introduction to swing trading - xm · 2016-03-08 · introduction to swing trading....
TRANSCRIPT
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Introduction to Swing trading
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Software Developers
Certified Traders
Certified Trainers
We have developed an Trading Methodology based on Technical Analysis,
Risk Management, and Behavioural Finance that we teach to our students
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According to the Art of War of Sun Tzu, the first thing a general
should do to raise the probabilities to win a battle, is to
gather intelligence.
“every battle is won before its ever fought”
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3 M’s
The
Pyramid
of Success
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3 M’s - The Pyramid of Success
Most successful traders agree.
Successful Trading or Investing Requires :
1. Method - A working system
2. Money Management - Sound money management practices
3. Mind - Proper mental approach
Without any one of these key elements, you'll ultimately fail in
these endeavors.
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MM – Maximum Drawdown
6
It is extremely important to limit the total risk to which your portfolio is exposed. This value is called portfolio maximumdrawdown.
Your portfolio maximum drawdown should never exceed the level of 15% - 25%.
Drawdown % needed
5% 5,26%
10% 11,11%
15%17,65%
20% 25,00%
25%33%
30%43%
40%67%
50% 100%
60%150%
70%233%
80%400%
90% 900%
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The Human Mind
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Analytical
or
Calculator
Emotional
or
Crazy
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Trading Foundations
Successful Traders Habits :
1. Preparation – Trading is 90% Analysis and 10% taking trades
2. Consistency - Approach, methodology, execution
3. Execution –Focus on technical aspects rather than the money.
Helps remove emotion from chart reading.
4. Confidence - Systematically following a set of rules will help
you grow as a trader
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Evolution of a Trader
Traders start from having a lack of discipline and very relaxed
rules of how to trade
To grow as a trader must evolve to be extremely disciplined
with very strict rules. – Trade in a very rigid way for a long
period of time
With time and practice this will help shape the mind and habits
of a trader
With time to evolve into a extremely disciplined trader, with very
strict principles, and more relaxed rules …..
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Trends
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What is a Trend?
The trend is simply the general direction of the market.
Markets don’t generally move in a straight line in any direction but are characterized by a series of Zig-Zags .
It’s the direction of those peaks and troughs that constitutes a market trend.
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Trend Direction
An uptrend is a series of successively higher peaks and
troughs.
A downtrend is just the opposite, a series of declining peaks
and troughs.
Horizontal peaks and troughs would identify a sideways / range
price trend.
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Trend Direction - Uptrend
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Trend Direction - Downtrend
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Trend Direction – Range / Sideways
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Trend Decisions
There are three decisions confronting the trader :
Buy (go long) only if it is a Uptrend
Sell (go short) only if it is a Downtrend
Do Nothing (stand aside) if it a is Range
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A Trend Is Assumed to Be in Effect Until It Gives Definite Signals That It
Has Reversed.
Hence the sayings:
“The trend is your friend”
“Never go against the trend”
By following trends over different time frames, traders can increase their profit making opportunity in trending markets and stay away from markets when they are not trending.
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TIME-FRAMES
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Weekly
Daily
Hourly
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Trend Classifications
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Trend
Reversal
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Failure to break the support
(make a new low)
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10
42 6
8
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Failure to break the support
(make a new low)
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9
31 5
7
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Be Careful!
Not All
Failure Swings
Are Correct
Always use stop
losses
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Technicians don’t eat Heads & Tails
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The
Fibonacci
Magic
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The "greatest European mathematician of
the middle ages", his full name was
Leonardo of Pisa, or Leonardo Pisano in
Italian since he was born in Pisa.
He was one of the first people to introduce
the Hindu-Arabic number system into
Europe - the positional system we use today
- based on ten digits with its decimal point
and a symbol for zero.
Fibonacci
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Fibonacci - Problem
In Fibonacci Liber Abaci book, chapter 12, he introduces the
following problem:
How Many Pairs of Rabbits Are Created by One Pair in One Year?
A certain man had one pair of rabbits together in a certain
enclosed place, and one wishes to know how many are created
from the pair in one year when it is the nature of them in a single
month to bear another pair, and in the second month those born to
bear also.
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1 1 2 53 8 13 5521 34 89 144 233 377
618.0377
233
6180233
144 . 618.0144
89
382.0377
144
236.0377
89
618.0618.0
382.0
618.0382.0
236.0
618.089
55
618.1233
377
618.2144
377
236.489
377
618.0618.2
618.1
618.0236.4
618.2
Fibonacci - Series
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618.0a
b
618.0ba
a
Golden Ratio
a + b is to a as a is to b
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A golden spiral gets wider
(or further from its origin)
by a factor of Φ for every
quarter turn it makes.
Golden Spiral
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PHI - Nature
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PHI - Arts
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,
PHI - Universe
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PHI & Human Body
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PHI is Everywhere
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20
10 18,6618,010
82,1318,600,20
10618,118,6
82,231082,13
x
PHI & Trading
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Trend Reversal
Entry
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Time frame you trade
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Time frame you trade
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NO Failure to break the
resistance (makes a new high)
Market can go
UP
Market can go
DOWN
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