TRADING RULE #10

TRADING RULE #10

  • Only buy on reversal after dip at the opening (U shape) or else DON’T Buy
  • Only short on the top (or 2nd top) or else DON’T Short
  • For MOMO, only buy on first/ second up candle or the profit taking next leg up

Be DISCIPLINE or else don’t trade!!!!!

Timothy Sykes profit.ly profits

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Learned something today – Short on Nice Round Number

Short on Nice Round Number

Say a Stock is running on momentum from $3.20

The next stop will be $3.50, If it pass $3.50 the next stop will be $4.00, $4.10 or $4.20

If the chart is looking over extended and volume is fading and the news is not too good. Then you can consider about shorting above $4.00 and use $4.20 as the maximum stop loss.

What if the stock starts to run again? Cover with small losses or small profit and let it run again.

This time is will run to $4.50 or the next stop $5.00.

The ideal trade will then be looking at the charts and Technical to see whether $5.00 can be the top. If there is a double or triple tops (Volume fading, Top MACD turning down, Fast STO reversing). They it is safe to consider shorting it around $5.00 with stop loss just above $5.00

What to do next? You have 2 choices:

1. You can consider locking in profit on the way down.

2. Hold it until you see people starting to cover and the chart is reversing.

 

Timothy Sykes profit.ly profits

Learned something today – Sell or cover before you end up with losses

Sell or cover before you end up with losses

Say if you have enter into a perfect trade either Long or Short, and the chart is running the way you want. You are then having a nice GREEN profit. Suddenly, the Chart starts to turn. What will you do?

2 Choices:

1. Sell or Cover to protect your gains (Lock in profit)

2. Wait for the next Leg up/ Down

If the chart is reversing close to your entry price – Sell or cover with a small profit before you end up with losses.

 

Timothy Sykes profit.ly profits

Learned something today – Make prediction and look for the overall trend

Make prediction and look for the overall trend

I realised the issue that I have is trying to play on the technical of the chart and didn’t look at the overall trend/ Chart.

Example:
If the share have an uptrend all morning and it is on its way up to the $10. Don’t short it on the way down even thought High Fast STO and High MACD is still going down. This is because this share will still run to $10 after the Fast STO reverse and MACD start to reverse. The reversal can be quick and you will end up breakeven or even a small loss on your short.

 

Timothy Sykes profit.ly profits

Trading plan

Most people when they first started trading, they don’t have a trading plan. All they think when they go long or short on a stock is PROFITs.

What would most people do when the stock go against them? –>Leave it and hope that that stock will come back “This is what we call them a Bagholder ”

My trading plan:

1. Risk and Reward ( >3 Rewards to 1 time Risk)

2. Support/ Resistance, (Breakout vs break down)

3. Timeframe (Premarket 8am – 9.30am), Market open (9.30am to 9.45am), After Market Open (9.45 to 10.30), Normal Trading (10.30 to 1pm), End of day (1pm to 4pm)

4. Exit Strategy (Cut loss) (1% – 2%)

5. Lock in profit (7%-15%)

The above are my trading plan based on my experience on the market so far. (The trading plan will evolve as my experience grows)

Actual execution plan:

  • Only buy on reversal after dip at the opening (U shape) or else DON’T Buy
  • Only short on the top (or 2nd top) or else DON’T Short
  • For MOMO, only buy on first/ second up candle or the profit taking next leg up

Be DISCIPLINE or else don’t trade!!!!!


Timothy Sykes also done a good video explaining about his 7 Step Trading Plan as shown on the video below:

A 7-Step Program For Traders by Timothy Sykes

Timothy Sykes profit.ly profits

Different Types of Traders

Different Types of Traders

  • Scalping: The scalper is an individual who makes dozens or hundreds of trades per day, trying to “scalp” a small profit from each trade by exploiting the bid-ask spread.
  • Momentum Trading: Momentum traders look to find stocks that are moving significantly in one direction on high volume and try to jump on board to ride the momentum train to a desired profit.
  • Technical Trading: Technical traders are obsessed with charts and graphs, watching lines on stock or index graphs for signs of convergence or divergence that might indicate buy or sell signals.
  • Fundamental Trading: Fundamentalists trade companies based on fundamental analysis, which examines things like corporate events such as actual or anticipated earnings reports, stock splits, reorganizations or acquisitions.
  • Swing Trading: Swing traders are really fundamental traders who hold their positions longer than a single day. Most fundamentalists are actually swing traders since changes in corporate fundamentals generally require several days or even weeks to produce a price movement sufficient enough for the trader to claim a reasonable profit.

Novice traders might experiment with each of these techniques, but they should ultimately settle on a single niche, matching their investing knowledge and experience with a style to which they feel they can devote further research, education and practice.

Source: http://www.investopedia.com/

 

Timothy Sykes profit.ly profits

Learned something today – Learn to trade like you are in a big position size

Learned something today – Learn to trade like you are in a bigger position size

The problem that I have previously while training on small position size is that I feel like I can risk my small portfolio and trade crazy moves like:

  • Buy/ Sell premarket
  • Buy when the market open
  • Hold shares until the market open
  • Buy too much late when it’s ready for experienced traders to lock in profit
  • Short too much early when there is still MOMO and trendline didn’t break
  • Didn’t lock in profit on the way and when the stock starts to reverse, I hold until it reach my 1% or 2% stop loss.

What I will be doing now to rectify the problem above is:

Trade like I am in a bigger position size. I will assume that my position is size is multiply by 10.

Eg. If I am only trading with $1500 position size, I will assume that I am trading with $15,000. This will therefore make sure that I take the Profits and Loss seriously.

I will keep on working on this rule to make sure I will never trade crazy stuff.

Timothy Sykes profit.ly profits