December 29th, 2016 → 12:57 pm @ reacoms
Enlightenment in everything that you do while in trading, this will help you avoid getting confused with the world of technical analysis in trading and will help you to focus on the exact procedure that will lead you in to the successful trading.
Trading in Commodity, Currency and Share Market is risky. To become successful in trading you have to become a successful risk manager. Therefore, your focus now in trading should be on survival. If you're able to survive in trading, you will have succeeded. Explanations guide you to where you should focus your energy and resources. Enlightenment needed when you comprehend your survival in trading is reliant upon the following:
If you want to survive in trading and make money from trading in Commodity, Currency and Share Markets, you must learn to stay within the boundaries these rules create, as shown in figure 4.1.
This is probably the most important concept in trading success. Yet most traders are ignorant of it. Is it any wonder so many traders lose when they don't know their own personal risk of damage? When you calculate your own risk of damage you'll start to properly understand why you have failed in trading.
So what is risk of damage? Well let's have a look. Risk of damage refers to the chance you'll lose so much money that you'll stop trading. So avoiding risk of damage must now become your number one priority as risk managers for your trade success. If you can avoid damage, you will have survived, and then you will be a professional successful trader making consistent money from Trading in Commodity, Currency and Share Markets.
Risk of damage doesn't necessarily mean losing your entire account balance. It could be a 50 percent (50%), 75 percent (75%), or 100 percent (100%) loss of your account, depending on your individual risk tolerance. Your point of damage is the financial border, or risk capital, you established during your preparation. The first step in avoiding your point of damage is to calculate the probability of your chances of reaching it. If the probability is too high, you must look to lower it. If you can lower your probability of damage to a suitable level, you will have taken an important step toward survival in trading. In nut shell, the larger the percentage of your trading capital you risk on any one trade, the higher your chance of being wash out, or your risk of damage, will be. In summary there are three key rules to reduce risk of damage;
Summarizing the above three key rules, we will get two major weapon to become successful trader in financial markets
Enlightenment continues when you discover the real Holy Grail of trading. You may have heard of people pursuing the perfect trading system. One with a very high accuracy rate with minimal draw down trading system like WinTrader Buy Sell Signal System called the Holy Grail. I'm sure you will have surprise to hear that the Holy Grail of trading systems does not exist.
However, in our experience in trading there is a Holy Grail of trading – the pursuit of a methodology that yields a positive expectancy that can be traded across multiple opportunities, as shown in figure 4.2.
Expectancy is the idea that is the least understood by majority of trader. Expectancy refers to what you can expect to earn, on average, for every rupees you risk in a trade. To calculate your methodology's expectancy, you need to know how often you win, how often you lose, and the size of your average winning and average losing trades. Once you have the information, you can use the formula in figure 4.3 to calculate your probable expectancy.
Developing a methodology with a probable positive expectancy with the support of highly accurate trading system and technical analysis software like Win-Trader that can give most accurate buy and sell entry levels with exits will take you a step closer to become a successful trader in Commodity, Currency and Share markets like MCX (India), NCDEX (India), COMEX (USA), FOREX, MCX SX (India), NSE (India). This is a trading plan, with the support of world’s best technical analysis system WinTrader Buy Sell Signal Software; trading longer term will produce enough winners to not only pay for the losses, but also produce consistent profit. Our trading strategies give us a positive expectancy when we trade. Expectancy is mandatory become successful trader. Expectancy is your edge. Trading without expectancy would be like taking a knife to a gunfight – not clever.
Enlightenment continues when you understand that simplicity is the key to developing methodologies with robust expectancy. Simplicity works on two levels – simplicity of design and simplicity of support and resistance levels.
If you have too many components with adjustable variables, then logically more can go wrong. And you need to avoid the intellectual trap trading presents. Many people who fail in trading believe the answer must lie in complexity – because surely the market wouldn't give up its secrets so easily? They start to see the market as a Rubik's cube that needs to be solved. So any assumption that offers a clever and profound thinking perspective will attract their attention. They enjoy the brain challenge and motivation it takes to learn and understand the complexity of the theory and its application to analyze the market.
In simple, trading success means the proper identification of major support and resistance levels. Traders enter a trade because they believe the major support or resistance level will hold and provide them with profit. Stops are placed where traders think the market will prove the potential support or resistance level has failed. Successful trading is nothing more, nothing less. But as a human it is impossible to identifies major support and resistance level in the fast moving market where time has more important in success. So you have a perfect technical analysis tool like WinTrader to get identify the major support and resistance levels. You buy when your technical analysis software has found potential support and it will move higher. You place your stop loss at a level you believe your analysis software will be proven wrong. You sell because your analysis software believes the market has hit potential resistance and it will move lower. Again, you place your stop at a level you believe your analysis software analysis will be proven wrong. With the support of prefect technical analysis software like WinTrader, even a new comer can easily identifies the major support and resistance level and will guide you to highly accurate buy or sell entry points with more than 90% accuracy.
Enlightenment continues when you learn to step in to where most fear in trading. If most active traders lose, you should be step in to where they fear to walk, rather than following them. You must learn to move away from the pack; fight the instinct to blend with the crowd where you enjoy the safety of numbers. This means thinking outside the square. Basically, the idea is that if most are looking south, you should look north. Only 10 percent or fewer of traders are in the winners' circle, so for your own survival you need to be in the minority. Not only will you be trading where most fear, you'll also be where the minority cheer.
Some of interesting areas where most of traders fear to walk in:
Being the best loser: Majority of traders hate to lose and regularly move their stops to give their trades a little bit more room. You should strive to be the best loser. I do.
Being the best winner: Majority are so nervous they will lose what little profit they have; they disregard their trade plans and exit winning trades too early.
Being a trend trader: Unluckily, markets do not trend all the time. As a result, trend trading usually has a low accuracy rate, where traders will only win around a third of their trades. Now, the majority cannot stomach only winning a one-third of their trades, even though it has been proven beyond doubt that trend trading works! So you should strive to learn how to trade successfully with the trend. You should learn how to survive on winning only a third of your trades. You should strive to be successful at what most cannot achieve. You should strive to enjoy what the misery trend traders suffer when they generally lose on 67 percent of their trades. Pride yourself on being able to do what most traders can't lose on most your trades.
Embracing simplicity: Most distrust the noticeable and simple solutions, seeking clues and advantages in complexity. You should struggle to investigate, research, and develop simple trading solutions with few moving parts, which if proved worthwhile, will have a better chance of remaining robust and profitable due to the lack of moving parts.
Being doubtful of commercially available charting software: Majority of traders have charting software with the usual array of indicators. Ensure you independently test the success rate of your preferred technical analysis charting software before adding it to your methodology.
Doing the work: Most are lazy: You should strive to research, investigate and validate every trading idea you think is worthwhile. You should strive to do the work independently.
Confirming your anticipation with TEST refers to validating your expectancy with the TEST procedure. TEST is my short form for Simulated Trades. Validating your expectancy with TEST will complete your enlightenment.
When you follow the TEST procedure, you must take care to only trade single lots in Micro/Mini in your simulated trades. Your purpose should be to authenticate your methodology's expectancy. If it is positive, and not dependent on a single extraordinary trade, you'll know your methodology is validated. If your expectancy is not positive, it's back to the drawing board, where you must repeat the TEST procedure until you have validated your expectancy.
Enlightenment is an important global principle of successful trading and one of the most important. Enlightenment has drawn clearly defined boundaries for you to operate within. If you stay within them, you'll have a greater chance of survival and, as a result, trading success. The objective of enlightenment is to help you avoid risk of damage. Avoid it and you will become a successful trader and make regular money from trading in Commodity, Currency and Share Markets.
Wish you have a successful trading career a head.