Dax Technical Analysis

To understand the basics of market movement you have to remember a really important fact: Trading is a zero sum game For every buyer, there is a seller. For every seller, there is a buyer. So if every buyer has a seller and vice versa, then why does price move?   In this unit, we are going to look at Major Market Cycles and Pockets. Let’s start at the beginning. As traders, what we have to remember is that we are trading the same data as everyone else in the world. Everyone else can see a previous peak in price or a previous trough. We all have the same price data (in general). We all understand support & resistance. So […]

How do you determine the best position size? The answer is not simple, it’s dependent on many factors and nothing is guaranteed to succeed. Martingale and Anti-Martingale methodologies are two categories in which position sizing strategies can fall. One of the more basic anti-martingale position sizing strategies is the percent risk model. Percent Risk Model Position Size Determine how much you’re going to risk on each trade in terms of the percentage of your trading capital. Studies prove that over the long term, traders who risk more than 2% of their capital in any one trade are not normally successful. Another factor to consider when setting this percentage is the win rate. Specifically how many winning trades your system is […]

Why are traders taking profit too early? It is first important to understand some of the psychology behind this question. What may come as a surprise to many of you is that many traders have problems letting their profits run. They also have problems cutting their losses quickly. To help illustrate this point I’m going to quote an example that Dr Van. K Tharp gives in his book, Trade Your Way To Financial Freedom. Which Choice? In this book, Dr Tharp points to a study in which people have the chance for either: $9,000 is deposited into their bank account (guaranteed) A 95% chance that $10,000 would be deposited into their bank account With option 2, there is the opposing 5% chance […]

Those who fail to plan, are planning to fail. This is a common saying. Another one I like is: Prior Planning Prevents Piss Poor Performance. Both of these sayings are true for you because trading is not a game and the successful trader spend a lot of time planning and preparing. You must learn to understand the importance of having and using a trading plan. Therefore this article helps you to prepare your first trading plan. Skill Assessment Are you ready for trading? Have you tested your system using a demo account and do you have confidence with it? Can you follow your signals without any hesitation? Trading in the markets means taking losses. The real pros are prepared and […]

In this unit, we are going to look at another aspect of the psychology of money management which causes many traders to fail. That is people’s desire to trade as part of a crowd. It’s not necessarily wrong to trade with a crowd, but it’s essential that you think for yourself and have a trading plan. Dr Alexander Elder This document is a transcript of Dr Alexander Elder’s Trading for a Living book. Elder is a trader and psychologist and many traders followed his work. I consider his book to be one of the better books out there on psychology, trading tactics and money management. He also discusses the psychology of crowds and how people react differently when trading as a part of a crowd. This is instead of trading individually. […]

Today we are going to look at the common mistakes that even the smartest of people make when entering into trading. This will help to ensure that we avoid those mistakes on our path to becoming a successful trader. 1. Holding Onto Positions For Too Long One of the most common trading mistakes is sticking in a trade where you know you’re right in your analysis but the market continues to move against you. As the famous economist John Maynard Keynes once said “the markets can remain irrational longer than you can remain solvent”. One of the best examples of the problem looks back to just before the millennium. Remember the tech bubble? Companies were earning ridiculous valuations, after having barely any trading history. You could see the market was inflated […]