Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

Recommended Posts

Good Morning All:

 

Last week I continued with part two of a three part series to help beginners, and maybe some 'veteran' beginners also. Last week we looked at different time frames and the types of accounts used to encompass those time frames properly. We talked about how education is so over looked by so many yet so needed, as everyone will pay their dues one way or another. Here is part three. In this issue, are finally ready to begin trading, so let's go over some rules to get you off on the right foot.

 

A Beginner's Handbook Part 3 of 3

 

Once you have made all the decisions that were discussed in the first two lessons and have received an education to the level you feel you need to begin trading, the decisive moment arrives. At this point, I want to make sure you have a few tools in your tool belt when you begin trading. First, there is a steep learning curve in trading. I suggest (well, insist if I can...) that you start out slowly with very minimal risk amounts. Get used to your trading software. Understand the plays. Begin to pick your favorites and really develop your trading plan. At this point your plan is likely just a 'shell'. Know how to get in and out of trades. The odds are that you will lose in the beginning. You are learning how to apply what you have been taught. You will make mistakes. The question becomes, do you want to have all this learning cost you serious money or small money? By the way, it is good to start out paper trading, but as soon as your plan develops and you know your trading software, begin trading very small risk amounts. The most important aspects of trading are not learned trading on paper.

 

Most of you reading this need to understand something. The vast majority of traders who come in to the market fail. Many people try to do this without any education, and those who do are the first ones to fail and usually do so in a big way. However, even with an education, it is not an easy game. There are reasons why even somewhat educated traders still fail at this. For most, there is a lack of discipline by individual traders regardless of whatever education level they may be at. In addition, a lack of capital that forces traders to trade with 'scared money'. It is simply a fact that most traders try to make a living from the markets with very little capital base to work with. That causes over trading and poor management decisions. If you have been trading for a while, do any of these things sound like they are powerful issues that are currently impeding your progress?

 

Another skill you must develop is the habit of keeping good records. Keeping records and statistical information can give you an excellent insight in your trading. There are many things that traders should track such as Sharpe ratios, batting averages, percentage gains based on any particular strategy, percentage gain based on long or short, etc. During this process you should be perfecting your trading plan. One that out lines the types of plays you will look for. It should restrict you from trading certain times and plays that you do not want to trade. It should outline money management rules for you, for handling both winning and losing days. It should set up your share size rules, and it should dictate what kind of record keeping, analysis, and continuing education you will do.

 

Some of these I touched on in prior week in this letter. Here is one of the most important things you can do for you trading plan, and for your continued improvement.

 

GetChart.aspx?PlayID=67328

 

Pay attention to the analysis part and make plans to follow up on all of your trades. Most traders spend 90% of their time trading. 10% on preparation and 0% on follow up. This is a very big mistake. Traders should spend as much time following up on trades as they do trading. That does not mean that from 9:00 - 4:30 must be counted as 'trading time'.

 

Your plan may call for you to trade the first hour and last hour. The time in between could be used to review the morning trades and prepare for the next day, paper trade new ideas, etc. You should spend considerable time printing charts of the trades you make and evaluating them and learning from any mistakes. Good traders understand that the money lost when making a bad trade can be an 'investment' in a process that works to eliminate mistakes and improve trading.

 

Closing Comments

 

Good traders also understand that the market is always right, and the best we can do is play the odds. Be flexible and remember that even the best trades can be stopped out.

 

This is the final article on "A Beginners Handbook".

Paul Lange

Vice President of Services

Pristine Capital Holdings, Inc.

pristine-logo-small.jpg

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Similar Content

    • By David Carter
      My broker (Jones Mutual) advised me to use candlesticks when CFD trading, as the simple line graph option does not give you enough information - is this correct?
    • By LindsayBev
      Hello!  I am new to this forum.  I am interested in learning about candlestick reading.  I would appreciate hearing from any that will answer this post WHICH book you found the most helpful?  
  • Topics

  • Posts

    • Date: 19th December 2024.   Federal Reserve Sparks NASDAQ’s Sharpest Selloff of 2024!   The NASDAQ fell more than 3.60% after the Federal Reserve cut interest rates, but gave hawkish comments. The stock market saw its largest decline witnessed in 2024 so far, as investors opted to cash in profits and not risk in the short-medium term. What did Chairman Powell reveal, and how does it impact the NASDAQ? The NASDAQ Falls To December Lows After Fed Guidance! The NASDAQ and US stock market in general saw a considerable decline after the press conference of the Federal Reserve. The USA100 ended the day 3.60% lower and saw only 1 of its 100 stocks avoid a decline. Of the most influential stocks the worst performers were Tesla (-8.28%), Broadcom (-6.91%) and Amazon (-4.60%).     When monitoring the broader stock market, similar conditions are seen confirming the investor sentiment is significantly lower and not solely related to the tech industry. The worst performing sectors are the housing and banking sectors. However, investors should also note that the decline was partially due to a build-up of profits over the past months. As a result, investors could easily sell and reduce exposure to cash in profits and lower their risk appetite. Analysts note that despite the Federal Reserve's hawkish stance, the Chairman provided a positive outlook. He highlighted optimism for the economy and the employment sector. Therefore, many analysts continue to believe that investors will buy the dip, even if it’s not imminent. A Hawkish Federal Reserve And Powell’s Guidance Even though traditional economics suggests a rate cut benefits the stock market, the market had already priced in the cut. As a result, the rate cut could no longer influence prices. Investors are now focusing on how the Federal Reserve plans to cut in 2025. This is what triggered the selloff and the decline. Investors were looking for indications of 3-4 rate cuts by the Federal Reserve in 2025 and for the first cut to be in March. However, analysts advise that the forward guidance by the Chairman, Jerome Powell, clearly indicates 2 rate adjustments. In addition to this, analysts believe the Fed will now cut next in May 2025. The average expectation now is that the Federal Reserve will cut 0.25% on two occasions in 2025. The Fed also advised that it is too early to know the effect of tariffs and “when the path is uncertain, you go slower”. This added to the hawkish tone of the central bank. However, surveys indicate that 15% of analysts believe the Federal Reserve will be forced into cutting rates at a faster pace. As a result, the US Dollar Index rose 1.25% and Bond Yields to a 7-month high. For investors, this makes other investment categories more attractive and stocks more expensive for foreign investors. However, the average decline the NASDAQ has seen before investors buy the dip is 13% ($19,320). This will also be a key level for investors if the NASDAQ continues to decline. NASDAQ - Technical Analysis Due to the bearish volatility, the price of the NASDAQ is trading below all major Moving Averages and Oscillators on the 2-Hour chart. After retracement the oscillators are no longer indicating an oversold price and continue to point to a bearish bias. Sell indications are likely to strengthen if the price declines below $21,222.60 in the short-term.       Key Takeaways: A hawkish Federal Reserve cut interest rates by 0.25% and indicates only 2 rate cuts in 2025! The stock market witnesses its worst day of 2024 due to the Fed’s hawkish forward guidance. Economists do not expect a rate cut before May 2025. Housing and bank stocks fell more than 4%. Investors are cashing in their gains and not looking to risk while the Fed is unlikely to cut again until May 2025. The US Dollar Index rises close to its highest level since November 2022. US Bond Yields also rise to their highest since May 2024. The NASDAQ’s average decline in 2024 before investors opt to purchase the dip is 13%. Always trade with strict risk management. Your capital is the single most important aspect of your trading business.   Please note that times displayed based on local time zone and are from time of writing this report.   Click HERE to access the full HFM Economic calendar.   Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!   Click HERE to READ more Market news. Michalis Efthymiou HFMarkets Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
    • SNAP stock at 11.38 support area at https://stockconsultant.com/?SNAP
    • DLTR Dollar Tree stock watch, pull back to 70.32 support area with bullish indicators, also watch DG at https://stockconsultant.com/?DLTR
    • AKBA Akebia Therapeutics stock, nice trend with pull back to 1.87 support area and bullish indicators at https://stockconsultant.com/?AKBA
    • CFLT Confluent stock watch, good trend with a pull back to 31.73 support area at https://stockconsultant.com/?CFLT
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.