Trading and Investing 101 Trading
Investing Tips Supply and Demand Price Action Technical Indicators
Candlesticks Chart Patterns
summary Double Top Double Bottom Triple Top Triple bottom Head And Shoulders Inverse head and shoulders
Mentality
Trading Plan

Reality Of Trading

The reality of trading is no matter how much information you study, all the technical indicators you use, all the chart patterns you memorize, this does not mean you can beat the markets 100% of the time. So how can we truly become a profitable trader? The best way to becoming a profitable trader is constructing a strong trading plan and having the mentality to stick with it no matter what.

How To Build A Trading Plan For You?

First when trying to figure out your plan you must figure out what type of trader you want to be and does it fit into your daily life duties. The type of traders we explained before were: Scalp trader, Day trader, Swing trader. A Scalp trader trades in the 1-5 minute charts. These type of traders are making multiple trades because the price action is much faster. Day traders are similiar to scalp traders but instead of making trades on the 1-5 minute timeframe they use the 15 minute chart, which is fast but not as fast as scalping. Day traders usally only make 1-3 trades in the day. Both of these styles of trading require you to be in front of the screen for a good portion of the day. Swing trading is alot slower because these trades can take hours to days maybe even weeks to complete. This will give people that have Really busy days to not have to check in with markets every five minutes. They can check in with their trades 1-2 times out the day with still being able to do their daily duties.

Multi-TimeFrame Analysis

Multi-timeframe trading is a trading strategy where the trader combines 3 different trading timeframes to improve decision making and help with chart analysis. When using Multi-TimeFrame analysis the goal is to increase the profit margins of individual trades by trading long-term signals in a shorter timeframe. More advanced traders make use of three main charts. These three charts being: Trading timeframe, Lower timeframe and Higher timeframe.
The Higher timeframe is used to analyze the long term chart and trend to get a general sense of market direction. Looking at the Higher timeframe traders can get a bias if they want to buy, sell, or remain neutral and not put on trades. Than will look for specific trading opportunities, in the direction of the higher timeframe, on lower timeframes. For example, When i trade i like to swing trade. My main trading time-frame is gthe 4 hour chart, My higher time-frame is the daily and weekly charts. I like to look at the weekly timeframe first because it helps me see major swing highs and swing lows the easiest. When i am marking my levels on higher time-frames i like to use different colors than my regular trading time-frame. I do this because it helps me know when to shift my mind frame that we may see a reversal because we hit a higher timeframe level which holds more weight. After i examine the weekly and the daily charts i than look at the lower time frame of 1 hour chart and then start looking for trade opportunities. It is also important that the trader must wait for a clodr on their timeframe before looking to enter, as this is important that you recieve confirmation before entering the trade.

Risk Management

Risk Management is the main reason why majority of traders lose money. When establishing a trade it is very important to know exactly where you want to take profits if the trade turns out to be successful, and to know exactly where to exit if the trade goes against you. majority of new traders only establish where they will take profits if the trade goes their way, but will hold onto a losing trade for to long. One of the ways you can know where to exit a trade if it goers against you is to use a stop loss. Stop losses are used to trigger traders to get out of a trade if it goes to a certain price. One indicator you can use for a stop loss is ATR. The average true range indicator helps you indicate that if price drops below a certain range to get out of the trade.