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Showing posts with label Trading Strategy. Show all posts
Showing posts with label Trading Strategy. Show all posts

Saturday, 5 March 2022

THE BEST DAY TRADING STRATEGY FOR BEGINNERS

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What is the best day trading strategy for beginners? If you are expecting a silver bullet, you might be disappointed. But if you’re willing to read on, you might just learn how to find and evaluate the best trading strategy for you as someone new to trading.

So what is the best trading strategy for a new day trader?

This is my take:

A day trading strategy that beginners can use to make easy money.

A day trading strategy that beginners can use as a starting point to learn and improve, while minimizing losses.

Novice traders should not fixate on profits.

Instead, their day trading strategy should focus on two crucial aspects:

  • Controlling the risk
  • Developing the trader

In a nutshell, we want to maximize a trader’s skill development while minimizing risk.

Best Day Trading Strategy for Beginner

Day traders who are just starting should not be led into the glamor of raking daily profits without first understanding the risks of day trading.

For a long career in the market, day traders must learn from their trades and develop the right trading attitude.

So instead of accepting any recommended strategy, look for day trading strategies:

  1. With lower trade frequency
  2. That go along with the market trend
  3. With a simple approach to trade management

These characteristics will help to start your trading journey on the right path.

1. INFREQUENT DAY TRADES FOR BEGINNERS

Beginners should trade infrequently. For traders who are still grappling with their trading edge, trading less is better than trading more. It is a form of risk control.

Trading infrequently also gives you time between your trades to learn from them.

Taking dozens of trades in a flurry will only cloud your analysis and fuel your feelings of fear and greed. With a strategy that produces fewer trades, you find it easier to develop an awareness of your emotions and keep them in check.

Furthermore, it helps you practice sitting still in the constant market flux. Beginners often neglect to develop this ability to pursue ever more market action. (I learned it the hard way, over a long time too.)

 Money is made by sitting, not trading. – Jesse Livermore

Follow these guidelines to trade with a lower frequency.

  1. Avoid scalping strategies.
  2. Trade slower time frames. (E.g., Use 5-minute charts instead of 5-seconds charts)
  3. Be highly selective and take only the best trades.

2. TRADE WITH THE TREND

Day traders love to boast about successfully picking the top of the day or low of the session.

Of course, when you do catch the top or bottom of the trend, you feel like a hero. When you do not, you feel like a loser trying to fight a trend that seems to go on forever.

But trading is not about heroes and losers. It is about patience and persistence.

  • A trend trader must be patient and wait for a trend to develop.
  • A trend trader must also be persistent in taking trades with the trend and not be tempted to pick the top or bottom.

Trading with the trend helps a beginner focus on the right state of mind necessary for consistent performance.

Of course, trend trading is not the only route to profitable trading. But it offers a conducive start as it encourages the patience to wait for the proper context and opportunity.

3. PASSIVE POSITION MANAGEMENT FOR DAY TRADING

Position management refers to any market actions you take after entering your position. This includes shifting stop-loss and target orders and increasing or reducing your position size.

A novice day trader should set the stop loss and target for each trade and leave them alone.

Initially, do not adjust your stops and targets.

Why?

A beginner is prone to adjusting their stops and targets emotionally.

More often than not, they adjust their orders because they are affected by the profit and loss figures blinking on their screens.

Of course, active trade management can add value. But only confident and seasoned traders who can manage their trades based on systematic analysis should do so.

Don’t meddle with the position when you have neither confidence in your skill nor control of your emotions. Leave your stop-loss and target alone.

Instead, take out a piece of paper and write down what you would have done if you were managing your position actively. Recording what-ifs is a great way to evaluate your judgment. Again, your focus is to learn.

Once you have a sizeable sample (>30 trades), compare the results of passive management versus if you had managed it actively. You can then decide if you want to start managing your trades actively.

Adhering to passive management can also deter a beginner from canceling the stop-loss order, our primary risk control tool.

EXAMPLE: ADAPTING THE 9/30 DAY TRADING STRATEGY FOR BEGINNERS

We can adapt most day trading strategies for beginners.

Let’s look at how we can adapt the 9/30 trading setup for beginners according to the characteristics discussed above.

Chart showing adapted 930 trading strategy

  1. In theory, the best trades of the 9/30 strategy are the first pullbacks after a new crossover. So let’s restrict our approach to taking only these best trades. This limitation will ensure that we do not overtrade.
  2. The 9/30 trading strategy capitalizes on retracements within a trending market. So following its rules will naturally keep you with the trend.
  3. Place your target at the previous trend high/low and place your stop-loss a tick below/above the signal bar. Do not adjust.

There you go, a reasonable day trading strategy for a beginner.

CONCLUSION

Perhaps you observe that the example above does not offer a great reward-to-risk ratio.

If you feel uncomfortable with such trades, simply skip them. Alternatively, modify the trading rules to tighten your stop-loss or project a more aggressive target.

At this stage, what matters most is not how much money the strategy makes. Instead, focus on keeping things simple so that you can improve on your trading plan through small and manageable changes.

Remember that the best day trading strategy for beginners is not the perfect trading setup, and it certainly does not guarantee profits.

It is simply a conducive starting point towards success.

Saturday, 19 June 2021

EMA, RSI, Trading System

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Timeframe: 1-hour.
In this system, we use 3 indicators:
1. 5-period Exponential Moving Average (EMA 5) applied to the Close.
2. 12-period Exponential Moving Average (EMA 12) applied to the Close.
3. 21-period RSI (RSI 21)

Entry Rules for Long Trades:
It’s simple. We enter a long trade when EMA 5 crosses EMA 12 to the
upside… AND our RSI 21 > 50.

Exit Rules for Long Trades:
Exit the trade when EMA 5 crosses back below EMA 12
Or when RSI 21 < 50.
Or when price stalls at major resistance, trendline, pivot points,
Fibonacci projection target.
Or when bearish engulfing patterns or inverted hammer patterns form.

Entry Rules for Short Trades:
Enter short when EMA 5 crosses EMA 12 to the downside.
AND RSI 21 < 50.
Stop loss = 20 – 30 pips… 

Exit Rules for Short Trades:
Exit our short trade when EMA 5 crosses above EMA 12
OR RSI 21 > 50
In the pictures below EMA, RSI, Trading System in action.

In the pictures below EMA, RSI, Trading System in action.

https://image.jimcdn.com/app/cms/image/transf/none/path/s2e2ea4a9b3965dd1/image/i7cef8fd662817e9e/version/1328368312/image.gif

https://image.jimcdn.com/app/cms/image/transf/none/path/s2e2ea4a9b3965dd1/image/i27a121af62187ab6/version/1328368355/image.gif





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Saturday, 23 March 2019

20 SMA With RSI Trading Strategy

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20 SMA With RSI Trading Strategy


The 20 SMA with RSI trading strategy is also  a very simple   trading strategy which beginner traders can find very easy to use.
Currency Pair: Any
Timeframes: Any
Indicators: RSI (set period settings to 5)  & 20 SMA

WHAT IS THE PURPOSE OF 20 SMA?

The  20 SMA for  identifying and whether the trend is up or down and here’s how:
  • if the price is above the 20 sma, the market is in an uptrend.
  • if the price is below the 20 sma, the market is in a downtrend

WHAT IS THE PURPOSE OF RSI?

Its purpose is to confirm the strength of the trend.
  • you also need to set the 50 RSI level on your chart
  • when the RSI peaks above the 50 level and starts to turn down, it indicates that the uptrend (or minor rally) is weakening and it is a good time to be looking for a sell signal to trade.
  • when the RSI bottoms below the 50 level and starts to head up, it indicates that the downtrend(or minor pullback) may be weakening and it may be a good time to look for a trade entry signal to buy

TRADING RULES OF THE 20 SMA WITH RSI  TRADING STRATEGY

Refer to the chart below for the trading rules:
Selling Rules:
  1. Price has to be below the 20 SMA-indicating a downtrend.
  2. Wait for price to rally back up to touch the 20SMA line.
  3. Once 20SMA line is touched, look down to see if the 5 period RSI has peaked  above 50 level and has started to turn down-confirming a weakening upward momentum.
  4. Place a sell stop order under the low of the candlestick (after it closes). This candlestick should coincide with the RSI starting to turn down.
  5. Place Your stop loss above the high of that candlestick.
  6. Your profit target: 3 times what you risked. Another option would be to exit with whatever profit you have when the opposite trading signal is given (which is when a buy signal is given-this can bag you hundreds of pips easily in a nice trending market).
Buying Rules:
  1. Price has to be above the 20 SMA-indicating an uptrend.
  2. Wait for price to pullback down to touch the 20SMA line.
  3. Once 20SMA line is touched, look down to see if the 5 period RSI has bottomed  below 50 RSI level and has started to turn up-confirming a weakening downward momentum.
  4. Place a buy stop order above the high of the candlestick (after it closes). This candlestick should coincide with the RSI starting to turn up.
  5. Place Your stop loss below the high of that candlestick.
  6. Your profit target: 3 times what you risked. Another option would be to exit with whatever profit you have when the opposite trading signal is given (which is when a sell signal is given).



DISADVANTAGES OF THE 20SMA WITH RSI  TRADING STRATEGY

  • as with all  trading strategies based on moving averages, this strategy performs really poorly in flat or ranging markets.
  • sometimes price may not rally or pullback to touch the 20 SMA line until very later on and by that time that price movement would have been already exhausted and the market may be looking to reverse direction.
  • moving averages indicators are lagging indicators-you are waiting for price to come back to a 20 SMA when price may have already made a big move.

ADVANTAGES OF THE 20 SMA WITH RSI  TRADING STRATEGY

  • this is a trend trading strategy and in a good trending market, will work really well which has the potential to make you a lot of profitable pips.
  • the  use of forex reversal candlestick patterns would greatly enhance the entry signals so you should learn about how you can incorporate them into this trading strategy.

Sunday, 12 August 2018

Stock Market Strategy

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"Searching For The Best Stock Market Strategy"

A Concise, Consistent, Complete Trading Course by Rahulprasad Yadav,Arshi Khan


Risk Disclaimer

All information is for educational purposes only. Nothing should be considered as a buy or sell recommendation. The risk of loss in trading stocks, commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if trading is appropriate. When trading stock, futures or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. This email may is a paid advertisement. It could be for a product or service that is not offered, recommended or endorsed by Stock Alphabets and neither the company nor its affiliates bear responsibility or control over the content of the advertisement and the product or service offered. Proceed at your own risk.
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Sunday, 29 July 2018

Support & Resistance Trading Strategy

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SUPPORT and RESISTANCE

Think of support and resistance as areas, rather than specific prices. They are important areas in which traders can visualize and trade against the forces of supply and demand in a specific stock. Notice in the chart below, how price respects these areas and even breaks out only to come right back inside resistance.


State Bank of India

MGL