When The Market Goes Against You

Eyb Kofnas is president of an educational Web site for traders forex market - Learn4x.com. The greatest challenge for the trader with trading on the FOREX market there, when he opened the position, and the market begins to move in another direction. Responses to emerging situations are the true test of endurance and intelligence trader.

This paper is dedicated to offer a few strategies that can help in such cases.

Here are the traditional methods of limiting the losses:

1. Stop order: The freeze order shall establish control over the passive losses. When you open a position, you can immediately place a stop order. One of the rules for placing stop orders for the purchase, for example, it would be a stop-order on the previous wage, or at the level of support. When selling, you have to stop a warrant for a previous maximum or on the level of resistance. This allows you to control the loss against extreme movements. However, this does not guarantee the exact performance, because, depending on your broker, the majority of stop orders become market orders when they are activated. In extreme movements, your stop order will be activated, and in fact met, when the price may be too far away. The negative feature of stop orders that recent levels of support and resistance is often tested with a view to increasing the stop-orders. Many faced with a situation where the position is closed by a stop-order, and then the market started to move in a direction which was originally expected.

2. Stop-turn: In this option, you open the position to buy or sell and post stoporder with an additional lot. For example, when buying a lot of euro 86.50, you place an order for the sale of two lots of Euro 85 95. This strategy keeps you in the market, and expands your position. Of course, this does not protect you from possible re-turn the market in the initial direction in which you will find yourself on the wrong side.

3. There is no stop-orders. You open a position and leave her alone. This strategy allows the market to work. There are two disadvantages: a) when the market intensely moving, you remain attached to the wrong side. b) you have to test their patience. A bit long, people may look at the position, which continues to build up their losses. The advantage is that the currency pairs fluctuate over time and have a wide range. If you focus on the longer time scale, the price will tend to remain in the direction of the trend, which is dominant.

Fortunately, there are alternatives to these strategies. Traders are not limited to these three strategies. We'll call this new technique for risk management - Simultaneous buying and selling. Some companies that provide services in the FOREX market offers this feature. Company "FXSOL" is one of the brokers and their trading platform podserkivaet it. We recently spoke with Tom rafts from "FXSOl" on this approach.

"There are several reasons to open a multidirectional stand on the same currency pair," said Raft. First - this is the psychological advantage of the fact that to always be involved in the market. Even though the position zahedzhirovana, and the customer can not lose money because of adverse market movements, it is still emotionally involved in the market and can tailor the hedge in accordance with how the situation develops in the market. The second relates to the ability to remain involved in the market during a limited range of the market. It helps a trader to avoid quick turn, are worst enemies of traders. "

In this strategy you open a position and, if the market moves against you, then you open an opposite position. They will not vzaimozakryvat each other. The position on the purchase, there is the account in conjunction with the position to sell. What makes this really - fix the situation and allow the trader is not the time to manage risk. Say, for example, the position moves in for the purchase of lucrative direction. You can leave a position to sell as is and add to positions on a purchase.

If the market starts to move back, the position on the sale can be closed when it becomes profitable. The advantage of this approach is that it allows the trader quietly assess market conditions and does not become hostage to these conditions. Trader can choose how to balance between these positions. A full hedge occurs when a position in the buying and selling equivalent. This freezes the ratio of profits to losses. But it does not freeze position.

If the profit from the position at one side quickly reaches a certain level, they may be closed for a fixed profit. You can add more to one side and to increase one direction than another.

One of the best applications of this technique is possible when trading ranges. When there is no certain clarity in which direction to go, you can open the position to buy and to sell and let the market come to you for help. To do this, you do not need to test its strength.

While it is not absolutely oshibkoustoychivoy technology, it certainly deserves attention. Ability to be on both sides of the market at the same time is rarely used, but probably could be applied more effectively by most traders.

Forex Magazine
based on www.futuresmag.com

Trader Dictionary

Technical Analysis - is the art of constructing a curved line from unproven assumptions to the inevitable conclusion.

Technical analysis - this is a painful process perebiraniya obvious things!

Analyst - it is a professional who pays for it, that he did the wrong assumptions about the markets.

Technical analyst - are professionals, who are paying for something that he, using computers, making the wrong assumptions about the markets!

Market analyst - this is a specialist that tomorrow you will ably explains why his prediction yesterday did not come true today!

Market analyst - this is an idiot, which lowered the forecast of market-based instruments immediately after you bought it!

Broker - a person who invests your money until they are finished!

Broker - a person who has always wanted, willing and able to invest your money for their own profit!

Broker - a person whom you trust to help you make key financial decisions. Please note that the first five letters in this word (broke) means "broken."

Bank - a place where you provide an umbrella in fine weather and ask for it back when the rain begins.

Action - a magical piece of paper, which was worth $ 39.95 until you have not bought. After that it will cost $ 5.50!

Trading on momentum - the perfect art of buying and selling to the maximum to minimum!

Positional trade - the art of buying and selling at the bottom even lower!

Bull market - a random market movement, forcing the investor take a financial genius!

The market correction - the day after you have opened a long position!

Diversification - things go wrong all along, but they are correct in isolation!

Behavioral models of trader

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 trade», 2003. Doctor Stinberger published over 50 articles on short-term approaches to behavioral change for traders.

Although I am not leading private practice on the training of traders are likely to be inevitable that traders will look to me for help after reading my book on «Psychology trade». From time to time I am working on projects with a group of traders to use psychology to improve their trade. In the past few years, I have collected personal data of interviews, and helped more than a hundred traders.

This is a representative model, and allows me to make findings on the psychology of traders and typical challenges they face in their trade. Below, I identify several points that I learned from the survey and interviews with traders who trade for their living.

• Most problems in the trade are variations to concerns about performance. Anxiety execution occurs when the execution of trade, which usually happens automatically, it becomes the object of excessive study. This attention to the execution of an effect of the intervention, in which execution can no longer take place naturally. With such a concern often faced in the execution of sporting events, with a public speech, passing tests, etc. Whenever fear about performance dominate over directly by the execution, the results will suffer.

• Anxiety execution occurs during periods of market success, and in times of loss. It's easy to find traders who are able to take losses, but who become frightened when they record profits prematurely, ie, to achieve their goals of profit. The effects of barriers after the string of losses is more grueling than the effects of obstacles on the pressure, which traders feel when making money.

• Traders normally try to replace negative talk with each other on the positive during the trade. This is a mistake. When traders are loaded into the market and focus on the screen, they do not participate in a conversation with them at all.

• Striving for perfection is the most usual source of performance anxiety among traders. Traders tend to focus on achievement and are often set high goals for themselves. These performance goals are making the tension, when goals were not met. Actually, it makes sense to replace the goal of performance objectives of the process. Rather than set the goal to make, for example, $ 25,000 a year, the trader must, for example, aim to follow the trading plan (inputs, the size of the position, outputs) in 90% of all cases.

• The quest for perfection leads traders to exceed trade regime. The excess of the trade regime is the most common source of losses among traders, which I took the interview. Traders exceed the trade regime, when they feel pressure to make money that dazzles the trader about what is happening in the markets at this time. Trading in the low volatility, trading outside the trading plan, trading losses, and trading unreasonably overestimated the size of the positions - these are examples of excess trading.

• Traders who deal with the concern of performance on the same level of position (eg, 5 lots) often re-experience this problem when they significantly increase the size of its positions (50 lots). We do kalibruem our emotions, based on the amount of money that we earn or lose. This makes trade pyatidestyu lots much more difficult for traders, trade than five lots, even if the market situation could be absolutely identical.

• Traders often think that they have worse psychological problems than was the case. When model performance raises concerns in trade for a considerable period of time, traders often become convinced that they are driven deep into their emotional problems and in need of intensive psychotherapy. Often, the self that he destroyed or emotionally unsuitable, a greater problem than the direct execution of concern, which is quite soluble problem.


Of course, there are other problems, not just associated with fear of performance that can confront the trader. Many of them described in my book. The uniqueness of the performance anxiety that it could crush the very successful traders are the same as it was new. This is why most of the problem concern-the desire for perfection has tended to be the most focused on achievement and successful traders. This is indeed a double-edged sword.

Somewhere between the extremes of pressure and satisfied with the performance of laziness is a happy middle, where traders can focus on self, not sabotaging your results. Trade like a well-planned process: you want to keep the initial expectation is reasonable, to enjoy this while it happens, and learn from this as soon as completed.

Next, we consider the strategies that a trader can use to overcome the pressure of time.

Consider the following psychological scenarios:

• A student must pass a final exam at the rate of anatomy in order to successfully complete their first year in medical school. Since its first few tests were on the verge between successful and unsuccessful passing this exam completely affect the final result. As the ideal time for the big test, a student, more and more worried about this test, especially when he misses some of the issues. Anxiety affects his sleep, which in turn makes it even more worried that fatigue will prevent him from successfully pass the exam. By the time he was taking the exam, he was tired and perevozbuzhden and skips a lot of questions, often reviewing the correct answers.

• The young woman did not ever feel comfortable when speaking in public, but now it will hold the most important presentation in his career. As a result of this presentation it or get the main client for the firm, or lose it in favor of a competitor. During the conversation, she pointed out that members of the audience from the client, which it seeks not seem to be especially careful. This suddenly makes her anxious, and she desperately tries to give a presentation problem. When she loses the thread of our conversation, she becomes excited, and finishes the presentation of an uncertain note.

• Trader has several winning deals in succession, and a confident feeling, increases the size of positions that benefit the good lane. The market initially was in his favor, but quickly develops when large orders are pushing it in the opposite direction. Looking at the position, he realizes that he lost all the profits from his previous winning deals. He re-enters the market, just to capture this second wave. Now he feels as if he had entered into a failure and hesitantly begins to trade, with a reduced size perspective. By the time of closing the market, he receives a negative outcome for the day and week. He feels as a dullard who has become too reliant upon their achievements.

No doubt you can find a familiar pattern in each of these situations. A man was executed in a situation where he feels pressure to succeed. The situation plays a critical role in the eyes of man, and he now focuses on performance, rather than directly at the viewer. This is a double center of concern - to focus on performance, rather than remain sequestered by the execution - is a common element underlying all the concerns of performance. Such anxiety is the single most common problem of trafficking, which I encountered in interviews with traders.

How traders can reduce their level of performance anxiety? Here are some strategies that, in my opinion, can be effective:

1. To concentrate on the process, when you think about the trade, rather than the profit and loss - Traders like to set goals for themselves - more so than not - money goal lead to unnecessary pressure. Better goals are to focus on the trading process, such as limiting the losses in two tikami if you skalpiruete market or hold the position until the slide stop, the warrant will not be activated. Good attitudes «if I sell to, the profit will come by itself». This will remove most of the pressure to perform.

2. Gradually increase the risk. Risk leads to psychological aggravate the situation and greatly increases the likelihood of pressure during the performance. Bad shot in basketball in the first minute of the game is no different from the bad throws in the final seconds of game in the tie, but there is a huge psychological difference. Traders who try quickly to radically increase the size of your account, find that the transaction, which has been able to 1 lead, can not work with 10 lots, because of the pressure leading to the request too quickly to limit losses or take the profit. The gradual increase in the size of the position far more effectively than impulsive jump, which you find yourself emotionally unprepared.

3. Get away from the screen. Talking with them during periods of performance anxiety actually affects accurate processing of market data, because part of the brain responsible for perception and action in the market model is not activated. Much better to move away from the screen and refocus on what the market gives you, rather than blindly acting on fear and further complicate the situation.

4. Use Mental rehearsal in order to make the dangerous situation your friends. This may be only the most effective technique, which I found to reduce and eliminate the fear of execution. Using the managed model that has been repeatedly confronted with dangerous situations, and mentally rehearsing, as it would be a better answer, you can eliminate much of the tension, when such situations occur in reality. The aim is to so often confronted with the fear of execution to think that copying the answer to it becomes automatic, like a familiar model.

5. Privyazhite Mental rehearsal of a particular psychological condition. This is - one of the best strategies covered in my book. Learning to place themselves in a state of extraordinary calm and concentration, and then, repeatedly repeating the strategy for dangerous situations, a trader can establish a link between psychological status and copy answer. When there is tension performance, all that a trader should do - is to call upon repetiruemoe psychological condition and repeat the behavior that has been studied in detail. For example, if you're constantly thinking repetiruete strategy in order to retain the winning transaction in the maintenance of calm, renewal of calm during the next winning transactions will facilitate the conduct related to the holding position.

6. Do mentally tested in front of traffic. Removal of high expectations at the beginning of the trading day may reduce the pressure of performance. Every time when the word «shall», is the idea of trade-is being stripped. The word «shall» includes internal requirements in order to make some money, deal with some frequency, to return the money back after the loss, do not keep money in the market, etc. As concerns the performance is often supported by excessive demands on themselves, the management and confirmation of the reasonable purposes of trade during the trading day may reduce the pressure of performance.

7. Separate trading of life. When something becomes too significant, the pressure that accompanies the performance, increasing exponentially. Traders who trade for their livelihood, are particularly vulnerable to the concerns of performance. If the trade - this is your entire world and it does not work, then you will feel as though your world is crashing. Lay «eggs» self in a few baskets, so that it could guarantee that the inevitable recession and the black bars will not destroy your confidence.

I want to stress once again: the majority of traders who believe that they have driven their psychological problems, deeply inside themselves, in fact, caught in a vicious circle of excessive demands on themselves, increasing the pressure of performance, causing anxiety, which leads to violations of the execution and renewed demand to itself, to compensate for the failure. After some time, traders are caught in a circle, are beginning to doubt as to whether they had ever succeed.

Brett Stinberger
www.turtletrader.com

How to make a Profit

The extreme limit, and its use may lead to your success.

In order to write this article, I took a few weeks to see whether such a system and what results it can give. In my opinion, she gave a good result and is likely to show itself and more. In this article I would like to describe the analysis of the work and principles of testing the system.

A very important point in the trade is to gradually enter the market and also confident of it go with a positive result. With all that is necessary to obtain a positive result of at least several months to be sure to claim success in this endeavor.

If you have already learned more than one hundred pages of text material, then surely you remember such a clever phrase. With the simpler the system, so it is more efficient. Exploring different methods of trading, I come to the conclusion that it is actually true and there. Because the market is very chaotic, and some specific reasons for his motion is not, or at least very difficult to determine the cause of premature created a strong movement. Therefore, in order to earn it, we have to learn to sag. It is important to learn to manage the patient because the market severely punishes impatient. Surely you noticed: now open position, and the price went against you, and once the position is closed to foot, the price is gradually changing its meaning. And if you stayed a bit longer, it probably would close with a positive result. To such a case, I do not propose to take advantage of my system and test it on 100 per cent.

Figure 1 - Timetable for EUR / USD

Look carefully at Figure 1. It shows a graph which illustrates the change in price over the three-month period. Now it is very important to find the causes of such dramatic change prices. Typically, such a large price movement is due to several reasons.

1. Business news (some strong economic news), it must be some very important news or report, which was waiting for the whole world. For example: a record of applications for unemployment benefits, the gross national product, the election of the president or parliament. They begin to discuss the news for weeks or even two before leaving. If you carefully follow the events that occur on ryke, it is possible for a few days to prepare for full release of such a strong news.

2. Very interesting. I am sure you are very often asked myself the question why the price drops at a time when some significant reasons for its movement is not observed. And this fall may be a very long period of time some of the day, and sometimes two. So this moment is akin to interventions that are difficult for Japanese to them. When the location of a certain price range, there are price levels, which test, either of Perforation which can provide an impetus to further movement and the subsequent drop in prices, or growth. These levels are called the levels of orders. Few people can just give us a value price, which will allow testing immediately set in motion price. Therefore, banks and brokers announce price levels of the warrants market participants to buy or sell, the levels of mass congestion of warrants. This in turn could presumably to warn us of the sharp drop, or secure. Very often, these movements may allow us to get a good profit, therefore, need to learn how to manage themselves and their money in such periods of time to use it for themselves.

Now that you know the main reasons for the fall, a sharp fall in prices, give the picture number two.

Figure 2 - Numbering relatively quiet time periods.

In this figure I have identified 8 time periods for which it is possible to analyze the movement of prices. Of course, when we are on the market, we can not assume how the market will go, and in what direction will change the price, so we will assume that we do not know what would happen in the future, other than the alleged levels of orders for purchase or for sale as well as economic calendar. Therefore, our task is to find the best time to enter the market. Based on the results, the less risky method of entry is when the market is planned major drop. Because you can not pre-determine or notice offensive of Perforation of the deployment orders, so the best option for the planning of market entry is, of course, some kind of a news story. You can even pre-enter and perestrahovatsya, exposed to stop turn. In this case, if you're right, you can get an instant increase in profits, whereas if you are wrong, your stop-Los match, then the warrant will be executed on a turn. In the case of the wanton growth or fall of prices, you can use the following option. To determine the price of market entry, I use the calculation of the price relative to the previous wave, see figure:

Figure 3 - Determination of the time limit recoil.

Look closely at Figure 3. It shows a long wave and its subsequent correction of 1-2. At such times, in my view, very risky to carry out financial transactions, because the correction could play and his return. Here if a correction is very deep then the probability of response below the warrants is very high, which can guarantee the subsequent movement in a given direction, otherwise the price will return to the previously established price range. Pay attention to the figure that, in such moments of price moves are not instantaneous, but gradually, which means that the stop level should be slightly higher than usual. This in turn increases the risk. Therefore, in order to optimize the calculation of risk-profit, I think the position should be reduced.

In such moments is carried out through the entry of orders based on certain price levels. It is very important to calculate the level of the entrance and placed the foot, because it can seriously help you in the future price movement. Very often there are such moments, when properly located stop working, and then again the price continues to move in the direction you predicted. But if you do not want to risk, you can do to refrain from such a transaction, because there is very little chance of success. We must be professional in order to accurately determine the response time of orders of other participants.

But in this case, the most successful deal could be working on the road, due to the strong financial news, because in such moments in the market there is a strong movement, with very fast, which in turn will allow you to get your earnings, if your orders were placed in the right place. By the way on this occasion I will talk in more detail in my video seminar, so stay tuned. These points will allow entry into the market with a minimum of foot, and in the case of a wrong, you can always roll back to close with minimal foot.

Happy trading to you!

Alexander M. Mazurkevich
AlMaz Fund Management.

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.

Forex Magazine
based on www.brettsteenbarger.com

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.

Forex Magazine
based on www.patterntrapper.com

Choosing the trading system

Introduction

A good trading system should be an integral part of this business, so you can enjoy superior returns with controlled risk. However, the choice of a good trading system can be a very difficult process. The problem is that most of the systems offered by the public, not good enough, which means that they do not provide effective, state distributors. Therefore, it becomes necessary to have a way to distinguish a good system of false rashvalennyh systems. Fortunately, there is a way to do this using a set of requirements to be met by the system before you could consider using it.
I have suggested here 8 criteria that will allow you to choose some really good systems from all others.

Criteria

A good trading system meets the requirements of each of the 8 key elements, while most systems will perform only a few requirements. For example, the trading system may be advertised as providing 80 percent of the winning transaction, which at first glance it sounds quite attractive. However, losing the deal the same system may be 5 times higher than the average profit a winning deal, making the system loss.

1) Mechanical system

Trading system must be 100% mechanical, with the exception of a human factor. It also can not change or adapt, as time continues to conform to current data. Also, the system algorithms or rules with manual performance, should not hide or be adapted for short-term, non-repeated patterns of historical data, which eliminates losing the deal.
A good indicator of the system will be to demonstrate consistently good results at least 5 years of past data that meet all other criteria are also listed in this article. Promotional materials of many systems to choose only the winning transaction, ignoring losing the deal or, worse still, will not be able to detect Losing the deal as a whole.

2) Liquid Markets

Trading system should be geared to the liquid markets where sufficient daily volume exists to easily and consistently comply with the warrant, as it is a system with minimal slippage. For example, the futures market index S & P 500 is a liquid, while the market contracts for orange juice is much less liquid.

3) The independence of market direction

A good trading system will not depend on the specific, such as bovine, sending the market for its success. It must demonstrate successful work in all market conditions: bullish market, bearish market, as well as trade in the side band.

4) Hypothetical results of the

Primary way to evaluate the trading system is based on testing of its work on historical data ( «hypothetical work»). However, a report on the implementation must include the real market conditions - the trade spread, slippage, commissions, etc. These conditions could hypothetically make the winning transaction in losing. Beware of any data on the trading system, which is not included, or underestimating the impact of real market conditions - such data is nothing but a deception.

5) The maximum decline

Inherent characteristic of trade in general and trading systems in particular - is the maximum decline in the trading account of the last peak. This is a very important factor in assessing the risk associated with any system. There are two aspects to consider: the importance of dollar decline as a percentage of the total bill (not to exceed? Average annual income) and the duration of the recession, has not reached a new peak level of assets (not to exceed 6 months).
Many trading systems have shown greater returns over the past few years, but did not reveal the recession, which sometimes exceed the initial capital invested, and lasts for a year or more. Before the selection of the trading system, you should be able to quantify the risk of recession, and find it suitable as a material, as well as emotionally.

6) The initial size of the account

The maximum decline in the past (at least for a period of five years) plus a deposit required for a contract - this is the absolute minimum account size required to trade on the system. And, to be conservative, prudent to add a buffer, because the maximum slowdown for any trading system is always in the future. Many distributors of significantly underestimate the size of the initial accounts, required for a successful trade on their system, leading people to false expectations and probable failure.

7) The annual rate of return

Annual returns are measured as net profit after all deductions (commissions, etc.) divided by the initial size of the account, giving you an annual yield as a percentage of the initial size of the account. Here, two important things. First, the average annual net profit should at least doubled, exceed the maximum decrease occurring for at least five years. Secondly, there should be no completely unprofitable years.

8) Trade Profile

It should take into account two important aspects. First, the winning percentage of transactions should be within 40-60% of the range, and the ratio of profit to the average median loss should range from 1.3 to 2.0. Secondly, the average net trading profit (total net profit divided by the total number of transactions) must be a minimum of 3 times more than the actual costs of conducting a transaction. Beware of systems that promise more than 60% of the winning transaction. Such systems usually show very little correlation to the average middle-winning losers, where several Losing transactions could easily surpass profit from winning a few deals.

Now you've got the tools

Following the basic principles outlined in this article, you can distinguish the false from the bloated system really good trading systems, making excellent returns with manageable risk. Remember: the trading system shall comply with all elements of the criteria listed here so that it can be seen as a potential system, which you might consider to trade on your own account.

The next step is up to you

Trading systems are not suitable for everyone. Trading in the markets involves substantial risk. However, the use of a good trading system can make a significant difference between mediocre or negative, and excellent results.

Bill Pulos

Trading on the prognosis or the market?

A lot of my customers asked this question, like other traders, so I just want to talk about it. Many commercial systems and almost all the analysis on market trends and seek to predict, if you want to predict the future behavior of the market. It does not matter whether the trader uses fundamental and technical analysis, if his opinion is formed, therefore the trader tries to predict the behavior of the market.

Some use the Elliott wave theory, some rely on economic factors, but the main objective is to assess where the market price will at some point in the future. These types of analysis may, from time to time, be quite accurate, but not always. As traders and people, we will always have opinions and ideas based on our belief that we have experienced. Regardless of how strongly we do not have opinions, we can not seem to help themselves do not have them.

As traders, we should be interested in how we use those opinions, projections and beliefs - it is a fairly important issue. Since the market does not care about our opinion, first and foremost that it is necessary to understand - is that all these views, or projections about the markets are nothing more than as fantasies because, at present, they do not exist in the real world.

We want to trade fantasies? It is obvious that no! But how can we use these forecasts to help themselves to trade rather than to harm yourself? This is extremely important. Let me cite a few examples and analogies as to how predictions can help or harm you.

Let's say you believe, based on forecasts made on the Elliott wave theory, which some market instrument is going to start upward trend. Even MACD shows a positive divergence. You say to yourself: «I buy here and I will wait».

It takes some time and rather than start their upward trend, our market-based instruments down. You tell yourself that you have entered the market too early, but that you are confident that the market will go up very soon, so you decide to hold the position for some time.

With the following tool bar, the market goes even lower, and now you really volnuetes. Bull divergence in the MACD is still present, and Elliott wave analysis remains the same, but looks as if this movement was down the last: «market noise», calms you are yourself. In doing so, you think, «can not go much below the market», and so you hold the position further.

Then the market price of the tool drops, you panicked, close their position and ask themselves how such things could happen? The answer is that it happens all the time with traders, who trade based on the forecast, rather than the actual market action!

In this example, the trader holds on to his imagination, based on his prediction. His faith in his outlook has meant that he did not place a protective stop-order, which is typical for traders locked in this type of trade is forecast. In the end, the ego also plays a role.

Now, let's take that same example and show how one can and should use market forecasts to their advantage. Rather than just buying a market instrument for the current price at the moment, based on its positive forecast, we are waiting until the market shows signs of actual tool change its downward trend.
We feel that, based on our forecasts, this marketing tool will soon spread, but the current reality shows us that as long as this does not happen. Thus, we have a purchase right now, but instead wait until the market-based instruments will not show signs of actual power - we, as traders «sell on the market, rather than on forecasts». However, we use the forecast to prepare and keep the market-based instruments in our list of possible opportunities for the future.

I want you, as traders looked at the forecasts as to the assistance of the trade, rather than as a direct reference to action. That's why it should become one of the tools in your technology arsenal.

Use the following analogy with the reflection of projections:
Do you plan to walk under sail during the day. You check the weather forecast, and it was not good: expected heavy rain and wind. You have a big boat, you are an experienced sailor, and you decide to still make their walk.

When you leave the dock, the weather, as predicted, gorgeous - sunny and only a light breeze. Now, I ask you, even if the forecast is expected to heavy rain and wind, you could put your raincoat right now or to wait until the weather does change? I think most of us would be waiting for the actual changes in weather conditions.

You can also set a sail boat to match the current weather conditions and the actual wind, but not predicted conditions that might occur, but could not. If you lift the small storm sails now, your boat will not be able to swim with the current light breeze.

When weather conditions change, you change his clothes, and sails under the weather! Seaman, in this example would use the forecast to be prepared for a possible worsening of weather conditions, taking the raincoat and the sails.

The same goes for trade! Regardless of whether a forecast of market movement, make a corresponding note, but the deal based on current conditions and be prepared to make if the conditions change. In other words - «deal on the market, rather than the forecast!» Or, you can rephrase it in another way - «Live in the present rather than future or past!»

Bennett MakDouell

Models of market success 1

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 trade», 2003. Doctor Stinberger published over 50 articles on short-term approaches to behavioral change for traders.

It was written many books on the market success. However, it is unclear as experienced traders are making their impact. Several explanatory models implicitly traced in these publications:

1) the psychological model - a market success, according to this model, depends on the self and the psychological state of the trader. Successful traders do not necessarily have the best trading practices, or what some secrets, but the ordinary method more consistently, with less emotional involvement, and therefore better management of risk. The development of commercial success is a function of development in this model.

2) scientific model - according to this model, successful traders are obtained primarily as a result of continuous and deep study. Markets show patterns of cause-effect interdependence, which over time changed. The role of research in this regard, is to expand these schemes to trade with them. This model, in a sense, is the antithesis of the psychological model. This model assumes that as soon as you discover any inefficiency in the market, it can be incorporated into the mechanical system, which eliminates any concern for the human elements of the trading process.

3) a model to understand the hidden structures - the model emphasizes that success in the market depends on understanding the market. On the market there are some graphics and other formations, which does not change over time, but they are not necessarily visible at first sight. The role of the professional trader is in the right rasshifrovyvanii and application of these universal structures. This is not so much connected with the function of research, but with the experience. Such approaches to the trade as an image formation, Elliott Wave Market profile or not a systematic approach to trade, but instead rely on the skills of a trader on the interpretation of such market structures.

4) model of execution - in this model, trade is seen as an activity associated with a specific performance, like athletics. Successful trading can be decomposed into components of the skills and abilities that can be worked out and improved by intensive training and practical application. The result will be less connected with any research or the ability to interpret the image formation, but mainly to the ability to perform fast, in other words from the perceptional and motor skills.

No doubt each of these models has some elements of truth, and quite possible that all these models are part of what is associated with the notion of success in the market, not much different from the descriptions of the elephant by the blind men in the famous parable (when they had touched different parts of an elephant). The first and fourth models are concentrated on the quality of the trader, while the second and third models are more related to the basic qualities of the market.

In a sense, these models are like lenses, which are of traders to form their attitude to the market, depending on how they view the world and, with the priorities of that for which they work. They reflect the deep structure of beliefs about the nature of the world: whether the validity of fixed-line, thus ensuring that it can be to reach universal formations or whether it is fluid, helping to ensure that it can be covered through a constantly ongoing research, is whether knowledge of the apparent t . f. obtained through psychological reflection or implicitly - is reflected in the performance.

As the market success of these models are based on our fundamental understanding of the world, I suspect that they are much less amenable to modification than is usually presented. The researcher will feel not quite yourself with Elliott wave theory, not because of any objective evidence that the researcher finds flaw as adherent Elliott Wave mnogoznachaschim contrary, but because the very notion of a fixed, stable reality is not consistent with his vision, which stresses the dynamic relationship . Traders, who is considering trading in terms of correct execution of the idea that success depends on the psychological state, not just perceived - unless you can become a good surgeon, through the inner self?

Perhaps a successful trader is different from the unsuccessful is not because of the superiority of one model over another, but because he found a model for their professional development, which is consistent with his inner personality, outlook and life experiences. Unsuccessful trader may experience a lack of consistency in a model as a whole - impulsively moving from working on myself to work on market research of the market changes to the interpretation of the universal market formations. Or unsuccessful traders may follow patterns which are in conflict with their domestic individual characteristics and life experiences, as in the case of an intuitive person, who is trying to link its trade with mechanical schemes.

In this sense, the models are like religion - may be many paths to spiritual growth, but must find its own path, which corresponds to you. You can not be a devout Christian in a single day, practice of Zen Buddhism to the next, and be orthodox Jew to the next. Before you ask different questions about the opportunities in the market, or what kind of training is needed to trade on the basis of this feature, you can start otshlifovyvat his own view and to formulate a plan that will contribute to your success.

Brett Stinberger
www.brettsteenbarger.com

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.

Mark Booker
www.hardrightedge.com