The Trader's Toolbox

Discussion in 'Charting Techniques' started by trendtrader, Sep 1, 2012.


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  1. grado

    grado New Member

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    great learning materials
     
  2. trendtrader

    trendtrader Well-Known Member

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    How to eliminate 80% of our losing trades?

    When the price is above a rising 20-dma and the 20-dma is above the 200-dma, you can ONLY LONG,
    you CANNOT SHORT. Likewise, when the price is below a falling 20-dma and the 20-dma is below the
    200-dma, you can ONLY SHORT....you CANNOT LONG.

    This RULE forces you to trade WITH the trend. Most of our losing trades occur when we trade against the trend.

    Imagine if we can eliminate 80% of our losing trades, what difference THAT will make to our overall results.

    So....

    When the price is above a rising 20-dma and the 20-dma is above the 200-dma, where and when do we go LONG?

    Where to go LONG? At or near the 20-dma.
    When to go LONG? After the formation of a GREEN CANDLE.

    So each time the price retraces to/near to the 20-dma and it rebounds and a GREEN CANDLE appears, that's
    the time to go LONG and you hit the button. And if the price continues to climb, you have a WINNING TRADE
    there and you SHOULD ADD MORE POSITIONS to capitalise on a winning trade in hand to maximise your gains.
    And so long as the price continues to do Higher Highs and Higher Lows, every retracement to/near the still
    rising 20-dma is an opportunity to add more positions to your winning trade. Continue to add positions and
    ride the uptrend to maximise your profits. But no trend, UP or DOWN can last forever. At some point, the
    trend will end and reverse..... or go into consolidation. The game is over when the picture of strength turns
    into a picture of weakness.

    Now look at the following charts and see the SHEER POWER of trading with the trend when the price is above a
    rising 20-dma which in turn is above the 200-dma. Notice how the price retreated towards the still rising 20-dma
    and then rebounded to climb even higher. Imagine you have a winning trade like these and you keep adding more
    positions to your winning trade each time the price retreated to/near the rising 20-dma.

    This is UOB's 6-Mth Daily Chart from Mar 2012 to Aug 2012....


    a1.jpg


    And this is CityDev's 6-Mth Chart from Mar 2012 to Aug 2012. You will see a similar picture.


    a2.jpg

    Likewise, you will see the same thing in DBS' 6-Mth Daily Chart from Mar 2012 to Aug 2012.


    a3.jpg


    The reverse is true.

    When the price is below the 20-dma which in turn is below the 200-dma, you can ONLY SHORT, you
    CANNOT LONG. And where and when do you SHORT?

    Where? You SHORT when the price is at/near the 20-dma and it fails to break above the 20-dma.
    When? When a RED CANDLE appears.

    See for yourself. This is Wilmar's 6-Mth Daily Chart from Mar 2012 to Aug 2012.


    a4.jpg
     
    Last edited: Sep 1, 2012
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