Hunting The Trend

Trend day occurs when there is expansion of the daily trading range and the opening and closing are approximately opposite extremes. The first half hour of trade often consists of less than 10% of the daily range, typically a very small intra-day correction. Typically, the price effect captures the momentum the last hour and the trend is accelerating.

Daily trend may occur in the same or in opposite direction to the prevailing trend in the afternoon schedule. The critical point is to increase the spread between the maximum and minimum daily range, which offers the opportunity to make trading profits for a short time.

Classic trend day - great at the opening of the GEO has created a vacuum on the side of purchases. The market opened at one extreme and closed on another. Please note, as he did higher peaks and higher minimums all day. Also, at the end of the day increased mobility - another characteristic of the trend of the day.

Traders need to understand the characteristics of the trend of the day, even if they are interested only in intra-day skalpirovanie. Trader, prescient trend day to change the strategy of the trade from the level of support and resistance and tracking states perekuplennosti and pereprodannosti indicator to use the methodology for trade breakthrough and be flexible enough to buy or sell at the bottom of the top. Trader caught by surprise, will often suffer great losses in the trend, since it will try to sell or buy at the bottom of the top early on. Since there is little intra-day recovery, small losses can easily spiral out of control. The worst problems occur when you try to average losing position in the trend days.

Fortunately, it is possible to identify certain conditions that often precede trend days. Because it can easily be done at night when the markets closed, a trader can adapt their trading plan for the next day and will be ready to place their orders at the opening position and the stopordera at acceptable levels.

The principle of reduction / enlargement range
Several types of conditions lead to a trend day, but most involve some type of reduction in the variability or range of days. Generally, price expansion tends to follow periods of price reductions, a phenomenon that is cyclical. Market alternates periods of rest and periods of consolidation or movement, or increase / decrease. Variability, in fact, is more cyclical than price.

When the market consolidates, buyers and sellers reach the equilibrium price level and trading range suzitsya seek. When new information comes to the market, the market moves from this point of balance and tries to find the new price or a price region. As buyers and sellers will be "caught" on the wrong side and, ultimately, forced to absorb the downward imbalance of supply and demand.

In turn, the increase in price momentum attracts new market participants, and soon harm-ing circle closes. Fast rising prices stimulate new buying, which in turn push prices even higher. Rather than a price to move back, as in the case of trade in the range, a "positive feedback" - the state in which no one can predict how far prices will go. The market receives a strong single pulse, rather than to swing back and forth.

Trend day down
We can tell when the market is approaching the end of the reduction or consolidation, because the average daily range is narrowed. We know that a potential breakthrough in the approach. However, it is difficult to predict the direction of a breakthrough, because buyers and sellers, it seems, are in perfect balance. All we can do - is to prepare for the increased variability and increase the range!

Most trading strategies for breakthroughs allow the market to indicate the direction in which to enter, to go along with the market. This technique offers the initial location of trading positions in exchange for a higher confidence that the market will continue to move towards the entrance to the trade.

The advantage of these breakthroughs on trade policies is that they have a high ratio of reward to risk. The drawback - the fact that rapid Facing can be very unpleasant!

Ticks values for short-term intra-day trading - the state of variability are important for determining the quantity of motion, even if you have short-term intra-day trader. At the consolidated market indicators perekuplennosti / pereprodannosti, such as ticks values may work well for skalpirovaniya.

Conditions of pre-trend Day
Several key price patterns can serve as a signal of potential for a significant increase in the range:

• NR7 - very narrow range over the last 7 days (Toby Krabel introduced this term in his classic book, "Inside-day trading with short term price patterns and breakthroughs in the opening band");

• a cluster of 2 or 3 small daily ranges;

• point of a wedge-type models, which typically shows shrinkage of day range;

• "Huck-day" - in which the opening of above / below the previous maximum / minimum of the day - and then price changes direction, the range should be narrower than the range of the previous day, forcing traders to believe that the trend has spread, then instead of the market has formed only a small consolidation or within-day model to continue;

• low values of variability, based on statistical measurements such as standard deviations, the historical relationship of variability or indices;

• large GEPy at the opening caused by the large imbalance between buyers and sellers;

• Unrestricted momentum (markets close without resistance, above, during an ascending trend, with or without close support, below, while the downstream. This condition differs from the installation of the above, in which volatility has increased. However, the momentum imbalance between the huge market buyers and sellers continues to expand trade!)

Extreme values of the waning ticks can be dangerous - trend in the day, the counter-trend strategy based on reducing teak indicator of extreme values may result in significant losses.

The average true range of stresses the reduction / enlargement range - 3-day average true range of stresses how cyclical is the expansion / reduction of the range. Variability is wont to be more cyclical than price.

Trading Strategy
The strategy of trade on the break, or intra-day method of following the trend may be the best approach to trade in the daily trend. Wait for the market first showed in which direction the trend will evolve in the course of the day. Rarely it can be determined by a single price opening. Thus, most strategies for trade breakthroughs comes only after the market had already begun to move in one direction or another.

Add the following methods in its arsenal. All of them will guarantee that you participate in full-time trend.

• Breakthrough morning trading range. Morning range defined maximum and minimum, established for the first 45-120 minutes of trade. May use different time parameters, but the most popular - the range of the first hour. Wait until the initial range will be set and then put: 1). A warrant for the purchase of higher peak morning and 2). An order to sell below the minimum of the morning. Protective stop-order and you should always place at the opposite end of the range as soon as the warrant was set at the entrance to the market.

• Early entrance. Toby Krabel identified it as a large price movement in one direction during the first 15 minutes after opening. The probability of continuation of this movement is extremely high. As soon as one or two very large 5-minute bars appear within the first 15 minutes, the trader must be quick enough to join the trade in the next "pause", which is usually followed. Many of these strategies, the initial risk may seem, is quite high. However, the trader must admit that since the trading volatility increases, it also increases the potential for good returns.

• Expanding the range of price discovery. A value added or subtracted from the price discovery. Although Toby Krabel also described the concept in his book, it really popularize Larry Williams. The value can be fixed, or it may be a percentage of the average true range of the previous 1-3 days. Warrants for the purchase or sale are in place, and the trader will enter the market, in whatever direction the price is not the beginning of the movement. Log in, often done in the first hour can be made earlier than the breakthrough happens first hour range. Generally, the further the price moves from this point, the greater the chance that it will continue to move in the same direction. The ideal is to continue towards the primary trend, once the open position.

Variability increase since brewing trend - trend days are also often occur in rapid pulse markets. There is a slight decrease in range, the apparent movement in the last part of the trend. Rather, emotions are born, since the imbalance between supply and demand reaches extreme levels.

• Price break from closing the previous day. This strategy is similar to the above, with orders to buy and sell based on the percentage of the previous range of 1-3 days, which adds to the previous closing. The advantage of using the closing price is that warrants the opening of the position can be calculated and placed on the market before the opening. The disadvantage is the potential for rapid spread, if the market moves to fill the large opening at the GEO.

Another version of a breakthrough from the price of opening or closing is the use of standard deviation or functions per cent of the price instead of per cent of the average true range. All of the above methods can be easily incorporated into a mechanical system.

• Breaking through the channel. One of the more popular types of strategies are following the trend in the nineties, initially popularize Donchianom - a concept which uses a breakthrough 4-week maximum or minimum. Later, Richard Dennis has transformed it into a "System of Turtles", which used a 20-day maximum / minimum. Most traders do not understand that, just enter the market with the breakthrough of the maximum or minimum of the day can also be seen as a form of trade breakthrough in the channel. (Another popular option is the 2-day maximum or minimum.)

Exit strategy
One of the easiest and most popular ways to leave the trade on the break is simply a way out at the close of the market. A perfect day trend rose nearly opposite from the opening day of extremum range. This strategy keeps the trader in the market during the day, and it does not bear any risk transfer position for another day. Most strategies break, in fact, allow the transfer position for the next day because the next discovery will often be accompanied by GEPom in a favorable direction. Therefore, the other a simple exit strategy is to close the position when opening the following morning.

Instead, a strategy based on time, like the closing of the day or the next day, you can also use price benchmarks. One popular method is to take profits near the maximum or minimum of the previous day. You can also determine the purpose based on the average true range.

For the classic market analysis, charts "tic-tac-toe" could "account", which sets the benchmark price. This method is valid only when the price breaks out of the consolidation or a well-defined graphical formations.

Trade
In general, for trading systems at breakthrough, the greater the start-stop-order, the higher the ratio of reward to risk. With breakthrough strategies, the initial sale should be given a place to work.

However, intra-day trader will know that better things are moving in his favor now. In this case, move the stop-order level-even as soon as the position shows a sufficient profit. Stop orders can be moved as the market continues to trend, but not too close. Since a significant portion of the profits can be obtained in the last hours of trading, as the trend is accelerating, try not to leave the market early.

When trading multiple lots, close some of them to guarantee a small profit in the event of a turn. However, do not add the position: the later being the entrance to the market, the more difficult to find an appropriate point of risk.

A few words about the mechanical systems
Trade with the mechanical system can provide invaluable experience. Average net income for the majority of these systems is very low, so that they can not bring wealth, but they are amazing tool to gain experience in a very structured format.

If you are going to trade with the help of a mechanical system, you must be willing to enter into all transactions! It is impossible to know what the deal would be winning, and which are losers. Most traders who are trying to select, manage to choose a losing deal, and left without really big wins. The most difficult to carry out the transaction, tend to work best! For most systems, the bulk of profits obtained from less than 5% of the total number of transactions.

Although the majority of breakthroughs in the trade has a high starting point of risk, its high ratio of reward to risk making them easier psychologically. You could be splurging on Losing transactions, but, fortunately, the big losses occur not very often. Also, when trading in multiple markets or market-based instruments, diversification should help to reverse heavy losses.

Sum of the main advantages of trading on the breakthrough:

• it produces a proper habit, there is always a clear stop-order;
• you get more practice performing the transaction;
• This shows the importance of taking each transaction;
• it generates respect for the trend.

Further considerations on the use of trading strategies for breakthroughs

• an average daily trading range (must be high enough to guarantee a "spread");
• must take into account the volume and liquidity;
• It is important to take into account the seasonality (particularly for commodity contracts);
• must take into account the relative effect;
• it is desirable to take into account the commercial structure (diversification of the portfolio).

The mechanical trading system for breakthroughs - curve for a simple trading system for a breakthrough, which is widening the range of closing the previous day and went the next day. Once again, the market opened on a single extremum his range and closed at the other end. This steady pattern of lower highs and lower minimums all day.

The mechanical trading system for the breakthroughs - the system is based on expanding the range of the price of opening and closing and then proceed to the next day. Given the long movement, the entrance to the expansion of the range of the price of opening or closing of the previous day's work equally well. In this case, the entrance to the break of the price discovery led to a higher peak at one point, but greater reductions later.

Trade with the view of stadium

How about that, just look at the pricing schedule, you are immediately able to find a good deal? This is not so difficult as you think. First, look for recurring patterns and trends, and then see where the price traded on the "tree model". This should immediately show you whether there is an opportunity to make money.

The analysis stage to determine your location on the overall picture of the market. Stan Vaynshtayn presented this really powerful technique in his classic work "The secrets of making a profit in bull and bear markets." In this paper, he described how the market may be violated in certain stages of development.

Each stage has its own characteristics and are more suited for it, some specific strategies than others. For example, during an ascending trend is better to stand in long positions while descending trends are more suitable short. This sounds quite natural, but many traders do exactly the opposite.

This re-formed in the mechanics of the concept called cycles models. It focuses on the cyclical aspects of the analysis phase and how traders can use it to earn profits on a wide variety of market opportunities. Cycles models arise in the markets through the cycle behavior of the crowd. They are developing evolutionary - ie, one stage flows naturally to the next. They signal the selection of a strategy that will work best in the current stage, and warn of what to expect next.

What is this repetitive cycle? They correspond to the usual concepts of technical analysis, which we knew all these years - reason, breaks up, bottom-up trends, the new peaks, tops, breaks down, and top-down trends. Each stage also defines the axis of the trend range, which carries a price in the lateral movement, up or down in a fairly predictable manner.

One of the major factors that complicate the analysis of the market stage is that the market exists in more than a temporary format. In other words, the market will be in one stage on a weekly schedule, in another stage in the afternoon schedule, and the third on intra-day schedule. Traders must remove the contradiction between the trends in different time formats, to obtain a forecast of price action and to take advantage of a market phase.

Errors in determining market movements washed away many traders from the market. They set the stage for a certain schedule, and cast into the market. But they sometimes forget the larger temporary format, which is moving against their positions. You can overcome these problems by defining the periods of retention of positions that correspond to stages of commerce. In a broad sense, it is the same process that divides the market players in those trades through skalpirovaniya, trade on the movement, positional trade and investment.

Maximum opportunity arises at the time of transition from one stage to another. Consider three examples. Ability to trade on the break occurs when the ground is moving in an upward trend. Trading on the back developed in a time when the price recovers to the border of the last stage. Leap to the new maximum range of pulse generates transactions.

Competently choose their trading strategy. There are times to buy on the breakthrough times to stand up in short positions. There are times when you need to reduce their positions and the time to take what the markets give you. Certainly it is time to pursue the momentum and the time to sell on price fluctuations.

Errors in recognizing stadium also hurt. Look at the many examples where investors want to buy from depths after the collapse of the U.S. stock market from the top 2000. suffered losses. In those days, Bear market, investors have forgotten that the reason for the formation takes time, as needed to restore the years, not days.

Investors in undervalued assets are included in the market, which formed the base. Traders who trade on momentum, are strong in the ascending and descending trends. But it is unclear where some are buying at the top during culmination. So, whether you are trading on short-term movements, or invest for the future, take the time to determine the current stage of market specific marketing tool and to the broader market. This will ultimately help determine the best way to play your game.

Remember that finding out the market is an effective strategy for some stages. You will not make money when the market conditions do not correspond to your period of retention of the position or trade skills. Instead, stand aside and let the market reach the desired stage, when the current cycle has no meaning for you. This requires discipline, but it will allow you to stay in the game a long time.

Traders who trade on the movement can better utilize the market situation and deal effectively with a variety of stages. A wide range of trading strategies and approaches, allowing them to earn a variety of market conditions. They can trade on the breakthrough, when markets are in motion, and also play on the movement, when the markets swing to the range. The diverse skills enable them to trade in the short side when the markets decline, or work from the border during broadbanding.

Therefore, a successful trade, try to connect the correct definition of the stages of market movement and good use of appropriate trade strategies and approaches.

How to set stop-order

Introduction
As a universal means of risk management is widely recommended to close the stop-order. It is recommended that you either directly, assuming that you risk only a small number of fixed points in a single transaction, either directly or indirectly, through phrases such as "control their losses, quickly cut their losses, etc. The truth is that in many cases, close the stop-order and may actually increase the losses. In terms of trade for the oscillations, we consider why similar stop-order and often do not work, how they manage to adapt to normal fluctuations in the market and how to compensate for this added risk. Finally, we also consider cases where the closest stop-order and can even be used.

Preface
I remember how many years ago, I tested its first mechanical system. Then I thought that if I set a stop-order, it will help to really make money. To my surprise, the system actually started to lose money. Why? The point is that the position of interruption before they start work. Suffice it normal market noise, to denigrate those stop-order before it was expected movement.

Market noise
Most traders frustrating situation, when shortly after their positions had been closed by stop order, the market is in the assumed positions in the area. In an ideal situation, you sign in your position, place a close stop-order and wait for when the market will move in the direction of your transaction. In reality, the market often moves in the direction of your transaction, but only after some hesitation in opposite directions, known as the market noise. This noise is often enough to cut close to the stop-order (see below).

Calculation and correction of noise
It is obvious that no one knows exactly where the market-based instruments will be traded in the future. However, judging by past movement, you can assume with some probability, where market-based instruments is likely to fluctuate in a given period of time. This can be measured by statistically valid methods, such as historical volatility and average true range. It can also be measured by simple visual assessment of the price chart.

Average True Range
Under the title, the average true range is considering a range of motion of the tool market, given GEPy. For example, schedule "Juniper Networks", shares of which are very volatile, we see that for the five-day campaign period is the average true range of more than 6 points (6.54). Over the long term (50 day) period of action is the average range for more than 7 points (7.21). Therefore, if we are going to trade on the oscillation (the period of retention, two - seven days) at market-based instruments like the "Juniper Networks", range of motion by at least 6-7 items a day, it would be unwise to try to close the stop-order ( say 1-2 points) and hoped that he would not be vulnerable.

Historical volatility
Historical volatility - this is the standard deviation of daily price changes, expressed as a percentage. In essence, this means that the historical volatility measures the extent to which prices fluctuate over time. Suppose the market instrument is traded for $ 100, and its historical volatility - 10%. At the end of the year the market will likely be traded somewhere between $ 90 ($ 100 - 10%) and $ 110 ($ 100 + 10%), the statistical probability of 66%, implying a normal distribution and that the variability remains constant.

If you take a long-term value of historical variability, and reduce it to the intended period of retention of position, it will allow you to assume what the market is a tool for commerce.

For the above actions of the "Juniper Networks" on condition that the action would be held within five days of 30.04.01g. We have a potential range from 46 1 / 2 to 71 1 / 2. This means that, with some probability (but not guaranteed!), Our position will not be closed to stop a warrant during the period of retention, if the stop order will be removed, at least at 12 1 / 2 points.

Visual assessment
Most technical analysis is done using a simple visual evaluation of the schedule. Just looking at a market instrument that is traded in a range from 40 to 50 in one day, falling to 39 the next day and zatemvozvraschaetsya to 50, it is possible to conclude that the variability of such a tool. Therefore, any less good trader is unlikely to rely on trading on the instrument, use the stop-order in 1-2 points.

How to manage risk
When you trade in a more volatile market-based instruments, you certainly can not simply extend the range for its stop-orders, without compensation at risk in one way or another. You must keep the overall risk and to manage the size of your positions, respectively. For effective risk management to take risks for no more than 1 - 2% of your trading capital in one transaction. Therefore, in general, you can sell a large number of lots in the less volatile market-based instruments and to reduce the number of lots for mobile and fast-volatile instruments.

Managed Funds
Remember that risk management is an integral part of the overall money management, and use a wider range for the stop order has no meaning without the management of money. It is obvious that you should make sure that, on average, you take much more of the open positions, than risk losing. For example, you can not take risks 5 points for each transaction, making an average of only 1-2 points. Mark Bucher calls such strategies "anthills". Ants can make a substantial mound of small particles, but it only takes one big trail of shoes, so that all of this crush. Therefore, make sure that your income is sufficiently large to justify a wide range of stop-orders.

Cases for the close stop orders
Now, when we discussed the dangers of close stop-orders, let us consider the cases where the closest stop-order and can even be used. It depends on the technical model and / or if you want to re-enter the market, after you close the stop order will be struck.

Technical model
In many cases, market-based instruments should not violate the technical model. If it does, it can be assumed that the model has failed. Therefore, in such cases, the stop-order may and probably should be placed outside the model, even though it often is in the normal market noise. An example of such models can serve as short-term situations such as dense low variability grounds. For example, look at the picture below, as a hypothetical market-based instruments makes narrow consolidation after a strong upward movement. Market-based instruments should not go beyond the grounds of the consolidation. If it does, it can be assumed that market-based instruments observed peak. Therefore, it provides a logical reason for placing the level of stop-order.

Keep in mind that trade is not always all it is by the rules. Sometimes, the markets will make a false movement following the consolidation before the resumption of its long-term trend. However, you must comply with its stop-order, because when such a situation, you do not know if this is a false movement of (a) or removal of the model (b). This leads us to our next question - the re-entrance.

Re-entry
If you want to carefully control the position and have the discipline to perform re-entry after the closing position on a stop-order, the more immediate stop-order and can be used, even in volatile market-based instruments. This is especially true in the short-term situations with low variability. However, in general, keep in mind that many small losses and can often add up to a much greater amount than a big loss, especially given the spread and commissions. Also, keep in mind that the strategy of re-entry, probably best suited for those who are accustomed to take many small losses and has some experience of intra-day trading. If you are unable to monitor screen, or you are not psychologically prepared to re-operate on market-based instruments, on which you have just been shut down (sometimes many times), then you should use a broader range of orders to stop and allow the position to turn how do you expect.

The golden mean
The more close to the stop order, the more likely your position on it will be closed. However, by placing the stop-order level, where the statistics suggest is too far a distance to market noise, you can be confident in its invulnerability. Therefore, you can use the "golden mean" and place your stop-order somewhere between these two extrema. In this case, you will be sure that your stop-order is within the normal market noise, but it is less likely to be vulnerable, rather than a very close stop-order.

Conclusion
Close stop-order, which many used to reduce commercial risk, in fact, may increase the risk because they are more likely to be struck because of the normal market noise. This reality must be taken into account, in your terms of trade. In this article we have only touched upon the topic of variability, money management, and technical models. If you are going to succeed as a trader, you should explore these issues more deeply.

How to trade like professionals

As a trade professional, objective analysis of fundamental and technical trading techniques.

Every professional knows when to make it a successful transaction in the market, because the only knowledge helped earn.

Alexander M. Mazurkevich

Each investor, trader or an amateur at the stock exchange once asked what kind of methods for the analysis of market movements, the best and effective. There are many theories and techniques of various trades in the market. For example, long-known scientist Gann. He knew a lot of technical and fundamental analysis, but apparently gave it to the technical analysis. Or there you have the theory of Elliott wave, the scientist mathematician as preference is given to technical analysis, but not once he resorted to the basic method of analysis. All of these theories to some extent, work and bring profit to those who actually deal in them. Who will be able to feel what was referring to Mr Elliot, interpret their analysis methods on the market, will be rewarded a profit, it can get in times of trade in financial instruments.

Here we take an example schedule EUR / USD:

Figure 1 - Schedule of EUR / USD, four.

If we are to care for a schedule and try to analyze the changes in price quotation EUR / USD, then we can apply both a technical and fundamental analysis of the market. Figure 1 shows how an investor makes trading method of technical analysis. To do this he uses the following indicators: MACD (11,14,15), RSI (6), MA, Bollinger Bands. If we are very careful supervision, it can even detect the signals to enter and exit the market and from market. See Figure 2.

Figure 2 - Schedule of EUR / USD signals to enter the market, method of technical analysis.

There is an opinion that if your technical analysis allows you to earn in the market, thanks to a software program can be a mechanical trading system and safely carry out profitable trading is not watching the market. But all this is just opinion, because in the world, there is no mechanical trading systems that could make you a millionaire. Therefore would advise you not to use technical analysis in times of trade, because if you change some factors in the market you can lose, and that Chen is not desirable.

Here's a look again at the picture number two. Yes, indeed, there are depicted trading signals to enter the market. Of course, they are effective and very clear that they are working. But that makes me the same price quotes on a large number of pips. As it can be, then how to change the price must be at least a lot of requests for purchase or sale. Here we picked up a second version of the analysis and, I would say the most effective method of analysis that each trader in the market is not down with the accounts, because the fundamental factors can have a significant impact on price change, and this, understand themselves, and allows smart and professional traders make money. When traders try to make money, it is necessary that the market was a lot of other dealers, with opposing views, which would be sold, when to buy or vice versa. So all the traders come to market only when the whole world declare any planned financial statements, then we have to be ready. Everything can change in minutes. And from the lucrative trade moves into a loss, because as volatility increases in a few dozen times in these moments. Trading in the market and manipulating all manner of ways, I often lost, and received damages until no one knew the golden rule, which I would like to share with you in this article. In order to earn money in the market, it is necessary to be and feel "moved" the market. So we have to be on the market at a time when many trade and withdraws from him when the movement of price quotes over. If you want to earn in the market constantly and do not lose money, in addition to the technical analysis necessary to focus on fundamental analysis and its implications. As we know the market would take into account everything, so now the price will change in one or other side just because someone is very much buys or sells one or another instrument, the reasons for this is determined only after the publication of financial information agencies. I would therefore advise you to not only be guided by technical analysis in the search for optimal points of entry into the market for the withdrawal of profits. I would like to bring the scheme in the commission of an analysis of the market traders Alexander ???????????:

1. Market research begins with basic research methods of market movement for the whole week. Focus on the most important news to be announced during the week studied.

2. Then defined as the price movement of the channel between strong news in order to identify the best methods of market entry.

3. After identifying the channel using technical analysis techniques to search for the position of the entrance to the market. If favorable conditions can make a deal before the announcement of strong news in the hope that a successful login will allow me to secure my position in case the price movement in the opposite direction.

4. After that, wait for announcements of news and compare the data with the projections, if the data differ significantly from the forecasts, to sell or buy, in the required direction.

5. Using technical analysis, seeking the most favorable time of withdrawal from the market at a profit, because after the strong price movements tend to occur at the peak output from the trend, which in turn leads to falling prices in the opposite direction. Successfully picked the time trend will enable them to take up to 10-15 pips. When you open large lots, there are a lot of money.

A good trend you!

Technique of sliding stop orders

Mark Booker was the manager of Trust Fund «Midas» since 1992. The Fund was recently named the best in the world for his 5-year average yield of 26.6%. Mark Booker began trading in 16 years. He also founded the Association of Investment Research to fund research trading systems on trade in shares, treasury bills and currency.

Most investors and traders spend too much time focusing on how to enter the market and too little time to find the best way out of profitable positions. What is particularly interesting about this neglect - is that the majority of traders makes a huge portion of its profits only a few transactions in which the market has moved in their favor. Thus, the majority of traders, in fact, would have greater success by focusing on the best exit from lucrative deals than if they continue to practice their techniques entrance. I would like to briefly go through some of our «methods» sliding stop orders to help traders learn to withdraw from the lucrative deals with much more useful. We use many methods of moving the stop-orders, but the simple rule of thumb, which we present here should greatly enhance the effectiveness of trade for most traders.

First, patience, and then carefully
The method that we are going to briefly cover, used until the market-based instruments will not be perekuplennym (for a rising trend):

- Waiting for a breakthrough three -, four-week or longer to enter the consolidation of the market (in the case of long-term trends);

- Placing stop orders below the minimum of the consolidation by the time when you entered the market

This requires patience for the first quarter of the movement after you have entered the market (for a variety of market instruments and time formats that can be a different number of bars). However, when the market starts to become a tool perekuplennym, it should be much closer to the stop-order and the current level.
As soon as the market becomes a tool perekuplennym, it may begin a correction or consolidation. Consolidation may take different times for different markets, and the meaning of sliding stop order is to maintain an open position until there is a likelihood of further movement, regardless of how much is the price. This is the meaning of the expression «to allow profits to grow». Thus, when the market becomes perekuplennym tool, based on technical or fundamental factors, we use the technique of sliding stop order is different from the one that we used before the market became overvalued tool. When the market becomes overvalued tool we have for any decline at the close of a period of two consecutive days (for daily schedule). Once we have a two-day decline in a row at the closing, we believe that market-based instruments are in correct. As soon as the market adjusted the instrument, we expect to see when it will revert to the new maximum. For any new peak followed by a correction, we then move our stop-order staggered at least this correction and we will continue to move it this way, with each correction and then the new maximum. In this way we continue to wait for quite a significant support level is broken down in the traffic before leaving out of the market, but we have moved our stop-order and a much more aggressive than it was before the market became overvalued tool.

Examples

Let's take a look how it works in the real market, using the actual transaction, we have carried out since 1999.

While price is not reached perekuplennosti, we place a stop order at least consolidation, which broke up the price. Once the price reached a level perekuplennosti, on any grounds, a stop order below the minimum established by the last correction.

The price of shares «Adobe» (ADBE) broke to new 52-week peak in March 1999. And then develop a good narrow trading range from late March to mid April, creating the type of model «flag», which we watched for the signal input. This market-based instruments showed a strong relative effect, the strong fundamentals (quarterly growth in revenue, estimates of the growth of income over the next year, has been a leader in its field, etc.), which corresponded to most of our criteria for market-based instruments with great potential for further upward movement .
When the four-week consolidation was broken up in April (around 30), we started buying ADBE. The first three or four trading range after the entry occurred in May when the price ADBE fell from 40.53 to 33 1 / 2, which was quite a big fall. In June, the price came out of that consolidation to a new peak, and we used our first stop to the movement of the warrant, using the rolling stop-order at 33 and, finally, were able to «protect» the profit by setting a stop order above the price of our entrance. Other three-four-shaped consolidation in the July-August and August-September, allowing us to again raise the stop-order in our rule «three or four consolidation and a new maximum».

Then in October ADBE start trading in the zone perekuplennosti in accordance with basic data (P / E above 40). The value 40 was the maximum value of P / E (price / income) over the past three years. This implies that ADBE potentially becoming overvalued and could be a serious correction. Thus, in October, we started using our method is more approximate sliding stop-orders for this market-based instruments. Every time ADBE did decline two days later and then breaks to a new peak, we moved our stop order below the minimum of this correction.

1 and 2 November, the price ADBE made two consecutive decline. November 4, ADBE fell to 67 1 / 8 and then made a new maximum. This was not a three-week consolidation, but as we have a potentially perekuplennoy territory, we used a protective stop-order at around 66 3 / 4 (just below 67 1 / 8). Prices continued to rise to 79 before the start of a major correction, and our position has been closed to stop the order of 66 3 / 4 in early December, ADBE started as a deep decline. Although we have not caught the summit, we have captured the lion's share of the good traffic, and we captured most of the traffic, using a rolling stop-order, than if we started immediately to close the position in October, when market-based instruments only began to look perekuplennym.

As a second example, consider the foreign shares, traded on the NASDAQ - «Business Objects» (BOBJ). In mid-June, BOBJ broke up two months of consolidation, with large volume. Its growth has been supported by many technical and fundamental factors of our criteria for potential growth. We started to buy BOBJ about the level of 30. BOBJ has made a new maximum in July, adjusted to a level 37 and then consolidated for two months before the re-achievement of a new 52-week maximum, which allowed us to place our rolling stop-order immediately below 37, will protect our profitability.
BOBJ has gone to endless growth, and in November he had reached the level perekuplennosti, based on the rate of P / E (which exceeded the projected income growth over the next year and the historical maximum PE). Thus, in November we moved to our technology closer stop orders. In January of 2000. Our position has been closed by stop-order on the 115, below the minimum of 14 December 1999. And we get a very good profit.

Conclusion
Keep in mind that no technique of sliding stop order is not perfect. The sliding stop-order and will often close your positions before the market will continue to further movement in that direction. But more often, moving the stop order will not allow the market to collect a substantial portion of the profit already. You can always re-enter the market when market conditions meet your criteria for a new breakthrough. Therefore, the sliding stop-order and not only will help your profits grow and prevent the loss of earned huge profits, but they also help you focus your shopping on the capital market instruments, which continue at present to develop the trend in and out of the market instruments that are in deep correction.

In search of profits

Technical analysis can be defined as the study of past price movements to identify patterns and trends, which are believed to be predictable in the future. At the heart of this approach is the assumption that human behavior, by its nature, is iterative. We all recognize that, although human behavior may be of current trends, they usually do not recur in exactly the same mechanical way every time. Even with this in mind, technical analysis is able to give us the opportunity to make price predictions with high probability the expected results. This can help us achieve our goals, which leads, ultimately, to long-term follow-up success.

There is a broad set of technical approaches. Some are better suited to specific traders and their trading styles than others. This article presents some of these approaches, which may be useful in the interpretation of intra-day market behavior and the formation of short-term forecasts follow the price dynamics.

I'm using intra-day trading period, primarily because it provides the greatest degree of immediate feedback. An important element for success - the ability to quickly understand their mistakes. Within-day sale offers us the opportunity to feel the pulse "and be prepared to take swift action when we talk about the market behavior is incorrect. Technical analysis tells us, quite informative, what happened in the past, but this does not provide us with absolutely no guarantees about the future.

Analysis of the oscillators

The nature of intra-day trading requires the trader to do continuous assessment as to whether a market develops in the range of or trend. If the option that the market will be traded in the range, then we need appropriate means to determine the short-term turning points. On the other hand, if the option that the trend will grow, we needed a means to determine (1) the appropriate entry point based on the current trend and its effect, and (2) the appropriate entry point based on the probable subsequent exhaustion of the trend.

Effective means of identifying such short-term intra-day market turning points is to assess the pulse, the core of the subsequent market fluctuations. Price momentum - this is the measurement of the degree or rate of change in prices. Usually, if we assume that subsequent market volatility will continue to create new records or new minima, it is expected that the degree of price change to increase along with traffic to the new maximum or the new minimum. If the subsequent oscillation is not an increase in the pulse, the reliability of any new push higher or lower than challenged.

One very effective tool for measuring price momentum oscillator is 3 / 10. This is - a simple indicator constructed by subtracting the 10-periodnoy exponential moving average of the 3-periodnoy exponential moving average. As an alternative, most charting software offers building Indicator MACD (convergence-divergence moving averages). Oscillator 3 / 10 can be modeled using the MACD, by setting short-term option for 3, and long-term at 10, and the smoothing parameter to 1.

When using an oscillator 3 / 10, we are trying to identify one of two states of the subsequent market fluctuations, which will either move to a new peak, a new minimum. The first of these states is referred to as "the divergence of the oscillator, and the second as" Confirmation of momentum. " These two terms describe the opposite condition. Typically, each successive higher maximum fluctuations or variations will be accompanied by at least one or the other state.

At markets, developing trend to lower prices, the divergence of the oscillator is described as a fluctuation in the new price level, which is accompanied by a higher minimum oscillator. At the market, move to higher prices, it is described as a fluctuation in the new price records, which is accompanied by a lower peak in the oscillator. The graph shows examples of both states.

In fact, the divergence of the oscillator indicates that the current market movement is losing momentum. It was at this time, most likely spread. If we considered the trade in the direction of the expected turn, it would be appropriate time to carry out the entrance to the market. On the other hand, when the confirmation of momentum, we know that the current direction fluctuations is a virtue, and it would be best, or to retain the existing position or to look for opportunities to enter in the direction of motion.

If you use properly, Oscillator 3 / 10 can be a very useful tool for the intraday trader. This is - a fast and effective means of measuring market momentum, the disclosure of valuable information about the main intention of the market. But it should be understood that he, like any other tool, is not the litmus.

The system of control points

Judgments made on the likely market behavior, which are based on an analysis of the momentum may be more effective if we first determined the levels of which can act as price benchmarks in the interpretation of activity of the trading day. "The system of control points" is one such approach.

Traders trading in the exchange hall, generally used very similar systems to evaluate the price of market-based instruments in the absence of significant external influences. This system of control points determines the relative price levels, based on the previous day's price activity.

Price levels of the control points act as a potential area of support and resistance throughout the day. They serve as guidelines for professionals in the exchange hall, where they adapted their proposals, especially with low trading activity. Traders who trade outside the stock exchange floor may use those same values to aid in identifying appropriate areas to enter the trade, placed stop orders and output.

The formulas for calculating support and resistance levels of the System control points as follows:

DP = (H + L + C) / 3
R1 = 2 * DP - L
S1 = 2 * DP - H
R2 = DP + (R1 - S1)
S2 = DP - (R1 - S1)

DP represents the daily reference point. R1 and R2 define the resistance levels above Daylight reference point. S1 and S2 determine the levels of support below Daily reference point.

A fundamental level is a daily reference point. Generally, when every day we start to trade, we consider this level as a point of balance between the force of bulls and bears. It is believed that the demonstration of a significant price activity above Daylight reference point is byche values, while lower activity is bear sign. While the actual entry and exit from the market is determined by a variety of other market factors, we first look at the dynamics of prices on the level of Day reference points as a support tool in the overall market sentiment.

Within-day trading activity can be generally regarded as a rotation around, and the pursuit of Day reference point. When the price moves away from this zone and is close to the first level of resistance (R1) or the first level of support (S1), market behavior is becoming more and more important. Any deviation from those recently reached levels that increase the likelihood of a return to daytime reference point. On the other hand, the violation of any of these initial levels is regarded as the market welcomed the change in the assessment sales tool.

In addition, whether the market will continue to move further away from the Daily reference point? Penetration through each subsequent level of support or resistance, in general, is regarded as a greater involvement of market participants. The increase in market participants, a great likelihood that will be open long positions, leading eventually to a greater potential for the further continuation of the trend. Any subsequent violations by the level of support or resistance systems GCP generally regarded as increasing the interest of an increasing number of long-term participants.

As soon as the market made a convincing violation of a certain level of support or resistance, this level is considered to change its role to support the resistance and vice versa, and, subsequently, becomes a test point for further market activity. For example, the graph right, when price action develops after the break-up the first level of resistance (R1) and to restore the price has moved back to this level, it is considered a test of its reliability. The successful test occurs when movement is unfolding, and the restoration of price moves further upwards, which increases the credibility of this level as a new level of support. Additionally, any further movement on this level has the potential to go through the next levels of support or resistance, attracting more long-term players in the market and ever-expanding range of market activity.

When using the level of support and resistance to the System control points can be a very useful tool for intra-day trading. The approach is not only the fastest way to measure the intra-day levels of support and resistance, but also offers an effective means of applying the guidance to the market activity in order to better understand market behavior and opportunities for trade. These levels help to determine when and where the short-term intraday trends are likely to fluctuate, and they can also serve as "test points" in the decision-making, whether the market will continue moving forward or change its current direction.

Dynamic support and resistance

One of the major disadvantages of using the System control points is that they are calculated on the basis of the price activity of the previous day, and may not accurately reflect recent changes in market behavior. Effective intra-day trading also requires a means to determine support and resistance, which can more easily adapt and provide more accurate pricing activity in the rapidly changing market conditions. 20-periodnaya Exponential Moving Average (20EMA) can be used to build these "more dynamic" levels of support and resistance. In contrast, levels of support and resistance to the System control points, which remain constant throughout the day, 20EMA changed according to immediate changes in the price. This feature makes them very effective tool, especially when there are significant changes in the market movement between levels of control points and after the large surge motions.

My main intra-day schedule is a 5-minute time scale, but I often turn to other periods to confirm the market conditions. For this reason, 5-minute 20 periodnaya EMA is a moving average, which is most often being referred to. However, also useful for further graphical analysis are 15-minute and 30-minute 20-periodnaya EMA on the same 5-minute chart. This is achieved as follows:

5-minute 20EMA - construct a 20-periodnaya Exponential Moving Average.
15-minute 20EMA - construct a 60-periodnaya Exponential Moving Average (15 / 5 * 20)
30-minute 20EMA - construct a 120-periodnaya Exponential Moving Average (30 / 5 * 20)
It is important to understand that the values for 15 and 30 minutes, obtained by this method is not accurate and does not accurately represent the 15 - and 30-minute 20EMAs, but for purposes of determining the potential levels of support and resistance, you will find this technique very useful.

20-periodnaya EMA is considered as any other potential level of support or resistance. In a market environment with a tight trading range, these levels can be quite easily violated. However, when the price begins to trend, 20EMA can provide valuable assistance in identifying appropriate areas that can be seen as to open new positions, and for the failure of existing ones.

One of the most frequent use of this indicator is included in the game when we start some day trading, with the expectation that the trend set by the previous day to continue. The usual strategy in these days is to look for an opportunity to re-entry into the first movement of the restoration, which moves the price likely to support (with an upward trend) or resistance (in descending trend). The first level of support or resistance faced by the market is likely to be, or 5-minute 20EMA, 15-minute 20EMA or 30-minute 20EMA (upper graph). It is important to monitor these levels as we look forward to continuing the trend. Once the trend has been set, it is often one of these levels (usually 5-minute 20EMA) would constrain the price action very effectively.

20-periodnaya EMA can also come into play immediately after the news caused significant price shocks (middle graph). Trading conditions can often be so volatile during these periods, it is better to do try to stay on the sidelines until the initial hysteria not spadet. Typically, a strong impulse impulse that accompanies such events, is starting a new trend-setting movement. This price movement will usually undergo some rehabilitation before raising will not be sustainable. Once again, the 20-periodnaya EMA is an excellent tool to measure the degree of recovery and eventual return to trend.

As mentioned earlier, namely, "dynamic" characteristics of the 20-EMA periodnoy make such an important indicator tool. His ability to respond in accordance with the direct changes in market conditions, make it a valuable tool in shaping a sense of structure of, by and large, unstructured events.

Maximum and minimum previous day

Each of the intraday trade practices, discussed above, referring to the levels obtained by mathematical calculations. Engineering, which will be discussed in this section, by contrast, will have to deal with a set of support and resistance levels that are much more apparent. In short, we will discuss the technique of using the previous day's price extremes as a way to determine the levels of support and resistance.

If you think about the market activity as of the auction, where buyers and sellers constantly vie for the best price, the daily maximum and minimum represent the last period of the outer limits of the values of the prices during any given day of trade. The highest price reached during the day, represents the maximum that buyers will offer for the goods and the lowest price represents the minimum that the sellers wanted to take. For this reason, the subsequent price action tends to remain within the boundaries of the obvious price values, which were identified during the previous trading day.

Under normal market conditions (driven by news of the price surges are the exception) the successful breach of the maximum or minimum of the day is usually preceded by several failed attempts. After a successful breach, this price action is often an important change in market psychology with the potential formation of a new trend of movement.

One approach is to exploit the benefit of this market scenario, is to use the actual maximum or minimum break the previous day as a signal to enter the market - opening long position in the breakthrough peak and a short position in the break level. Use this method for market entry is quite viable, and, in a rapidly changing market conditions, may be the only way to participate. However, it is believed that this is a fairly aggressive technique, because forays into new market can sometimes be a very quick turn around. A more conservative and unwilling to risk approach is to wait to sign until a specific rollback of price movement. Such short-term reversals often occur before a new trend movement did not begin in earnest. Often, the violation of the maximum or minimum of the previous day would return back to the original point of breakthrough. Otherwise, the next most likely level of recovery will be a 5-minute 20EMA.

Price analysis on the maxima and minima of the day may also be useful when the market is in a long narrow range. This market scenario is often accompanied by a significant movement out of the range, and sharp increases in volatility. Sometimes increasing the variability can be very sudden and quite severe, leading to trading days, which allows to capture more profit, but only if you chose the correct direction of a breakthrough.

Whenever conditions were identified by low variability, the maximum or minimum break the previous day can often serve as a signal that the expected movement of the range, and this may allow us to enter into the market to take part in it, with little risk. But even before such a breakthrough occurs, there are several methods that allow us to make a preliminary assessment of the likely direction of a breakthrough and to an earlier entry. For example, we often can determine the direction from the price activity on the maximum or minimum of the previous day and current daytime reference point. If the market first, suited to minimize the previous day and then ottolknuvshis, goes up through the day's reference point, the direction of a breakthrough is likely to occur in the higher prices (left figure below). Similarly, if the market is approaching the maximum previous day, reflected, and the price then moves through a daily reference point down, then the likely direction of a breakthrough will be down (bottom right graph). In addition, often the key to the possible direction of a breakthrough can be found in the behavior of the market about Daylight reference point. If the price is not able to disrupt this level, the expected breakthrough will often grow in the direction against the original motion.

Maximum and minimum previous day's price points represent extreme values. Also, they contain the potential to act as support and resistance levels during the trading day. The dynamics of prices near these levels can communicate valuable information about the subsequent behavior of the market.

Conclusion

Typically, new traders are coming to the study of technical analysis tend to identify a single indicator, system, or trading method that, in the performance of the precision and discipline, will bring good results in most attempts. Many traders, especially beginners, in its never-ending search for the only and ultimate technology trade, tend to look at this technology as a magic key that opens the hidden secrets of the future market direction. It is important to understand that we do not appreciate a technical tool in this light. Instead, these instruments are rather regarded as a mere aid in summarizing and simplifying some aspects of our business routine. As mentioned in the beginning, the technical analysis effectively explains what happened in the past, but it does not make any guarantees about the future.

The methods discussed in this article, you will step to the understanding and interpretation of the evolution of prices and the major driving forces of the market, but do not expect that they will become your "Holy Grail cup." Probably need more practice before you can comfortably incorporate them into their normal trading routine. Some will be more effective under certain market conditions than others. Plan to undertake a significant amount of time with each tool before you begin to fully understand its advantages and its disadvantages. As with all effective trading tools and techniques, the nuances and peculiarities become more evident over time, with enough practice.

The psychological aspect Of Trade

Brett N. Stinberger - Doctor of Philosophy and Professor of Psychiatry at the Medical University in Syracuse, NY. New York. He is also an active trader and writes articles on market psychology. The author of the book "Psychology of Trade, 2003. Doctor Stinberger published over 50 articles on short-term approaches to behavioral change for traders.

If I had to give one piece of advice to most traders, who are struggling with their ratio of profits to losses, it would be to trade for a proven systems and models and sell them systematically. If you look at very successful companies, such as "McDonald's", "Dell", "Federal Express" or "Wall-Mart", then find a company that makes the same things and in the same way every day, with high degree of consistency. They invented the formula for victory, which is the key to success and they are doing this formula with high fidelity and regularity. That's exactly the way you have to sell.

Thus, this raises two important questions for any self-trader:

. Do I have a formula for victory, and whether I have checked to make sure it is successful and to have the necessary confidence in this?

. I sincerely follow his formula, and whether I track every transaction and know that I follow the formula and to have confidence in their ability to follow it?

A very large percentage of traders that have applied to me for help, they could not honestly answer these questions affirmatively. They want to get help for themselves, when what they need - is the need to consider their trade as a world-class business.

Trade and individuality
About three years ago, I along with Linda Raška examined a group of about 64 active traders. We wondered whether any particular individual and repetitive style that distinguished the more successful traders from the less successful. We received a large number of results that lead to think. For example, we found that successful traders have a lower level nevrotizma (negative emotional experience) than their less successful colleagues. They also used methods are more focused on problem-solving (developing strategies to deal with problem situations), as compared with the concentration on their emotions. Successful traders, as we found higher were evaluated on a scale of "good faith", reflecting the motivation to follow their plans and commitments. In general, these results confirm what many of us have seen in my career on the market: traders to temper their emotions and act on the basis of his plan, selling better than their more emotional and impulsive counterparts.

However, it was unexpected and a conclusion in our study, which was that a disproportionate number of successful traders - about half - said of the use of mechanical trading systems. Of the unsuccessful traders, no one has used a mechanical approach. When I later took an interview with successful traders, it turned out that even those who were not committed to trading systems that base their transactions on the models that they have carefully studied. On the contrary, almost all unsuccessful traders lacked such training in relation to the models and research.

In his recent book "The Psychology of trade" (2002), I describe these successful traders as the following rules. I am confident that the main reason why they were successful is that they use trade rules for the conduct of its trade, and to maintain a positive mental attitude. In this article, I would like to explore in detail why trade rules are one of the most powerful psychological strategies that can be used in active trade.

Psychology rules
What is a mechanical trading system? Basically, a set of trade rules. They perform several functions. The first of these functions - logic: the rules are designed to maximize profits by exploiting the anomalies that arise in the relatively efficient markets. Each set consists of trading strategies that the statistics referred to as rules of decision-making. That is, they set the terms - A, B,. n, that the market must comply with before traders come in long or short side or a closed position, etc. The idea is that, without these conditions, the likelihood that the open position will be determined by pure happenstance profitable. As soon as we upgrade this probability under certain conditions, greatly increasing the chances in favor of the trader. While any individual transaction may not prove beneficial, for a sufficient period of time and with sufficient number of transactions, the increase is likely to affect the curve of the trader's assets to the extent to which the decision rules were investigated. Is vital for any trader to know how the system has been developed. Has it been tested over a period of time, regardless of when it was developed? Is it work in real-time comparable to its historical performance? Is the built-in logic is obvious, or there are too many parameters, complicated logic or other signs of adapting the system under certain conditions?

Less well-valued function is that such rules have a second decision, psychological function. Body of trade to a set of rules, traders reduce its ambiguity so that it can operate on automatic mode. This allows precise control of the new trading opportunities in a way that improved their chances could ultimately work in favor of the trader. With the reduction of ambiguity, the rules make a significant contribution to the sense of mastery and reduce much of the stress associated with high activity of this kind of activity. Think how hard it would be to move in a lively city where there are no rules of the road! Almost exactly the same emotional state of many traders, who operate without any rules. The existence of trade rules provide the procedure, as opposed to chaotic process.

However, in order to serve the system of psychological help, it must comply with the identity of the trader. A study conducted by the London Business School, shows that there is another personal trait - extraversion, which shows a positive correlation with tolerance of risk. Some traders are far more inclined to take risks than others, simply because of their individual characteristics. It is essential that the system on which you sell, take this into account. Thus, the ratio of profits to losses of the system is only one parameter, which should be evaluated when searching for a better shopping method. Statistics of the recession and the percentage of winning / Losing transactions can be crucial for the psychological comfort of the trader. For instance, I discovered for myself that I was much more successful at short-selling within-day models, than on large fluctuations. With the average holding time positions less than 30 minutes, I can get a small profit with reasonable consistency, maintaining its concentration on trade and limiting its losses. While I theoretically possible, can make more money, in keeping with longer-term fluctuations, in practice this does not happen. Increased volatility of longer-term time period is in conflict with my emotional state, influencing the decision to turn my bargain for the one that does not correspond to a reasonable minimum wage!

Trade is indeed a highly activity. Like other high-level activities, it requires directed effort. The football team, which is a great game is a game plan, the army seeking to wage war, develops a plan of battle; psychotherapist holds sessions with a coherent strategy to help the patient. These plans are actually sets of mainstreaming rules that, in general, the artist focuses on the challenges faced by them. In the same way in which the singer had planned a tree of decisions in advance, quickly and decisively can be found responding to the evolving situation. In many areas, trade one of them, the difference between success and failure can be a matter of seconds or minutes. This makes the cognitive efficiency of the main component of highly active activities. Expression of many years of experience in several approvals, rules and plans that improves efficiency.

This brings us to another important psychological aspect of management - to improve efficiency in decision-making rules should be simple. That is, when all the rules set out in a coordinated manner, they are plans that are flexible guide traders to complex situations. In his own trading on the index, I, for example, share each day into four parts: a morning session, midday session, day and night session (Globex) session. Then I assess market trends and sub-trends, measure the degree of institutional purchases / sales and looking for testing and breakthroughs from one period to the next for the intra-day transactions. By combining simple rules of decision to segmentation trading day, I can come to each day with a flexible strategy that is not slaughters my head.

Regulation and function of the brain
Research in cognitive neuroscience also help illuminate the value in the management of the rules on the basis of performance. We know that the area was named predlobnoy cortex is largely responsible for what is known as "executive functions" of brain. They include planning, reasoning, decision problems, and many of the actions that allow us to engage in purposeful activity. When predlobnaya bark is damaged, the result will be a "disability syndrome" in which patients are unable to plan and carry out complex actions. They are easily distracted, reflecting the lack of memory and concentration. As a result, even the simplest coordinate concerted activities like visits to the food store, can cause trouble.

Recent theories of attention deficit and hyperactivity syndrome (DVSG) argue that the lack of predlobnoy cortex leads to a periodic absentmindedness with hyperactivity children. Indeed, studies have found a decrease of blood flow to predlobnym areas in these children. Interesting, but the same decrease in blood flow occurs in normal people during the high emotional stress or disorders. As an emotional experience is processed by the lower cerebral structures, located far from predlobnoy crust, the relative blood flow to the frontal area is a useful measure of executive abilities. When a person is highly upset, for example, deactivation of frontal cortex leaves him in a position where it is becoming like a child DVSG or incompetent patient. How many times have you looked at a losing deal, and wondered whether you were in his mind, when placed an order? According to brain research may not exist!

Traditional trading wisdom says that we need to manage their emotions, acknowledging that it was very emotional state make us more vulnerable to losses of concentration and impulse behavior. When we activate the wrong brain area, we can expect the adoption of the wrong trade decisions. The rules allow us to firmly adhere to the appropriate trading actions, regardless of the psychological and emotional state, which we feel at this time. Indeed, the full process of formulating, coordinating and following the rules will increase the executive functions necessary for proper trafficking. It is really that remain committed to the rules is a way to stay focused and rational. That is why, I believe, with Linda, we noticed that the successful traders tend to follow the rules and be systematic.

Conclusion
Habitually enough to hear, as traders argue that the emotional composure is the key to profits in the markets. This article suggests that the converse assertion is also true: Strict adherence to good trading rules and systems is one of the most powerful ways to maintain a positive emotional state in the trade. When we operate according to the rules, we are in a psychological state which allows for effective perception of decision problems and actions. Therefore, training to follow the rules during the rehearsals of trade is an effective strategy for the cultivation of the rules for trade in real terms.

Different systems of law can work in different ways for different traders, depending on the time period selected and traded market. For example, some rules will use statistics such as ticks and increasing and decreasing the number of shares during the day, which would not have to trade in agricultural contracts, but may be useful in intraday trading on stock index fluctuations. Other rules, such as trade practices in the breakthrough may be more widely applied in various markets and would allow to hold the position for a long period of time in order to maximize potential profits.

Ultimately, the rules and systems, which you follow, and their implementation in successive trading plans must be your identity, including your risk tolerance. The research work on your system - identifying its strengths and weaknesses, and the initial trade on it on a small position provides a great help in building your confidence to trade and to ensure that the rules work for you. If you believe many of the traders, who took the interview, Jack SCHWAGER, the key to success in trade is the commitment of its own study of the curve. Defining the systems that work for you, transforming them into coherent strategies and methods of trade and the detailed study of them in order to feel comfortable with them, is an important part of this process.