Class 8: Trading Neutral. I. Learning to Trade Neutral. Today s Class

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Cameron Jenkins
5 years ago
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1 Today s Class Psychology of Trading Neutral Anatomy of a trade Bracket trading/trading neutral Determining stops Journaling Class 8: Trading Neutral I. Learning to Trade Neutral Learning to Trade Neutral/Psychology Objective of a trader: Pick a direction Good trader doesn t care which direction Good trader removes emotion (allowing analytical and rational skills to take over) Emotional Trader vs. Neutral Trader This stock is going up This stock is oversold it has to go up CNBC said this is a good stock so it s going up I think it s going to $100 It just feels right This stock looks like it s going up This stock may go up because it s oversold CNBC recommended it... If it breaks out, $100 is a reasonable target Everything has confirmed PAGE 1

2 Objective of a trader: Pick a direction Good trader doesn t care which direction Use your tools and skills to determine trades Line Drawing and Pivot Points Moving Averages Chart patterns (Level 2) Candlestick patterns (Level 2) Indicators (Level 2) Setup a neutral trading scenario (brackets) Determine stops (and risk) Write down and plan your trade Notes PAGE 2

3 II. Learning to Trade Neutral 1. Pick a stock Anatomy of a Trade 2. Draw extreme support & resistance 3. Draw major pivot points 4. Ask the critical questions: Does this stock generally trend? Is this stock in a trend or is it set up for a new trend? Do the next targets present an acceptable profit for me? 5. Look at the stock s relationship to the moving averages 6. Do the chart patterns tell me anything? (level 2) 7. Do the candlestick patterns tell me anything? (level 2) 8. Do the indicators tell me anything? (level 2) 9. Am I running into a long term trend or average? 10. Draw your bracket for final confirmation 11. Determine your stop point 12. Document your upcoming trade (plan it) 13. If you have an automated trading system enter the trade with contingencies (OptionsXpress will do this) 14. Place trade and wait for confirmation Alternately you could place trade in real time 15. Turn around and set your stops PAGE 3

4 III. Bracket Trading/Neutral Trading Learning to Trade Neutral The most important lesson you can learn in trading is to trade without emotion. If you set up your trades before the market opens (or at night after the market closes) you will make more logical decisions. Use bracketing to limit your trades to the trades you really want to do Draw your pivot points When the trade is ready to confirm... Draw a bracket around your pivot points Use those price points to enter your trades Use those price points to enter trade Create an If/Then scenario IF the stock goes above THEN I go bullish IF the stock goes below THEN I go bearish PAGE 4

5 Where do I stop out? IV. Setting Stops Want to set your stop in a place where you know the trade has gone against you. Give yourself enough room for the everyday moves of the stock. Failure to allow room for your stop is one of the costliest mistakes a trader can make Alternative to the stop is an alert Alert will call your cell phone or send you an Possibilities for placing stops: On the other side of Support or Resistance The other side of your bracket is often good In a trend use your moving average What about with options? Use a contingency Order (if XYZ stock does this, then trade this option) Notes PAGE 5

6 Planning Your Trade Is Easy Do your standard analysis V. Planning Your Trade Walk through the anatomy of a trade Draw your brackets Document your entry point Document your target point Document your stop Write it all down in your journal Use a Journal to Document Plans and Results Write down your entries, exits, & stops Write down your IF/THEN scenarios Document what actually happened Document any successes or failures Use your Journal to improve your skills When Do I Start Trading Real Money? Educate yourself Practice your trading (learn your skills) Learn to do the Trade Simulator (level 3) Virtual Trade (modern form of paper trading) When you are virtually trading successfully, you are ready start trading real money If you are trading real money and are consistently losing money, return to the virtual trading and figure out where you are messing up PAGE 6

7 Why is education so important? Sign up for Levels 2 & 3 Continue Virtual Trading Action Steps Continue applying what you have learned and building on your education Sign up for weekly Power Trader Analysis Tell your friends This has been a great journey so far but the journey has just begun. Next is Foundations of Stocks and Options Levels 2 & 3. If you are unsure what is best for you reach out to us through at success@tradesmartu.com or Schedule a Call and one of our Student Success Coaches will walk you through any thoughts or questions you have. PAGE 7

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Class 6: Trading the Lanes (In-depth Line Drawing and Charting) Review of Class So Far

Today s Class Class 6: Trading the Lanes (In-depth Line Drawing and Charting) Review of class so far Where we are going from here More in-depth technical analysis Trading with brackets (neutral trading)