Friday, 8 July 2011

Getting It On

The most important part of trading is getting the trade on. To make sure this happens, I have a detailed trading plan (TP). My trading plan has evolved over time and is still evolving. I make tweaks to meet market evolution too, although the basic methodology stays the same - identify the trend and trade the thrust after the pullback.


However, there are two categories of this type of trade: the first trade after a change of trend (the trend of the chart I am trading) and the continuation trades after a too early exit from that trade. The risk on each type of trade is different and the recognition of knowing when I'm wrong is different too. Stops should not be a matter of price but a matter of what's happening in the context. If price has to move too far against me before I would know I am wrong, I pass the trade.


Lengthening the CCI can help identify the trend when there is more noise (chop) in the market. Sometimes I use 90, 135, 180 or more instead of the 45CCI. Trend identification is of prime importance.


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3 comments:

  1. Anonymous8 July 2011 at 15:56

    Hi El,

    Thx for the posts on trade management and risk, my fear of not being able cutting the loss prevents me of pulling the trigger, and as you say, put the trade on is the mist important thing...

    How do you handle conflicting info from the 2 different ccis?

    YW

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  2. Anonymous8 July 2011 at 16:03

    Tom, nice (as always).

    One question: would it be possible for you to go over (possibly several days) the various setups you trade, or even just some of them? I think one of them is 'slingshot' IIRC.

    Thanks a lot! -J

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  3. Anonymous8 July 2011 at 17:36

    Hi Tom,

    How many markets do you watch? How is your monitors setup? Any intermarket analysis?

    Thx.

    ReplyDelete

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