High probability trading : take the steps to become a successful trader
Format: PDF / Kindle (mobi) / ePub
A common denominator among most new traders is that, within six months of launching their new pursuit, they are out of money and out of trading. High-Probability Trading softens the impact of this "trader's tuition," detailing a comprehensive program for weathering those perilous first months and becoming a profitable trader.
This no-nonsense book takes a uniquely blunt look at the realities of trading. Filled with real-life examples and intended for use by both short- and long-term traders, it explores each aspect of successful trading.
BECOMING A BETTER TRADER Becoming a better trader means, above all, being disciplined enough to do what you are supposed to do. It is one thing knowing how to trade; it's another actually being able to carry out the steps that can make you successful. A good trader has discipline in all aspects of his trading; that means getting prepared to trade before the market is open, doing your homework, and knowing why you want to make every trade you do make. A disciplined trader will not make random
you make the same mistakes over and over again, it's time to reevaluate whether trading is for you. Overall I'll stress that you should take it slow and preserve your capital until you've been trading for over 2 years; even after 5 years traders are still in for a surprise or two. By taking it slow you give yourself the chance to be around for the long haul. After you've paid your tuition and dues, you are ready to graduate and make a living from trading. The Problems Traders Face When Starting
will be and therefore will produce more signals; a larger lookback period gives fewer but more reliable signals. Like stochastics, the RSI is used to see when a market is overbought, is oversold, or has the momentum to keep going. When a market picks up steam and the RSI gets closer to a top or bottom, there is always a good chance that the market can retrace a little of its move. But be alert, because it may show an overbought signal just as the market is about to break to make newer and newer
to work, so I hold, watching them get worse, until I finally exit them 20 minutes later. This is something I have to be more diligent about not doing, but it is easy to get complacent when you have stops in the market that you think are good. Slippage Slippage is another problem one encounters with stops. It is not uncommon to have a stop at one price but get filled at a substantially different price, especially if the market is moving against you fast. There are times when a news event
deviation move, as I'll explain later. These are many ways to use technical analysis to place stops. They can be placed outside trendlines, moving averages, channels, support and resistance lines, the low of X bars ago, below a Fibonacci retracement level, or at previous market lows or highs. These are areas the market is likely to come to, and if they are broken, that may indicate a change in the direction of the market. The advantage of using the market to determine risk is that the risk