@tech/a what instruments do you generally trade?
For I'm a mix of approx 20% forex, 60% stocks and 20% indices.
Learning to trade
- Thread starter DaveTrade
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For I'm a mix of approx 20% forex, 60% stocks and 20% indices.
tech/a
No Ordinary Duck
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Stock short term
Stock longterm
DAX short term
Stock longterm
DAX short term
Thanks. What's long and short term for you?
For me, I'm mostly a swing trader lasting anywhere from 2 days to 2 weeks. Longer term for me is around 1 to 3 months.
Are you generally a volume price analysis trader?
tech/a
No Ordinary Duck
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DAXcan be minutes to an hour or more but could be 3 trades in 2 hrs
Stock short term from a day to however long it takes to stop not normally more than a week
Self managed Super some months some years
Trading a mixture
Systems trader for longer term
Method trader for shorter term similar to you
In some ways
Only a small amount of my days/ week involve trading
Stock short term from a day to however long it takes to stop not normally more than a week
Self managed Super some months some years
Trading a mixture
Systems trader for longer term
Method trader for shorter term similar to you
In some ways
Only a small amount of my days/ week involve trading
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@trender thanks for you postings. For the benefit of all that have been finding your way of trading very interesting, I'm posting another video below with related information.
https://youtu.be/WaTuu-KQbaU?si=WAms48KrqQvtrRAw
Thanks for sharing. I do look at futures as well. Tbh the vast majority of my trades are in stocks and indices where volume is centralized. With currency I rely more on market structure and multiple time frames.
I'm pretty paranoid with trading and stock markets in general. I have no idea if in 1, 3, 5 years I'll still have the edge so when I accumulate chunks of profits I reinvest into other asset classes and business. The combo works well for me.
My biggest insights into trading over the years is you never know when the gig could be up. Edges could fade or stop working, your psychology could take a detrimental hit, health, family etc. I wouldn't ever want to rely solely on trading to generate income or expand wealth. Hence my reinvesting into real estate and small businesses.
If trading still has utility for me then I'll continue. When I sense the gig is up, I'll exit.
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The wisdom that comes with age, or should I say, as we get older we see a greater need to manage our risk in life because we know that we are running out of the time needed to rebuild if we suffer a big setback and the psychological cost if we let that happen.
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John Howell sent out an email and I got one because I like to listen to his market updates. His message was so well written that I felt that I should copy it and post it in this thread, I really feel that this could help a lot of people.
The following is John's words;
The Realities of Trading: Lessons from 20 Years in the Market
After two decades in the trading world, I’ve learned a fundamental truth that every aspiring trader needs to grasp: there is no such thing as get-rich-quick or easy trading. While the allure of fast profits can be tempting, the reality is that successful trading requires hard work, discipline, and resilience.
The Illusion of Easy Profits
Many newcomers enter the market with dreams of quick wealth, spurred on by stories of overnight successes. These narratives, often glorified in media and social networks, create a false expectation that trading is a straightforward path to riches. However, the harsh truth is that trading is far from easy.
The reality is that the vast majority of traders will face significant challenges, setbacks, and losses along their journey. The market is complex, influenced by countless variables, and understanding these intricacies takes time and effort. Expecting to master trading without putting in the necessary work is a recipe for disappointment.
Embracing the Struggle
The journey through trading can be arduous. Many traders experience what I call the “trading crucible”—a period filled with mistakes, losses, and steep learning curves. It's during this phase that many traders give up, believing that they lack the aptitude or that the market is rigged against them.
However, if you can persevere through these tough times, you emerge on the other side with invaluable insights. You start to recognize patterns, understand market psychology, and develop a strategy that suits your style. You learn what works for you and, equally important, what doesn’t.
The Learning Curve
The key to success in trading lies in embracing the learning curve. Each mistake is a lesson, each loss a stepping stone to improvement. Over time, you begin to refine your approach, identifying the strategies that yield positive results and those that lead to unnecessary losses.
What to Focus On
As you progress, you’ll find that your focus shifts. Rather than chasing quick profits, you start prioritizing:
1.Risk Management: Protecting your capital becomes paramount. Understanding how much to risk on each trade helps you survive the inevitable downturns.
2. Strategy Development: Crafting a trading strategy based on thorough analysis, backtesting, and continuous refinement will give you a structured approach to the market.
3. Emotional Discipline: Recognizing and controlling your emotions is crucial. The market can evoke fear and greed, and learning to navigate these feelings is a vital skill.
4. Continuous Learning: The markets are ever-evolving, and staying informed about economic news, trends, and new strategies is essential for long-term success.
What NOT to Do
Just as important as knowing what to focus on is understanding what to avoid:
1.Chasing Losses: It’s tempting to try to recover losses quickly, but this often leads to more significant losses. Stick to your strategy and let your analysis guide your decisions.
2. Overtrading: Trading too frequently can erode your capital and increase emotional strain. Quality over quantity is the mantra to adopt.
3. Ignoring Market Conditions: Each market phase has its characteristics. Failing to adapt your strategy to changing conditions can lead to missed opportunities or unnecessary losses.
4.Neglecting Mental Health: Trading can be stressful. Taking breaks and maintaining a balanced life outside the markets is vital for sustaining long-term performance.
Conclusion: The Path to Ease
While trading is undeniably challenging, the hard-earned knowledge gained through experience can eventually make it feel easier. After enduring the trials and tribulations that most traders face, you reach a level of understanding that allows you to navigate the markets with greater confidence and clarity.
So, embrace the struggle. The road may be tough, but on the other side, you’ll find that what once seemed insurmountable becomes manageable. With the right mindset and dedication, trading can transform from a daunting challenge into a rewarding endeavor. Remember: there’s no shortcut to success, but there is a path, and it leads to mastery.
Hope it helps
John Howell
The following is John's words;
The Realities of Trading: Lessons from 20 Years in the Market
After two decades in the trading world, I’ve learned a fundamental truth that every aspiring trader needs to grasp: there is no such thing as get-rich-quick or easy trading. While the allure of fast profits can be tempting, the reality is that successful trading requires hard work, discipline, and resilience.
The Illusion of Easy Profits
Many newcomers enter the market with dreams of quick wealth, spurred on by stories of overnight successes. These narratives, often glorified in media and social networks, create a false expectation that trading is a straightforward path to riches. However, the harsh truth is that trading is far from easy.
The reality is that the vast majority of traders will face significant challenges, setbacks, and losses along their journey. The market is complex, influenced by countless variables, and understanding these intricacies takes time and effort. Expecting to master trading without putting in the necessary work is a recipe for disappointment.
Embracing the Struggle
The journey through trading can be arduous. Many traders experience what I call the “trading crucible”—a period filled with mistakes, losses, and steep learning curves. It's during this phase that many traders give up, believing that they lack the aptitude or that the market is rigged against them.
However, if you can persevere through these tough times, you emerge on the other side with invaluable insights. You start to recognize patterns, understand market psychology, and develop a strategy that suits your style. You learn what works for you and, equally important, what doesn’t.
The Learning Curve
The key to success in trading lies in embracing the learning curve. Each mistake is a lesson, each loss a stepping stone to improvement. Over time, you begin to refine your approach, identifying the strategies that yield positive results and those that lead to unnecessary losses.
What to Focus On
As you progress, you’ll find that your focus shifts. Rather than chasing quick profits, you start prioritizing:
1.Risk Management: Protecting your capital becomes paramount. Understanding how much to risk on each trade helps you survive the inevitable downturns.
2. Strategy Development: Crafting a trading strategy based on thorough analysis, backtesting, and continuous refinement will give you a structured approach to the market.
3. Emotional Discipline: Recognizing and controlling your emotions is crucial. The market can evoke fear and greed, and learning to navigate these feelings is a vital skill.
4. Continuous Learning: The markets are ever-evolving, and staying informed about economic news, trends, and new strategies is essential for long-term success.
What NOT to Do
Just as important as knowing what to focus on is understanding what to avoid:
1.Chasing Losses: It’s tempting to try to recover losses quickly, but this often leads to more significant losses. Stick to your strategy and let your analysis guide your decisions.
2. Overtrading: Trading too frequently can erode your capital and increase emotional strain. Quality over quantity is the mantra to adopt.
3. Ignoring Market Conditions: Each market phase has its characteristics. Failing to adapt your strategy to changing conditions can lead to missed opportunities or unnecessary losses.
4.Neglecting Mental Health: Trading can be stressful. Taking breaks and maintaining a balanced life outside the markets is vital for sustaining long-term performance.
Conclusion: The Path to Ease
While trading is undeniably challenging, the hard-earned knowledge gained through experience can eventually make it feel easier. After enduring the trials and tribulations that most traders face, you reach a level of understanding that allows you to navigate the markets with greater confidence and clarity.
So, embrace the struggle. The road may be tough, but on the other side, you’ll find that what once seemed insurmountable becomes manageable. With the right mindset and dedication, trading can transform from a daunting challenge into a rewarding endeavor. Remember: there’s no shortcut to success, but there is a path, and it leads to mastery.
Hope it helps
John Howell
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@DaveTrade This article is worth copying and be read every Sunday night until it is ingrained into the grey matter.
It makes so much sense.
Well, to me anyway.
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When I started this thread I had a naive idea that I could teach some people about trading but I've found that it's not so easy if you can't talk back and forth explaining what your statements really mean. Also I've found that explaining yourself in the written form is quite a skill and I have a greater admiration for people with writing skills. Anyway I haven't posted here for a while and I came across an article from Netpicks that newbie traders should be aware of, so I'm copying it here;
What strategies help decide when to take profits?
A successful trader’s toolkit must include reliable profit-taking strategies to lock in gains and protect their capital. You’ll want to consider using fixed profit targets at key support and resistance levels, typically aiming for 20-25% gains before potential market corrections occur.
To make your exit strategy more dynamic, you can use trailing stops that automatically adjust as prices move in your favor. This helps you secure profits while still allowing room for additional gains.
Watch for reversal signals in your technical analysis to time your exits effectively. You might also want to set time-based exits to avoid extended drawdowns. A common approach is letting the trade run for 3 days and if no significant advance, close the position.
Remember to backtest different approaches to find what works best for your trading style and market conditions.
Using measured move formula analysis from previous impulse waves can help project accurate profit targets for future trades.
How do I calculate trading profits accurately?
Having a solid exit strategy is one part of successful trading, but you’ll also need to track your results accurately to know if your methods are working.
To calculate your trading profits, start by finding the difference between your selling price and purchase price for each trade. Don’t forget to subtract any fees or commissions from this amount to determine your net profit.
For multiple shares, use this simple formula: Net Profit = (Selling Price – Purchase Price – Fees) x Number of Shares.
Example: Let’s say you bought 100 shares of XYZ Corp at $50 per share and sold them later at $60 per share. Your broker charges a $10 fee for each transaction (buying and selling).
Here’s how we’d calculate your net profit:
Purchase Price per share: $50
Selling Price per share: $60
Number of Shares: 100
Fees: $10 for buying + $10 for selling = $20 total
Now, let’s plug these numbers into our formula:
Net Profit = (Selling Price – Purchase Price – Fees) x Number of Shares Net Profit = ($60 – $50 – ($20 ÷ 100)) x 100 Net Profit = ($10 – $0.20) x 100 Net Profit = $9.80 x 100 Net Profit = $980
So, in this example, your net profit from selling 100 shares of XYZ Corp would be $980.
To better understand your performance, convert your profit into a percentage by dividing your net profit by your total investment and multiplying by 100.
Calculate Total Investment:
Total Investment = (Purchase Price x Number of Shares) + Purchase Fee
Total Investment = ($50 x 100) + $10
Total Investment = $5,000 + $10
Total Investment = $5,010
Calculate Percentage Return:
Percentage Return = (Net Profit / Total Investment) x 100
Percentage Return = ($980 / $5,010) x 100
Percentage Return = 0.1956 x 100
Percentage Return = 19.56%
Remember, this is a simplified example. In real-world trading, you might also need to consider other factors like taxes or additional fees depending on your broker and local regulations.
Keep detailed records of each exit method and profit calculation to help you evaluate and improve your trading strategies over time.
Recording these calculations in a trading journal will help you analyze long-term potential and track your success over time.
What role does my trading plan play?
Success in taking trading profits relies heavily on your trading plan, which serves as your personal roadmap for making consistent, rational decisions. Your plan should clearly outline when and how you’ll exit profitable trades (and losing trades), removing emotional bias from your decision-making process.
To maximize your trading strategy’s effectiveness, you’ll need to establish specific profit-taking strategies that match your risk tolerance and investment goals. Include concrete rules for exit points, whether they’re based on price targets, technical indicators, or market conditions.
Here’s an example of how to establish specific profit-taking strategies that match your risk tolerance and investment goals:
Define Your Profit Targets and Exit Rules
Price-Based Targets: Aim to take profits at specific price levels, such as a 10% gain or when the price hits a key resistance level.
Indicator-Based Exits: Use technical indicators like moving averages or RSI to signal when to lock in profits. For example, exit when the price crosses below the 50-day moving average.
Partial Profit-Taking: Consider scaling out of positions gradually. You might sell 50% of your position when it hits a 1-1 R/R gain, then another 25% at a 2-1 gain, and so on. This helps you stay in winning trades longer while securing some profits.
Tailor Your Rules to Market Conditions
Adapt your profit-taking rules to different market environments. In a strong bull market, you may let winners run longer. In choppier markets, consider tightening your targets.
By establishing and following concrete profit-taking rules aligned with your unique strategy and risk tolerance, you can trade with greater discipline and potentially improve your overall profitability. Be sure to backtest and refine your rules over time as market conditions evolve.
Don’t forget to regularly review and adjust your plan based on your trading results.
Remember that sticking to your plan is just as important as creating it. When you follow your predetermined profit-taking rules, you’re more likely to maintain discipline and achieve consistent results.
Testing your strategy against random data samples helps confirm whether your profit-taking approach has a genuine trading edge.
How to balance profits versus letting trades run?
Balancing the decision between taking profits and letting trades run is one of trading’s most challenging issues. To find the right balance, you’ll need a clear profit-taking strategy that combines set targets with flexible adjustments.
Start by setting profit targets between 20-25% while using trailing stops to protect your gains. This approach lets you lock in your profits while keeping the potential for bigger returns. I use a risk reward ratio for scale outs instead of targets from percentages.
Setting realistic profit targets with trailing stops creates a balanced trading strategy that secures gains while maintaining upside potential.
Consider implementing a time-based exit strategy to avoid getting caught in extended market corrections. Watch market trends and technical indicators to help you decide when to exit or stay in a trade.
Remember to regularly check if your approach matches your risk tolerance – this will help you avoid emotional decisions that could lead to either premature exits or holding positions too long.
Understanding market swing patterns helps identify optimal exit points during both uptrends and downtrends, strengthening your profit-taking decisions.
What psychological factors affect profit-taking decisions?
The psychological battle within your mind can make or break your success in taking trading profits. Your emotional discipline plays a vital role in sticking to your predetermined exit strategies rather than letting fear or greed drive your decisions.
In the example above, if your exit strategy includes getting out when you see obvious momentum against your trade, do so. When you decide not to, is when the price will continue to move against you.
To manage these psychological factors, you’ll need to understand your risk tolerance and set profit targets that align with your comfort level.
When you’re feeling anxious about potential losses, remind yourself of your trading plan and resist the urge to exit positions prematurely.
Don’t let overconfidence from successful trades push you into taking profits too early.
Regular self-reflection can help you identify patterns in your emotional trading behaviors. By maintaining awareness of these psychological triggers, you can make more rational profit-taking decisions that support your long-term trading success.
Keeping a detailed trading journal can help track your emotional state during profit-taking decisions and identify areas for improvement.
How to adjust strategies for different markets/styles?
Adjusting your profit-taking strategy requires consideration of the market you’re trading in and your chosen trading style.
For volatile markets, you’ll want to implement trailing stops to protect your gains while still capturing upside potential.
If you’re a short-term trader, set specific time-based exit points and clear profit targets that align with your trading timeline.
Long-term traders should focus on broader market trends and key technical levels for their exit strategy.
In trending markets, use moving averages to help time your exits, while range-bound markets call for taking profits near established resistance levels.
Remember to match your approach with your risk tolerance – aggressive traders might want to secure quick profits, while conservative traders can hold positions longer to maximize potential returns.
The Aroon indicator can help identify trend exhaustion points, making it useful for timing profit-taking decisions in strongly trending markets.
TRADE EXIT TECHNIQUES
- Price-Based Targets
- Indicator-Based Exits
- Partial Profit-Taking
- Trailing Stops
- Time-Based Exits
What strategies help decide when to take profits?
A successful trader’s toolkit must include reliable profit-taking strategies to lock in gains and protect their capital. You’ll want to consider using fixed profit targets at key support and resistance levels, typically aiming for 20-25% gains before potential market corrections occur.
To make your exit strategy more dynamic, you can use trailing stops that automatically adjust as prices move in your favor. This helps you secure profits while still allowing room for additional gains.
Watch for reversal signals in your technical analysis to time your exits effectively. You might also want to set time-based exits to avoid extended drawdowns. A common approach is letting the trade run for 3 days and if no significant advance, close the position.
Remember to backtest different approaches to find what works best for your trading style and market conditions.
Using measured move formula analysis from previous impulse waves can help project accurate profit targets for future trades.
How do I calculate trading profits accurately?
Having a solid exit strategy is one part of successful trading, but you’ll also need to track your results accurately to know if your methods are working.
To calculate your trading profits, start by finding the difference between your selling price and purchase price for each trade. Don’t forget to subtract any fees or commissions from this amount to determine your net profit.
For multiple shares, use this simple formula: Net Profit = (Selling Price – Purchase Price – Fees) x Number of Shares.
Example: Let’s say you bought 100 shares of XYZ Corp at $50 per share and sold them later at $60 per share. Your broker charges a $10 fee for each transaction (buying and selling).
Here’s how we’d calculate your net profit:
Purchase Price per share: $50
Selling Price per share: $60
Number of Shares: 100
Fees: $10 for buying + $10 for selling = $20 total
Now, let’s plug these numbers into our formula:
Net Profit = (Selling Price – Purchase Price – Fees) x Number of Shares Net Profit = ($60 – $50 – ($20 ÷ 100)) x 100 Net Profit = ($10 – $0.20) x 100 Net Profit = $9.80 x 100 Net Profit = $980
So, in this example, your net profit from selling 100 shares of XYZ Corp would be $980.
To better understand your performance, convert your profit into a percentage by dividing your net profit by your total investment and multiplying by 100.
Calculate Total Investment:
Total Investment = (Purchase Price x Number of Shares) + Purchase Fee
Total Investment = ($50 x 100) + $10
Total Investment = $5,000 + $10
Total Investment = $5,010
Calculate Percentage Return:
Percentage Return = (Net Profit / Total Investment) x 100
Percentage Return = ($980 / $5,010) x 100
Percentage Return = 0.1956 x 100
Percentage Return = 19.56%
Remember, this is a simplified example. In real-world trading, you might also need to consider other factors like taxes or additional fees depending on your broker and local regulations.
Keep detailed records of each exit method and profit calculation to help you evaluate and improve your trading strategies over time.
Recording these calculations in a trading journal will help you analyze long-term potential and track your success over time.
What role does my trading plan play?
Success in taking trading profits relies heavily on your trading plan, which serves as your personal roadmap for making consistent, rational decisions. Your plan should clearly outline when and how you’ll exit profitable trades (and losing trades), removing emotional bias from your decision-making process.
To maximize your trading strategy’s effectiveness, you’ll need to establish specific profit-taking strategies that match your risk tolerance and investment goals. Include concrete rules for exit points, whether they’re based on price targets, technical indicators, or market conditions.
Here’s an example of how to establish specific profit-taking strategies that match your risk tolerance and investment goals:
Define Your Profit Targets and Exit Rules
Price-Based Targets: Aim to take profits at specific price levels, such as a 10% gain or when the price hits a key resistance level.
Indicator-Based Exits: Use technical indicators like moving averages or RSI to signal when to lock in profits. For example, exit when the price crosses below the 50-day moving average.
Partial Profit-Taking: Consider scaling out of positions gradually. You might sell 50% of your position when it hits a 1-1 R/R gain, then another 25% at a 2-1 gain, and so on. This helps you stay in winning trades longer while securing some profits.
Tailor Your Rules to Market Conditions
Adapt your profit-taking rules to different market environments. In a strong bull market, you may let winners run longer. In choppier markets, consider tightening your targets.
By establishing and following concrete profit-taking rules aligned with your unique strategy and risk tolerance, you can trade with greater discipline and potentially improve your overall profitability. Be sure to backtest and refine your rules over time as market conditions evolve.
Don’t forget to regularly review and adjust your plan based on your trading results.
Remember that sticking to your plan is just as important as creating it. When you follow your predetermined profit-taking rules, you’re more likely to maintain discipline and achieve consistent results.
Testing your strategy against random data samples helps confirm whether your profit-taking approach has a genuine trading edge.
How to balance profits versus letting trades run?
Balancing the decision between taking profits and letting trades run is one of trading’s most challenging issues. To find the right balance, you’ll need a clear profit-taking strategy that combines set targets with flexible adjustments.
Start by setting profit targets between 20-25% while using trailing stops to protect your gains. This approach lets you lock in your profits while keeping the potential for bigger returns. I use a risk reward ratio for scale outs instead of targets from percentages.
Setting realistic profit targets with trailing stops creates a balanced trading strategy that secures gains while maintaining upside potential.
Consider implementing a time-based exit strategy to avoid getting caught in extended market corrections. Watch market trends and technical indicators to help you decide when to exit or stay in a trade.
Remember to regularly check if your approach matches your risk tolerance – this will help you avoid emotional decisions that could lead to either premature exits or holding positions too long.
Understanding market swing patterns helps identify optimal exit points during both uptrends and downtrends, strengthening your profit-taking decisions.
What psychological factors affect profit-taking decisions?
The psychological battle within your mind can make or break your success in taking trading profits. Your emotional discipline plays a vital role in sticking to your predetermined exit strategies rather than letting fear or greed drive your decisions.
In the example above, if your exit strategy includes getting out when you see obvious momentum against your trade, do so. When you decide not to, is when the price will continue to move against you.
To manage these psychological factors, you’ll need to understand your risk tolerance and set profit targets that align with your comfort level.
When you’re feeling anxious about potential losses, remind yourself of your trading plan and resist the urge to exit positions prematurely.
Don’t let overconfidence from successful trades push you into taking profits too early.
Regular self-reflection can help you identify patterns in your emotional trading behaviors. By maintaining awareness of these psychological triggers, you can make more rational profit-taking decisions that support your long-term trading success.
Keeping a detailed trading journal can help track your emotional state during profit-taking decisions and identify areas for improvement.
How to adjust strategies for different markets/styles?
Adjusting your profit-taking strategy requires consideration of the market you’re trading in and your chosen trading style.
For volatile markets, you’ll want to implement trailing stops to protect your gains while still capturing upside potential.
If you’re a short-term trader, set specific time-based exit points and clear profit targets that align with your trading timeline.
Long-term traders should focus on broader market trends and key technical levels for their exit strategy.
In trending markets, use moving averages to help time your exits, while range-bound markets call for taking profits near established resistance levels.
Remember to match your approach with your risk tolerance – aggressive traders might want to secure quick profits, while conservative traders can hold positions longer to maximize potential returns.
The Aroon indicator can help identify trend exhaustion points, making it useful for timing profit-taking decisions in strongly trending markets.
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