I am new to this forum and while have traded, gambled? in the past have done so with no serious plan.
At the moment my plan is as follows.
1. Follow trends- refer to Darryl Guppy on Trend Trading- trends either up or down seem to have about a 70% chance of continuing. While still learning about T/A are prepared to lose small amount rather than paper trade as personally feel no involvement when doing so.
2. Be ruthless on money management. Strict money management seems to be far more important than actual selection, should show a profit on lower % of winning trades with good management over good selections with bad management.
3. While 2% risk seems to be written in stone among the various contributors am I being naive in suggesting that it would be possible to increase the risk exposure to 3% and at the same time reducing the stop loss margin. In this I note the chart that skyquake provided,(I don't know how to attach but it is #51 under heading "I lost $1600 in one day trading OZL" showing in the Beginners Lounge shows the percentage possibility of consecutive losing trades. In my admittedly general reviews of the market it would seem more viable to cut and run very early if a price drops as the chance of reversing after a small drop seems to be less than the likelihood of the trend continuing.
4. While trading profitably to gradually (say 0.5%) increase in risk after each profitable trade and reduce back to 2-3% after first losing trade to minimise capital loss.
5. Where the shares, options, whatever rises either:-
(a) sell a percentage as soon as transaction costs are covered and increase the stop loss to this amount so barring disasters at worst you will break even on that trade, or
(b) continue to hold all until a reversal and sell all at first opportunity (again on the basis that once a trend starts it is more than likely to continue). It means that you will never sell at the top of the market, who does anyway, but you should be reasonably close to it.
I am more inclined to option (b) but keen to hear opposing views
I look forward to comments, suggestions, criticisms.
sydneyboy
At the moment my plan is as follows.
1. Follow trends- refer to Darryl Guppy on Trend Trading- trends either up or down seem to have about a 70% chance of continuing. While still learning about T/A are prepared to lose small amount rather than paper trade as personally feel no involvement when doing so.
2. Be ruthless on money management. Strict money management seems to be far more important than actual selection, should show a profit on lower % of winning trades with good management over good selections with bad management.
3. While 2% risk seems to be written in stone among the various contributors am I being naive in suggesting that it would be possible to increase the risk exposure to 3% and at the same time reducing the stop loss margin. In this I note the chart that skyquake provided,(I don't know how to attach but it is #51 under heading "I lost $1600 in one day trading OZL" showing in the Beginners Lounge shows the percentage possibility of consecutive losing trades. In my admittedly general reviews of the market it would seem more viable to cut and run very early if a price drops as the chance of reversing after a small drop seems to be less than the likelihood of the trend continuing.
4. While trading profitably to gradually (say 0.5%) increase in risk after each profitable trade and reduce back to 2-3% after first losing trade to minimise capital loss.
5. Where the shares, options, whatever rises either:-
(a) sell a percentage as soon as transaction costs are covered and increase the stop loss to this amount so barring disasters at worst you will break even on that trade, or
(b) continue to hold all until a reversal and sell all at first opportunity (again on the basis that once a trend starts it is more than likely to continue). It means that you will never sell at the top of the market, who does anyway, but you should be reasonably close to it.
I am more inclined to option (b) but keen to hear opposing views
I look forward to comments, suggestions, criticisms.
sydneyboy