Incredibly… set-ups happen all the time. But there is an ‘array’ of set-up… a smorgasbord of set-ups if you like. But what one sees as a set-up… on a chart… another will totally-miss..!

This was part of a comment I got from another post…

This got me thinking… “Why not ask you for YOUR experience with different products.” Because I’m sure with the number of traders reading this on a daily basis, we’ll

So my question is:

What’s the best trading course you’ve come across so far?

Please share:

• what you liked about it,
• what you didn’t like
• and what could be made better about it.

It doesn’t have to be indepth… just share what you feel like.

Just add your suggestion to the comments section. I won’t automatically make this suggestions public, what I’ll do is compile the results… and see what happens. I don’t know what to expect at this point, so we’ll play it by ear.

Ray

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Ok, here it is.

Sell an equal number of call options and put options two standard deviations away from the current price.*

Pretty simple, huh?

It works because 2 standard deviations imply that the market will only get there 10% of the time. As a result, the strategy stands to win on 90% of its trades. (This is an actual strategy that I and many have paid for!)

Is this a good strategy?

If you like winning, yes…

If you like making money, no…

The reason I decided to make this the topic of today’s article is because many people seem to confuse the number of winning trades with creating profits.

This options system is the perfect example of that. In the long run a strategy like this is only asking for trouble. Taking small options premiums while exposing yourself to unlimited risk is not a sound strategy.

Does your trading strategy employ the same logic?

If you suffer from taking quick profits to “lock in” winners while missing out on the major moves, then you should re-evaluate your plan.

If you’d like to learn more about a position trading strategy that focuses on the inverse of this strategy, checkout Market-Millions.com.

Continued Success!

Ray

* I do not recommend this as an actual trading strategy. It is only meant to demonstrate the idea of winning trades versus profit.

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“You have given very nice idea for differenciating day trading & position trading. But should have given more information about how you decide the KEY resistance & support level.

Your article would have been perfect.I think without your logic of deciding this key S & R levels,the article remains incomplete.”

This is a comment I got for the “High Probability Setup Article“. What follows are some thoughts addressing this comment.

Again if you follow the line of thought through my last 2 articles, and really take a moment to think through the logic behind support and resistance, it becomes fairly obvious what you should consider.

If we really want to break it down to it’s smallest component, every price movement is a battle between the bulls and the bears. The ’stronger’ of the two will win, pushing the price in their respective directions.

We study charts to see how these ‘battles’ went over time.

So everyday, we can look at the price action for the day, and see where the battle started, how far the bears took the market down, how far the bulls pushed it up, and where it ended for the day.

Now looking at each specific day has only a certain degree of value… that’s why we start stringing together days and weeks and months of price action to see where the ‘major battles’ were made.

So if a major bull run was finally stopped at a particular price point, that price point becomes an important area to watch. The more often a market tests and fails to break through that support or resistance level, the more important it is.

For day-trading along side pivot points, I focus on the previous day’s high, low and close. How prices react around these levels helps me to determine how I want to position myself. Again these aren’t to be done in isolation, and the information I shared in the article “High Probability Trade Setups” explains why.

As we move to higher and higher timeframes, we must look to higher timeframes to find our support and resistance levels. I’ll illustrate this in a future article, as I don’t have a chart prepared at the moment to demonstrate this.

Are there hard and fast rules for determining support and resistance levels?

Yes and no.

I’m sure there are proponents on both sides of the fence. While on one hand I look at them as guidelines, on the other I believe they must be objective enough to consistantly apply to the market… a paradox… welcome to the world of trading

Continued Success!

Ray

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While you may (or may not) already know what candlestick charts are all about… and more specificially what a ‘doji’ is, the real question remains, do you know what it all means?

But before we get into all that, let me first answer the question that started this all, “What’s a doji?”…

A ‘doji’ is a term used by technical based traders (people who read charts) who use a specific style of charts known as “Candlesticks”.

Candlestick charting is a method that has been used by Japanese traders, and was popularized by Steve Nison.

A candlestick basically looks like this:

The high and low are at the extremes, sometimes refered to as the ‘wicks’, and the open and close form the ‘body’. The body is either colored or shaded to indicate whether the close was higher or lower than the open.

For example, the candle on the left is unshaded, meaning that the market closed up. Specifically the market opened at ‘2′ and closed at ‘1′.

The candle on the right closed down and is shaded black. It opened at ‘3′ and closed at ‘4′.

This is a very basic form of a candle. They can vary and have no wicks (when the high and low of the day coincide with the open and close of the day), just one wick, very short wicks or very long ones… bodies can vary as well.

Now the doji refers to a specific pattern formed when the open and close of the day are essentially at the same price. This makes the body a horizontal line versus a filled in body. So the pattern looks like a plus sign, with the top of the plus sign being the high of the day, and the low of the plus sign being the low of the day. And the line through the center being the matching opening and closing prices.

Now you can go out and probably do a Google search and find dozens of candlestick charting terminology… or hit your local library or bookstore to find the all time “bible” of candlestick charting by Steve Nison.

The one lesson I want you to get from this article is that in addition (or besides) just learning that when you spot a particular pattern (let’s say a doji for example) instead of just mechanically saying, “This must be indicating that the trend is coming to an end”, interpret what the pattern is actually saying.

If you stop to think about the open and the close having the same price, with a fairly even high and low, what does this mean?

Without going and finding someone else’s reasoning, take a moment to consider it.

Why?

The process of being able to read charts is not so you can robotically match patterns, but so you can match patterns AND interpret what is potentially going on. Because as I stated in the previous article, context is just as (if not more) important than the signal you’re analyzing.

By learning to ‘read into’ the messages that the chart is presenting, you will begin to grasp the bigger picture that someone who just isolates patterns will miss. And it’s by learning to combine the context with the pattern that can take your trading to another level.

Continued Success!

Ray

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