How to Fix the Top 10 Fatal Errors of Trading One Flaw at a Time. #2 Trading Strategies before Knowing Systems. From the Active Trend Trader

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Gordon Hopkins
5 years ago
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1 How to Fix the Top 10 Fatal Errors of Trading One Flaw at a Time #2 Trading Strategies before Knowing Systems From the Active Trend Trader

2 Disclaimer U.S. GOVERNMENT REQUIRED DISCLAIMER COMMODITY FUTURES TRADING COMMISSION FUTURES AND OPTIONS TRADING HAS LARGE POTENTIAL REWARDS, BUT ALS O LARGE POTENTIAL RISK. YOU MUST BE AWARE OF THE RISKS AND BE WILLING TO ACCEPT THEM IN ORDER TO INVEST IN THE FUTURES AND OPTIONS MARKETS. DON T TRADE WITH MONEY YOU CAN T AFFORD TO LOSE. THIS IS NEITHER A SOLICITATION NOR AN OFFER TO BUY/SELL FUTURES OR OPTIONS. NO REPRESENTATION I S BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE DISCUSSED IN THIS TRAINING. THE PAST PERFORMANCE OF ANY TRADING SYSTEM OR METHODOLOGY IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. CFTC RULE 4.41 HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS H AVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESU LTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN E XECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF AN Y, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PRO GRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. ALL MATERIALS PRESENTED ARE FOR TRAINING PURPOSES ONLY. TRADERS SHOULD PAPER TRADE ANY NEW METHOD PRIOR TO RISK OF PERSONAL CAPITAL. P AST PERFORMANCE IS NOT AN INDICATION OR PROMISE FOR FUTURE PERFORMAN CE

3 Effects of Fatal Trading Errors Those ill prepared will Fall Prey to the Fatal Errors! - They are victims when something like this happens Which can be devastating!

4 Top 10 Fatal Errors 1. Trying to Run Before Learning to Walk 2. Trading Strategies before Knowing the System 3. Failure to Develop a Routine 4. Unrealistic Expectations 5. Failure to Use Price Clues Entries, Exits & Trend 6. Trying to Get Even 7. Psychological Challenges 8. Spread too Thin 9. FEAR 10.Trading too Much/Trading too Little

5 If you don t know precisely what signal is yours & how you will size and manage your position STOP TRADING! ~Peter Brandt

6 Top 10 Fatal Errors 2. Trading Strategies before Knowing the System - Trading Strategies is like walking a tight rope with no NET! - There are various Strategies: Stocks, Options, Futures, ETFs, etc. - The System determines the probabilities for success with each Strategy - Not using a System is just guessing! - The System Provides the format and mechanics of trading - Rules & Consistency

7 Top 10 Fatal Errors 2. Trading Strategies before Knowing the System - The SYSTEM tell us: 1. What to Trade 2. When to Enter 3. When to Exit 4. What to Expect 5. What Strategy to Use 5 Pillars of Trend Trading

8 ATTS Rules What to Trade: 1. IBD 50 Running List Stocks, Sector Leaders, Leaderboard, Stocks on the Move, Growth 250 & Leveraged ETF s 2. Stocks that pass IBD Stock Check Up with composite over 80 or EPS > 85 (with one exception) 3. Stocks/Index ETFs Priced Over $10 with volume GTE to 500K shares/day (Exceptions on a case-by-case basis) 4. Stocks/Index ETFs with Weekly Options (Desirable not a must) 5. Stocks/Index ETFs from my personal and Private Go To List 6. Stocks/Index ETFs with observable price patterns When to Enter: At Objectively defined Action Points 1. Wait for TSI/Momentum Tick Up 2. Bounce or breakouts above/below moving averages intraday (more aggressive) or close (Primarily the 8 day EMA) 3. Trend line Breaks 4. Support/Resistance Bounces or Breaks (If a downtrend is making a new low don t trade it unless there is past support) Supplemental: With Convergence of Clues Candlestick Patterns Wait for the rebound or rejection of support/resistance Don t Fade Use consistent price trigger cushion (5-50 cents) When to Exit: At Objectively defined Action Points 1. Stop Losses: cents above or below swing high or swing low; Hard Stop 4-7% loss from entry price based on stock or ETF 2. 8 day EMA Rule (can apply to any moving average that triggers the trade) 3. Break Trend Line: cents above or below 4. Profit Stop: At set technical targets for Income Generating Trades & adjusting trailing stops, 1/3 to 2/3 s a position 5. Profit Stop after candlestick reversal signal is confirmed and/or violation of the low/high of a close below/above 8 day EMA 6. 2 Week Time Stop with no or little movement Supplemental: With Convergence of Clues See 5 Objective Profit Exits What Strategy to Use: Long & Short Stocks and ETF s. Weekly Covered Calls/Spreads, Naked Puts, Strategic Bullish & Bearish options (directional) What to Expect: Cumulative Target: 40% ROI & 60% Winning Trades

9 System to Strategy Stock & ETF Strategy Option Strategy W&I Strategy SYSTEM

10 Top 10 Fatal Errors 2. Trading Strategies before Knowing the System - Trading Strategies is like walking a tight rope with no NET! - There are various Strategies: Stocks, Options, Futures, ETFs, etc. - The System determines the probabilities for success with each Strategy - Not using a System is just guessing! - The System Provides the format and mechanics of trading - Rules & Consistency - To Avoid: Build your strategies around the system!

11 Questions & Comments

12 System to Strategy Have you developed or adopted a System? Is it a proven System? Is it just a Strategy in disguise?

13 Clarify, Simplify & Multiply This has been the Motto of Active Trend Trading from the beginning! We continuously work to Clarify & Simplify through refinements to the system to make it objective and easy to both learn and use. The purpose of all presentations is to provide our fellow Active Trend Trader Members a jump start to accelerate progress up the Learning Curve. We welcome suggestions on how to improve the learning process! Trade Wisely & Profitably, Dennis W. Wilborn Founder & Lead Technical Analyst

How to Fix the Top 10 Fatal Errors of Trading One Flaw at a Time. #8 Spread too Thin #10 Trading too Much or too Little. From the Active Trend Trader

How to Fix the Top 10 Fatal Errors of Trading One Flaw at a Time #8 Spread too Thin #10 Trading too Much or too Little From the Active Trend Trader Disclaimer U.S. GOVERNMENT REQUIRED DISCLAIMER COMMODITY