Discretionary Trading Systems, training chart posts - Posts, questions and discussions
17/06/2010 16:57:34
Tom Leeson
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Posts: 661
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Learning to trade
I think that maybe the best place to start as a trader is to understand Levels
levels of support and resistance
Previous Year, month, week, day highs and lows.
These are historical levels of support and resistance.
You may find that a pin bar candle will show where the crowd said “ooops” too low or too high - and the market bounced
It is always good to be aware of these. The market has a tendency to bounce at support and resistance points.
Learn to draw trends - link up candle wicks -slice though a candle wick if oyu have to but not candle bodies
A trend line or two parrallel - a trend channel provides support and resistance S/R levels.
Moving averages provide dynamic S/R levels
Then Gann – the 50% retracement needed for a market to pullback to take profits before continuing
The Fib levels – the market will quite frequently test these. Can be used as entry and exit points.
Range Bound behaviours:
Use a currentdayohl indicator to see the extreme of the market current session
It’s better to trade in from the edges if you can.
Two types of trading:
Mean Reversion
Reversion to the mean
Put a Bollinger on a chart – a 240 min
When the candles hit the outer bands that is the exhaustion zone –
The market will trade back to the middle – the mean – this would be an exit point.
Look at candlecharts.com and do some research on high probability candle stick patterns used only in the context of a market extreme that can be a very good way to trade.
RSI, Slow Stochastic will tell you when a market is overbought or sold and can used in combination of the above
Trend trading
A pullback to a WMA 533 on a 30 min chart on a currency is the intermediate trend… entry can be made in the same direction as the trend…
It may mean buying a recent high/ selling a recent low
RSI, Slow Stochastic will always say over bought when the market is trending and moves of the current range.
Perhaps a crossover with a 13EMA and 21EMA on a 10 min chart will allow you to see a better entry point perhaps which is with the direction of the 30Min chart
This is known as confluence of indicator states on multiple charts
A crossover again would be the exit point
Think of multiple reasons to enter a trade to save over trading…
A level of support -could the trade setup
A Macd cross above 0 could be the trade Entry
This way you are not picking tops and bottoms
Trading approach:
There are 3 components to every trading system –so think in terms of
Setup, Entry, Exit
Trade Setup = ABC bounce – at a level
Trade Entry = close above ma or 3 closes Higher
Trade Exit = fib 50% or close below a 10SMA
Stop Strategies
Look at stocks and commodities magazine and research Vervoots approach to managing risk – this is critical…
Always back test on historical charts and the practice on Sim – learn your ideas so you stick with them..
Learn to back test by going over trade system ideas backwards in time and walk forwards, mark the chart and keep a tally….
Trading Weekly Levels can be very good – the trades are few – but can be very big….
I will be releasing some educational info with all indicators etc further down the road….
Some Action points perhaps?
Stocks and commodities magazine at www.trader.com
Research trend lines, trend channels, fibs, stop management…
Candlestick patterns in context candlesharts.com
News avoidance never trade the news results – if you are chartist simply avoid trading when news releases are due 20mins either side.
You can use an economic calendar at www.forexfactory.com to see when these market moving releases are available.
Keep a log of your trading
Entry
Exit
Results
This will stop you over trading and you can learn from it
Plan a certain amount that you can loose and win per day…stop trading when you hit these levels come what may…
edited by tom on 20/06/2010
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MicroTrends tom
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