Trading Blueprint; how to approach a Trade
1. Start with the bigger picture – birds eye view
- If you trade and plan on a DAY chart, what does the WEEKLY chart show?
- If you trade on 60 min, have a look at the 4 hour chart
2. Is there Seasonal Tendencies or Patterns for this instrument
3. Is prices relatively High or Low for this instrument
4. Determine the Primary Trend for this longer term birds eye view
5. Determine the Primary Trend for your Trading Chart periodicity
6. Identify the Secondary Trend
7. Identify your BuyZones and SellZones
8. Identify and evaluate the different components of your SetUp Signal
9. Wait for your Trigger Signal and Execute the trade
10. Put your Money and Risk Management strategy and procedures in place – this is the point where you need to be disciplined and patient. Do not let your emotions kill a potentially great trade.
The detail of every step is discussed in the Training Course and Modules
Download as pdf: Trading Blueprint 16sep15
Look at this crazy chart of CBOT Wheat trading at cheaper prices than 45 years ago in 1970
This discussion on Automated Trade Signals is more advanced and not all charting packages will allow you the settings I use. See examples below. Members can login to see the detailed page on Automated Trade Signals.
I do not believe that the holy grail exist in terms of a fully automated trading system that do all the right buys and sells with all the appropriate StopLoss settings. But that does not mean that we can not use an automated system to warn us (tip off) of possible trades that we can then investigate further and decide on appropriate action. Using such a system will help to track and monitor many more instruments than would otherwise be possible.
I use these Automated Trade Signals on WEEK and DAY charts.
The Green and Red candles show the Primary Trend. Just staying in that trend will already give good results. BUT we want to do much more than that.
The blue and purple arrows show continuation trades. I do not show the profit taking signals on these charts.
There is of course sometimes false signals, you have to investigate each possible Buy or Sell and test it against your Setup and Trigger Signals before you execute a Trade.
In the Training Modules you will learn how to do a similar setup with all the Setup and Trigger Signals to create a Trading Plan.
Example of DAY Chart Auto Trade
Example of WEEK Chart Auto Trade
There is only one way to trade without fear, and that is to know, before you execute the trade, what your worst case loss can be if you are wrong.
You must be able to walk away from a trade knowing that your StopLoss is in place and will stop you out of the trade when you reach your previously calculated StopLoss level. This emphasise the importance of a well prepared Trading Plan, Proper execution, and a well defined Profit Taking and StopLoss Risk management strategy (Exit Strategy).
There are some factors that can make it difficult to keep a precise StopLoss
- Liquidity can be a problem when you try to exit, if a market get scared buyers and/or sellers might disappear.
- Important and unexpected marked news can create volatility that can make it difficult to exit.
- After an overnight market close the next session might gap open below or above you StopLoss because of overnight changes in the market.
There are only five possible outcomes for a speculation trade:
- Break even
You should from the beginning be absolutely focused on not taking big losses
One large catastrophic loss can deplete your capital. It is emotionally very difficult to come back and make money again.
After a losing trade you need a better winner just to even out again and get your capital back.
In the table below you can get an idea of the kind of winning trade you will have to do to cancel out a losing trade. If you allow a huge loss you will need more than a miracle to get back to your original capital before the loss.
If you start with $100,000 capital and you loose 2% on a trade you need to make 2,04% on a winner to get back to $100,000.
If you allow your trade to run away from you and you lose 20%, you need to recapture 25% on the $80,000 capital that you have left after the loss.
A Cheetah hunting is fast, stealthy and focused, but that doesn’t mean there aren’t challenges to overcome before they can eat. They often sustain injuries from their prey as it kicks in panic. Not every hunt yields a prize. To improve their chances of success and reduce risk of injury, the cheetah has adapted a very refined approach to hunting.
This is a very good description of a trader.
- You have to be fast, stealthy and focused in you approach to trading
- You will have to overcome many challenges
You are definitely going to sustain some injuries and setbacks
- Not every trade is going to be a prize
- To improve your chances of success and reduce risk of losses you have to adapt a very fine approach to trading
A cheetah spends the mornings and afternoons looking for prey. The stealthy cheetah assassin must use its wits as well as its lightning speed to give them the best chance of getting a kill. Once they spotted their prey, they stalk it. They need to position themselves as close to their prey as possible before they decide to make an ambush. The cheetah uses their electrifying speed to launch a surprise ambush. After subduing their prey they often have to work hard to keep it form scavengers like hyena or larger cats like lion.
For our Cheetah Trading System we need a:
- Tip Off Phase – you need something to warn you of a possible trade
- Analysis and Planning Phase – putting the trade together
- Execution Phase – executing the trade
- Keeping your Profit Phase – Profit and StopLoss Money management
In the Training Modules we explain and put everything together to reach this goal.
In the Trade SpoTTer Updates we take you step by step through the Cheetah Trading System Tip Off, Planning, Execution and Money Management.
Have look at this Fibonacci Projection
Crazy Fibonacci Projection on the S&P500
Your approach to the market will be different for speculation than for hedging or investing.
For an investment, a physical product like a commodity (corn, gold, oil etc.), a share (equity, stock) or property are bought with the expectation that as prices rise profit will be made. There is normally no gearing (leverage) of the product. You will expect to make perhaps 10% to 20% per year. Risk potential is quite low. Warren Buffett’s (seen by many investors as the most successful investor of the 20th century) return on investment for the past 40 years is on average about 18% per year. Usually a “Buy and Hold” approach.
For investment you need a lot of capital. Investments in shares and especially property are long-term investments (years). Income is usually as dividends, capital appreciation and interest or rental income. Continue reading
If you see your trading or participation in the market as a business to earn income there are many advantages compared to a traditional business.
• You are your own boss.
• There is no retirement age; if you can master the trading techniques you can create a positive income for many years past normal retirement age.
• You are the only employee – no labor problems and strike actions.
• You do not need an office, you have no fixed office hours.
• You can do your trading anywhere in the world.
• Your business’s capital inputs is low, you need a computer (laptop) with good internet connection and of course funds to trade with (more about this later).
• You might have to spend some money on training and charting packages, but nowadays charting is usually part of your trading platform.
• If you are an End of Day (EOD) trader you do not need to watch the marker action the whole time. You can download your data and update your charts after market close, do your analysis and planning, and execute the trades the next day.
• You can learn and develop you trading techniques part time while you hold down a regular job.
• What is your dream?
Hoekom dan enigsins aan die markte deelneem?
Indien jy deelname aan die markte sien as ‘n besigheid om inkomste te verdien is die voordele teenoor ‘n tradisionele besigheid baie.
• Jy is jou eie baas.
• Daar is nie ‘n aftree ouderdom nie, indien jy die tegnieke kan bemeester kan jy in jou “aftree” jare nog ‘n aktiewe, positiewe inkomste verdien.
• Jy is die enigste werknemer, geen arbeid probleme en staak aksies nie.
• Jy is nie vas aan ‘n kantoor nie, jy het ook nie vaste kantoor ure nie.
• Jy kan dit enige plek in die wêreld doen.
• Jou besigheid se kapitale insette is laag, jy het eintlik net ‘n rekenaar (laptop) met goeie internet konneksie nodig, natuurlik gaan jy fondse nodig hê om mee te trade (meer hieroor later).
• Jy gaan dalk moet spandeer aan opleiding en grafiek (charting) pakkette, maar deesdae is dit meestal deel van jou verhandelings platform.
• Indien jy ‘n End-of Day trader is gaan jy in die aande of in die oggende beplan en besluit watter trades om te doen, indien die trades geplaas is gaan jy die mark nie die heeltyd sit en dophou nie.
• Jy kan, terwyl jy ‘n voltydse werk het in die aande deeltyds begin trade vir ‘n aanvullende inkomste.
• Alhoewel meeste van die buitelandse markte deesdae amper 24 uur per dag oop is val die mees aktiewe trading periode in die aande Suid Afrikaanse tyd, van omtrent 16:00 tot 22:00 (baie meer produktief as om voor die TV te sit)
Wat is jou droom?