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Maximize Profits with Trade Management, Predict Price Reversals & Defining Different Types of Traders
We had some great questions in the live trade room today, and I wanted to share our time answering these questions with you.
One of the best video’s we have done so far this year, you will LOVE the part on proper trade management for people looking for bigger winners.
Signs of a price reversal
o Slowing Speed at the Highs/Lows
o Momentum changing direction at the highs/lows
o Big Money on the time and sales comes into the market against your direction as well
New version of the new auto-levels
o Changes the color of the big round numbers
o Allows you to remove the line labels
How many days of data?
o Slow timeframe = 90 days
o Fast timeframes = 5-15 days
4-range = 5 days
21-range = 15 days (traderoom_Fast)
o Check the blog, under trade room resources
Best way to ride a trade for the longer term?
o How do we maximize the profit on each trade we take?
We want to max out profit, but at the same time, we need MIN the risk!
Use multiple timeframes
• Slow timeframe (34range) shows the big picture, look for your next target and your initial stop
• Fast timeframe (4range, 13Range) shows us the best entries, and the cleanest patterns.
I will enter short on the fast chart, and then using my slow chart, I will manage my trade.
What are some other things I will watch to determine if I should hold the trade, or fold the trade?
• Tape Reading, reading the tape is the easiest way to identify if a profit target will be a good location, OR if you should let the trade run.
• Momentum, is momentum confirming the move? Is momentum over sold/bought, if so, take the profit, if not, let it run!
Why do we trade around the Auto-levels, but we use the other levels as stops and targets?
o These levels are swing highs and lows, on the slower timeframe chart, so they are where we want to enter our trades
When we violate the auto levels we are either breaking out, or failing to break out, that’s why we use them
o OPEN/CLOSE = we call these the middle, so we avoid them
o HOD/LOD = we love using these for our entries, just make sure we have good speed if trying to buy the highs
o Double-Tops/Bottoms = avoid these b/c something in the market around those levels have made the price action more sluggish
o Big Round Numbers = we avoid these because they are nothing more than a PSYCHOLOGICAL level, similar to pivot points, except the BRN’s are MAJOR levels for big money managers.
How do I make my time & sales window match JJ’s
o At the top of the download section, you will see the doc called time and sales window properties
Which is the best way of trading?
o Scalping? Day Trading? Swing Trading?
– Scalper:
o Lots of trades each day (10-20)
o Low risk per trade
o Low profit per trade
o Low Risk/Reward Ratio
o Goal = get in and out during the day to pick up little moves within the larger moves
o Chart = 4-range
– Day Trader: (best place to start)
o Lots of trades each day (5-10)
o Low risk per trade
o More profit per trade because we use a RUNNER
o Low Risk/Reward Ratio
o Goal = look for the intra-day moves and try to buy when the market rises, and sell when it falls.
o Chart = 4-range, 8-Range, 13-Range
– Position Trader
o 1-2 trades per day
o More profit per trade because we use a RUNNER
o Low Risk/Reward Ratio
o Goal = determine the direction of the day, and follow that direction, never holding overnight
o Chart = 13-Range, 21-Range
– Swing Trader
o 1-5 trades per week, month, quarter
o More profit per trade because we use a RUNNER
o Low Risk/Reward Ratio
o Goal = determine the WEEKLY direction and trade in that direction, looking to hold your trade possibly for months on end.
o Chart = 34-Range, 30-Min, 60-Min, Daily, Weekly
Selling the Lows / Buying the Highs:
– Watch the SPEED
o If the speed increases and we see big sellers at the lows, get short!
o If speed decreases and we see buyers at the lows, stay away from the short breaker pattern, and look for the 2step long entry.
o The opposite is true for the highs
