Khóa học elder traderviet english version

New trading tools – for risk control and self-control • How to place stops • How to manage money in your account Current markets review All illustrated with current market examples Q

LÀM SAO ĐỂ TRỞ THÀNH

TRADER GIỎI HƠN

New trading tools – for risk control and self-control

• How to place stops

• How to manage money in your account

Current markets review

All illustrated with current market examples

Q&A throughout After the class: visit SpikeTrade.com

Trading: intellectually simple …

Emotionally the hardest game in the world

Why do intelligent people keep losing money?

Trading as entertainment

Individual psychology of a trader

Why do intelligent people keep losing money?

Trading as entertainment

Individual psychology of a trader

Individual psychology - mindfulness

• The tendency to huddle under stress

• Loss of independence in a group

• Market different from other social areas

Mass psychology

Mass psychology of the markets

– The tendency to huddle under stress

– Loss of independence in a group

– Market different from other social areas

Remedies:

 Make decisions alone!

 Do not ‘talk your book’

Trade Journal for DISCIPLINE

What is Price?

Charts are the footprints of bulls & bears

Technical analysis is applied social psychology

Each price = a momentary consensus of value

among the crowd of market participants

The courage of the bid and the ask The argument with the crowd

Classical charting is quite subjective

Helpful patterns in classical charting

In classical charting I trust only:

 Horizontal lines (support & resistance)

 False breakouts, esp Kangaroo Tails

Classical charting – support/resistance, false breakouts, kangaroo tails

Classical charting – support/resistance, false breakouts, kangaroo tails

Crude Oil daily

Classical charting vs computerized analysis

In classical charting I trust only:

 Horizontal lines (support & resistance)

 False breakouts, esp Kangaroo Tails

In computerized analysis

 Carefully selected indicators (see below)

 Combinations of indicators

Less clutter – more clarity

Five Bullets to a Clip

Moving Averages (exp.)

Envelopes (Channels)

MACD (Lines & Histogram)

Force Index

…………

A moving average is a composite photo

Exponential (EMA) is more objective

Two messages of the EMA

The Slope of the EMA

The Distance between price and EMA

(#1) Dual EMAs define the value zone

The Slope of the slow MA helps choose trade direction

Value Zone helps define value trades vs Greater fool theory trades

(#2) Envelopes – because markets swing above and below value

Upper line = EMA + K*EMA

Lower line = EMA – K*EMA

Markets are manic-depressive Envelopes help buy depression and sell mania

Three types of envelopes (channels)

 Autoenvelope

 ATR or Keltner channels

 Bollinger Bands

Autoenvelope

2.7 standard deviations from the slow EMA

ATR (Keltner) channels

ATR (Keltner) channels

…what about Bollinger Bands?

Recommended only for option traders, to track volatility

(#3) MACD (Lines and Histogram)

MACD

MACD Lines are primary, Histogram derived from them

Rising MACD-Histogram = bulls in charge

Falling MACD-Histogram = bears in charge

MACD Divergences

MACD Divergence Rules

(#4) Volume

is the steam that moves prices

Raw Force Index formula:

(Close of this bar minus the close of previous bar) times Volume

of this bar

Smooth Force Index for trading:

Use a 13-bar EMA

Advanced Force Index:

Apply 3 ATR channel to the 13-ema of FI

Force Index links volume with price change

Force Index (smoothed with a 13-EMA)

Look for divergences

Force Index with three ATR channels (weekly)

Look for excursions above or below 3-ATR,

followed by a return into the 3-ATR channel

Force Index with three ATR channels (daily)

Force Index with three ATR channels (intraday)

My systems / systems I use:

Principal

 Triple Screen – the foundational system

 Impulse System – a censorship system

How I implement them:

 BD+FB (divergence and a false breakout)

 Fading an extreme

 Pullback to value

Triple Screen: time in the markets

Monthly charts: 1 bar = 1 month

Weekly charts: 1 bar = 1 week

Daily charts: 1 bar = 1 day

Hourly charts: 1 bar = 1 hour etc …

Triple Screen trading system

1 Choose your favorite timeframe (call it Intermediate)

2 Not allowed to look at that chart!

3 Go to the chart one order of magnitude higher

4 Make a STRATEGICdecision on the long-tem chart

5 Return to the intermediate chart and make a TACTICALdecision

6 May drop to an even shorter timeframe to fine-tune the entry

Triple Screen rules reminder

Remember:

* Make your STRATEGIC decision on the long-tem chart

* Make your TACTICAL decision the intermediate chart

* Set your profit target on the long-term chart

Triple Screen example

The Impulse System

All market moves in all timeframes can be described in terms of:

 Inertia

 Force

Inertia = the slope of fast EMA (exponential moving average)

Force = the slope of MACD-histogram (last two bars)

The Impulse System – for censorship

Not a “trading system” but a censorship system

It doesn’t tell you what to do – it tells you what you are not allowed to do

Permitted action signals:

 When stops being red – allowed to buy

 When stops being green – allowed to short

Here the Impulse permits buying

Signals are given by the loss

of Green (OK to short)

or Red (OK to buy)

Here the Impulse permits shorting

The Impulse with Triple Screen – an example

Check your trading decision against the Impulse

Technical tools review

False Breakout with a Divergence

False Breakout with a Divergence

Trend following

Pullback to Value

JCI – entry

Fading an Extreme

Fading an Extreme

Short

Let’s review multiple examples

• Two causes of trader mortality

• The role of a manager

• Money management rules

– The 2% Rule

– The concept of ‘available risk’

– The 6% Rule

Risk Management

Two Causes of Trader Mortality

Prevention of Trader Mortality

Never risk more than 2% of your

account equity in a single trade

Never risk more than 6% of your account equity in a single month

The Iron Triangle of Risk Control

A Planned risk for this trade

(no more than 2% of account)

B The distance from entry to stop

(in dollars)

C Number of shares

A divided by B

How much is 2%?

A: what’s your maximum risk in dollars?

You’re welcome to risk less than 2%, but never risk more

Every trade demands three numbers

What’s your dollar risk per share?

Divide your total permitted risk per trade by your risk per share

Your buy price minus your stop

The 2% Rule

$ 20

Stop – if it falls to $18, do not want to own it!

$100,000 How many shares may he buy?

$ 20

$100,000

Stop – if it falls to $18, do not want to own it!

How many shares may he buy?

Real example (from a $40,000 school account)

A Planned risk for this trade

(no more than 2% of account)

B The distance from entry to stop

(in dollars)

C Number of shares

Trade Journal

by SpikeTrade.com

Trade Journal

Daily homework

Become your own teacher : 2 month reviews

Stay out of the zone of market noise

At least 1.5 ATRs from entry

Place stops on the shorter one,

targets on the longer one Stops are a necessary evil

Stops in swing trading

At least 1.5 ATRs from entry

Trade planning & entry

Stop = Entry – (1-ATR * 1.5)

Targets in swing trading

Longer time-frame value zone and channels

Targets in swing trading

Pay attention to the market trend

LÀM SAO ĐỂ TRỞ THÀNH TRADER GIỎI HƠN