the definitive point where buyers or sellers came in the day before. Look for the market to either test and reverse off these points, or push through and show signs of continuation.
7. The last hour often tells the truth about how strong a trend truly is. “Smart” money shows their hand in the last hour, continuing to mark positions in their favor. As long as a market is having consecutive strong closes, look for up-trend to continue. The up trend is most likely to end when there is a morning rally first, followed by a weak close.
8. High volume on the close implies continuation the next morning in the direction of the last half-hour. In a strongly trending market, look for resumption of the trend in the last hour.
9. The first hour’s range establishes the framework for the rest of the trading day.
10. greater percentage of the day’s range occurs in the first hour then was the case in the past, and thus it has become increasingly important to trade aggressively if there are early signs of a strong trend for the day.
11. There are four basic principles of price behavior which have held up over time. Confidence that a type of price action is a true principle is what allows a trader to develop a systematic approach. The following four principles can be modeled and quantified and hold true for all time frames, all markets. The majority of patterns or systems that have a demonstrable edge are based on one of these four enduring principles of price behavior. Charles Dow was one of the first to touch on them in his writings.Principle One: A Trend Has a Higher Probability of Continuation than Reversal
Principle Two: Momentum Precedes Price
Principle Three: Trends End in a Climax
Principle Four: The Market Alternates between Range Expansion and Range Contraction!
12. In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word – Nobody! Thus the successful trader does not base moves on what supposedly will happen but reacts instead to what does happen

Poster: telamelo

Date:26/03/16
Time:10:07:36
Post #:17363372


telamelo said: ↑
A bit off topic... but thought I'd share Mitta's quality post #: 17361551 from w/end day trading thread - compliments to Mitta!

'Market Wizard Linda Raschke’s Technical Trading Rules':
1.Buy the first pullback after a new high. Sell the first rally after a new low.
2.Afternoon strength or weakness should have follow through the next day.
3.The best trading reversals occur in the morning, not the afternoon.
4.The larger the market gaps, the greater the odds of continuation and a trend.
5.The way the market trades around the previous day’s high or low is a good indicator of the market’s technical strength or weakness.
6.The previous day’s high and low are two very important “pivot” points, for this was the definitive point where buyers or sellers came in the day before. Look for the market to either test and reverse off these points, or push through and show signs of continuation.
7.The last hour often tells the truth about how strong a trend truly is. “Smart” money shows their hand in the last hour, continuing to mark positions in their favor. As long as a market is having consecutive strong closes, look for up-trend to continue. The up trend is most likely to end when there is a morning rally first, followed by a weak close.
8.High volume on the close implies continuation the next morning in the direction of the last half-hour. In a strongly trending market, look for resumption of the trend in the last hour.
9.The first hour’s range establishes the framework for the rest of the trading day.
10.A greater percentage of the day’s range occurs in the first hour then was the case in the past, and thus it has become increasingly important to trade aggressively if there are early signs of a strong trend for the day.
11.There are four basic principles of price behavior which have held up over time. Confidence that a type of price action is a true principle is what allows a trader to develop a systematic approach. The following four principles can be modeled and quantified and hold true for all time frames, all markets. The majority of patterns or systems that have a demonstrable edge are based on one of these four enduring principles of price behavior. Charles Dow was one of the first to touch on them in his writings.Principle One: A Trend Has a Higher Probability of Continuation than Reversal
Principle Two: Momentum Precedes Price
Principle Three: Trends End in a Climax
Principle Four: The Market Alternates between Range Expansion and Range Contraction!
12.In the world of money, which is a world shaped by human behavior, nobody has the foggiest notion of what will happen in the future. Mark that word – Nobody! Thus the successful trader does not base moves on what supposedly will happen but reacts instead to what does happen.
Click to expand...

TRADER PSYCHOLOGY

1. Be flexible and go with the flow of the markets price action, stubbornness, egos, and emotions are the worst indicators for entries and exits.
2. Understand that the trader only chooses their entries, exits, position size, and risk and the market chooses whether they are profitable or not.
3. You must have a trading plan before you start to trade, that has to be your anchor in decision making.
4. You have to let go of wanting to always be right about your trade and exchange it for wanting to make money. The first step of making money is to cut a loser short the moment it is confirmed that you are wrong.
5. Never trade position sizes so big that your emotions take over from your trading plan.
6. "If it feels good, don't do it." – Richard Weissman
7. Trade your biggest position sizes during winning streaks and your smallest position sizes during losing streaks. Not too big and trade your smallest when in a losing streak.
8. Do not worry about losing money that can be made back worry about losing your trading discipline.
9. A losing trade costs you money but letting a big losing trade get too far out of hand can cause you to lose your nerve. Cut losses for the sake o your nerves as much as for the sake of capital preservation.
10. A trader can only go on to success after they have faith in themselves as a trader, their trading system as a winner, and know that they will stay disciplined in their trading journey.
--Bring your risk of ruin down to almost zero.

RISK MANAGEMENT

1. Never enter a trade before you know where you will exit if proven wrong.
2. First find the right stop loss level that will show you that you’re wrong about a trade then set your positions size based on that price level.
3. Focus like a laser on how much capital can be lost on any trade first before you enter not on how much profit you could make.
4. Structure your trades through position sizing and stop losses so you never lose more than 1% of your trading capital on one losing trade.
5. Never expose your trading account to more than 5% total risk at any one time.
6. Understand the nature of volatility and adjust your position size for the increased risk with volatility spikes.
7. Never, ever, ever, add to a losing trade. Eventually that will destroy your trading account when you eventually fight the wrong trend.
8. All your trades should end in one of four ways: a small win, a big win, a small loss, or break even, but never a big loss. If you can get rid of big losses you have a great chance of eventually trading success.
9. Be incredibly stubborn in your risk management rules don’t give up an inch. Defense wins championships in sports and profits in trading.
10. Most of the time trailing stops are more profitable than profit targets. We need the big wins to pay for the losing trades. Trends tend to go farther than anyone anticipates.

--Develop a winning trading system that fits your personality.
YOUR ROBUST METHOD

1. “Trade What's Happening...Not What You Think Is Gonna Happen.” – Doug Gregory
2. Go long strength; sell weakness short in your time frame.
3. Find your edge over other traders.
4. Your trading system must be built on quantifiable facts not opinions.
5. Trade the chart not the news.
6. A robust trading system must either be designed to have a large winning percentage of trades or big wins and small losses.
7. Only take trades that have a skewed risk reward in your favor.
8. The answer to the question, “What’s the trend?” is the question, “What’s your timeframe?” – Richard Weissman. Trade primarily in the direction that a market is trending in on your time frame until the end when it bends.
9. Only take real entries that have an edge, avoid being caught up in the meaningless noise.
10. Place your stop losses outside the range of noise so you are only stopped out when you are likely wrong.

www.traderplanet.com/articles/view/165953-30-great-trading-rules/

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ASSAD'S RULES OF TRADING

Trading rule No 1. Never chase. Forget about the Dollar loss for a moment as the real damage comes from the distraction it creates.

Trading rule No 2. Wait for the break. Most traders buy inside the range, get impatient and as a result they sell on first sign of strength which ends up being the breakout.

Trading rule No 3. Don't ride the ticks and Dollar profits. It creates emotional turmoil and is draining. Prevention is best cure. Takes the fun out of the game.

Trading rule No 4. Price action trumps everything. Management lie or mislead but price action (money flow) never lies.

Trading rule No 5. Sell the news or a least sell partials. Markets discount everything and over the long run you will be better off.

Trading rule No 6. Always stay in control. Do NOT put yourself in news related coin toss trades, where the risk cannot be managed.

Trading rule No 7. Mind your own business, avoid conflict. If you take offence because someone has disagreed with your trade, then you are such a precious little petal.

Trading rule No 8. Do NOT set targets as all this creates is a premature EXIT. Run a trailer and let that take you out.

Trading rule No 9. Minimise whipsaw at all costs. It's a trader killer. The root cause of trading failure more often than not, starts with whipsaw.

Trading rule No 10. Do NOT buy stretched breakouts. More often than not they recoil back into the range to flush traders out.

Trading rule No 11. Start with long term charts and look to catch major breaks/moves. These tend to follow through and it makes it easier to run with winners.

Trading rule No 12. DO NOT trades Forex short-term. It is a mugs game, news driven by central banks. It is like betting on the greyhounds.

Trading rule No 13. Turn trading rules into habit. There is no point in having trading rules if you dont apply them!

Trading rule No 14. And the most important; only tell your wife about your losers.

Trading rule No 15. Hit those stops, no questions asked. Hitting your stop and watching a stock rally hurts but not htting your stop and watching the stock fall hurts a hell of alot more.

www.asenna.com.au/asenna/node/34842

Cheers tela

Poster: Freehold

Date:16/03/16
Time:10:32:06
Post #:17285982

goin long said: ↑
@Freehold whats going on with AVL sell volume this morning. 1.5 1.6 1.7 dissapeared on iress
Click to expand...

Trader Games... perhaps trying feign weakness... FA Wise there is no weakness.

Is Suspect we have bullish "Buy Cappers" ..Buy and instantly put a fake sell on the Buy side high up for same amount to skew the weight of the sell queue whilst they accumulate more... as opposed to "Sell Blockers" who do the opposite. We will have to wait and see... but story is solid ...market yet to wake up IMHO ... when it does money will flood in.