Candlesticks

The ideal trading system would be one that trades without emotions.  This means that you have to develop a systems that gives you the odds, in the long run, to have a profitable trading system.  Online trading systems that take the emotion out are called mechanical trading systems.  I think that you still need some emotion in trading but  the great traders channel this emotion into competitiveness.  Most are very competitive in nature and these traders work on their systems, their risk management and work their online trading plan.  They keep their emotions out of the plan they have developed and follow the plan.  Teach Talk Trade has mechanical plans that help take the emotion out but many still try to second guess the plan.  These traders try to justify their reasoning once in the trade to take a smaller loss or lesser of a profit.  You can not and will not influence the market.  The market will do what it is going to do, you need to continually assess the markets and put the probabilities in you favor with your online trading plan.  You will have losing trades as part of you online trading plan, and if you don’t then  I will tell you that your online trading plan is pie in the sky.  Accept losses as part of the business, this is difficult to do, and learn from them.  You will not eliminate losses, so embrace them, learn from them, and know that the profitable trades are around the corner.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

Online trading can be a lonely experience for the beginning trader. You will be searching for knowledge and will feel isolated. You will soon have the feeling that you just might have no ideas what you are doing. Online trading can be addictive also. You find yourself glued to the screen for 8 hours or more. Try this for a few weeks and you will see that it is draining. If you end up like most people, they will gravitate to an online community for companionship and education. In the future, the Teach Talk Trade Live Trading Room will let you interact with other experienced traders. We have the whole array of traders in our community, from beginner to advanced trader. We are all their to learn and to give support. You will find that being in a trading room like this one, you learn a great deal by watching and listening to experienced traders as well as asking questions and interacting. You will get to see the different styles of trading , thus being able to decide on which style may fit your personality. You should be exposed and explore the different methods of online trading - swing trading, position trading, day trading ect… Loneliness will rear its ugly head especially when you are experiencing losing trades. Boredom can also cause a lack of focus as well as overtrading. That is when many start to abandoned parts of their trading plan which begets more fear and losing trades. Your emotions start to take over your rational trading plan based upon probabilities and you start gambling trying to make up the losses. Teach Talk Trade can help you will all these issues.Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

The Drive to Succeed would be considered to be the trait I see as most important in being a successful online trader. You also need skill and talent. Skill can be gained by knowledge and practice. Talent is an inborn ability for an activity. You must have risk tolerance and have the ability to make decisions under conditions of uncertainty. All you decisions will have uncertainty built into them, you will be in a business of probabilities. You will have to get your head around this idea. Professional gamblers know they are in the business of probabilities, they try to play with the odds in their favor and you must do the same. Amateur gamblers are just throwing their money at something and hoping for luck and chance. Sure they will win some but more often than not, they will be losers in the long run. Online trading can be similar to gambling if you have the amateur mindset. You must develop the professional mindset and try to stack the odds in your favor on each trade. This is where education and practice come in. You need to develop a trading system that fits your personality, fits you risk and money management model and exploits your talents, then and only then, will hard work and discipline work in your favor. You need to be willing to accept losses, it is not a personal failure, it is a normal course of business. Would you consider Ted Williams or Cal Ripken a failure in baseball, of course not, they did not get a hit every time at bat. You will not a win each time you go to bat with an online trade.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

Is online trading as difficult as many say it is? Actually it is more difficult! The easy part is opening an online trading account. You can open an online trading account with as little as $500.00. In my mind that is ridiculous for a serious trader. This is for a gambler in most cases. Now this would be good for a long term investor who will contribute each month and invest in some no load mutual fund, but not a trader. Many traders get some email or go online to search for the Holy Grail, get sold a bunch of B.S. and start to trade. Trading takes education, practice and skill. I have seen articles that note that most traders blow through their accounts within a few months. When you trade, you are trading against professionals with considerable resources. Don’t get me wrong, online trading can be profitable, but you have to be realistic in your expectations, you need education and the right tools. Trading is an emotional game that needs to be conquered. You must conquer fear and greed each day, but with practice you will have the edge. Online trading requires lessons, just like if you want to be proficient in martial arts or playing the violin. Online trading requires discipline each and every day, each and every trade. You need to have a set of rules within your trading plan that enables you to evaluate your overall trading plan. It is hard to evaluate what your success are as well as your failures without a clear trading plan. Teach Talk Trade has the lessons for your success.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

Here I will talk about risk management in developing an online trading plan.  One area is position sizing.  Yes position sizing, do you hear me POSITION SIZING!  You have heard in real estate, location, location, location, well one mantra in online trading is position sizing.  In working your online trading plan, you will back into this area.  If you plan is realistic in its overall scope, your position size will be determined by  the plan and not some size out of your head.  When your position size is too large relative to your account size, you will engage on an emotional roller coaster.  Your online trading plan will crumble fast.  By limiting your  position size so that you are risking only a small fraction of your online trading portfolio on each trade, you are managing the emotional impact of profit and losses as well as managing your risk.  This is a part of money management also.  Many online traders are under capitalized and trade sizes that are too large for their portfolios.  They do this to generate income, their trading plan is most likely not thought out.  The emotional ups and downs will eat the trader alive, thus causing poor risk management which leads to lossesPlease take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

What do you suggest for the beginner or someone who is still searching for the Holy Grail?

I would suggest that this person take a hard look at themselves.  Get some education, and not the fluff that is peddled out there.  You need sound approaches starting from the basics.  Read, read, and read.  Keep current with the areas of the market that interest you.  As part of your education, you need to research the tools you will need that will help you get an edge, become more productive/profitable.  If you were a builder, would you go to work with only finish nails and one hammer in your toolbox?  This would make the process of framing a house difficult, it would be much easier if you could pull out your framing hammer and 10 or 12 penny nails, or better yet a nail gun to frame the house.  Consider participating in online trading rooms and setting yourself up like a business would, get the tools. Teach Talk Trade helps you build a solid foundation, from education, to chart room, a morning call and a live trading room.  We also have an Accelerated Educational Discount Package which is a complete package, a full toolbox, that will catapult you ahead of most traders.

Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

Most people do not know where to start in writing an online trading plan. I believe the that most who are entering the market should first start with education. They need to learn the markets. It is so easy for any one to start an online trading account these days. It should be like any other job. The typical person who wants to be a plumber, usually starts out tinkering with plumbing as a child, learns by watching a family member or friend, then starts an apprenticeship program and schooling , gets his/her plumbing license and becomes a plumber. A typical trader has some interest in the market, plays hot tips and loses money. You should approach the markets with an interested first, then education and apprenticeships and then you are ready to trade on your own. Here at Teach Talk Trade, we help you build that solid foundation of education, offer areas where you can apprentice and then trade with us on your own. Well back to that online trading plan you should write. Get familiar with the markets and get some education first. Online trading is available to virtually anyone. It is then that you will get a sense of the markets and see what might work for you. You will better understand your strengths and weaknesses and realize what might work for you. At this point you can start writing a trading plan, and yes it is important to write it down. You will be best served to write a plan from the top down. From what your yearly goals are, to monthly, weekly and then daily. You will need to write down what markets you will trade and how you will trade them. Teach Talk Trade has many articles that can help you with the process as well as training sessions.
Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

We get a lot of questions about various complex money management (MM) formulas and our preferences. We don’t comment on this subject very often because money management is such a personal issue that it would be impossible to give any universal advice that would be specific enough to have value. Everyone seems to have different goals and tolerances for risk, not to mention varying amounts of capital for trading. However we do have some basic thoughts and opinions that might be helpful in picking a suitable MM strategy that will help you to become a winner.

Be careful about trying to use formulas that are designed to optimize the returns. In my experience I have found that the most successful traders, over the long run, are not seeking to maximize their returns. The best traders are always seeking to carefully control their risks and to achieve as much consistency as possible. They look for methods to achieve consistent returns with low drawdowns and they are willing to accept smaller returns in the process. My policy has always been to worry about the risk and the consistency first and then to accept whatever returns that prudent approach will allow. I’m sure I will never win any trading contests and I have never bothered to enter one. In my opinion, no one should ever trade like the winner of a trading contest. I apologize for getting off on a different subject here. Lets get back on track and talk about trading in the only contest that matters - the trading that you do every day.

In recent years the strategy of risking a small percentage of capital on each trade has become quite popular and deservedly so. This MM strategy, often referred to as fixed fractional trading, reduces our dollar amount of risk as we experience losses and increases our risk level as we earn profits. The possibility of ever going to zero with such a strategy is virtually nonexistent. However this strategy has an inherent weakness that tends to constantly work against us. If we assume an equal number of winners or losers in a sequence this popular strategy produces net losses if the winners are not larger than the losers. To keep things very simple lets just look at a series of five wins followed by five losses with the wins being equal to the amount we risk. Lets also keep the math really simple and begin with starting capital of 100 and risk 5% of our current capital on each trade. I think that most traders would assume that if they had five losers followed by five winners they would be even. Unfortunately that is not the case.
Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

Using Stop Loss Orders to prevent an Investing Disaster

Many investors fail to use a Stop Loss Order to protect themselves in case they end up buying a stock at the wrong time. In his book “How to Make Money in Stocks” William O’Neil states even the most successful investors maybe wrong about 50% of the time when choosing stocks to invest in. The key is to cut your losses early when a stock fails to follow through to the upside and minimize your losses. However many investors fail to do so and allow a small loss to turn into a much bigger one by not using a proper Stop Loss Order.

Many investors fail to use a Stop Loss Order to protect themselves in case they end up buying a stock at the wrong time. In his book “How to Make Money in Stocks” William O’Neil states even the most successful investors maybe wrong about 50% of the time when choosing stocks to invest in. The key is to cut your losses early when a stock fails to follow through to the upside and minimize your losses. However many investors fail to do so and allow a small loss to turn into a much bigger one by not using a proper Stop Loss Order.

A good rule of thumb is to never let a stock drop more than 8% below the Pivot Point when it reverses to the downside after initially trying to breakout. Thus this is where a Stop Loss Order would come into play.
Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.

Every trader wants to make money, that is why were are in the game. Even the very best traders realize they will have losing trades. Losing trades is part of the business and you need to get your head around this. If you are playing baseball, would you expect to get a hit everytime at bat, of course not. Very good hitters have a batting average in the 300’s. Just think what is considered very good in baseball, getting a hit 3 out of 10 at bats, 30% of the time, would be considered terrible in trading. But wait, could a 30% wining record be good in trading?

Well lets see, if you had a system that had a probability of 30% wins and 70% losers could it be a great system. This would be a hard sell to most people. But if you think in probabilities and odds it just might be a good system. Lets say your wins produced an average of $3000 for each win and a loss of $1,100 on each losing trade. Well this system over the long run would produce a gain of $130.00 for each trade, not bad. You see though, you would need the fortitude to emotionally lose most of the time and have losses of $1,100 each time. This would be difficult for the amateur trader. A trader with a $5,000 starting account could not even think of using this system since it may wipe the trader out before a profit. Even a $10,000 account would be too small in my opinion, the capital at risk would be too large.

This trader could experience 11 losses before a win also. Losing trades are part of the business. Teach Talk Trade can help you develop a system that fits your
style. Teach Talk Trade can show you the tools you need to be successful. TTT educates you, we teach you how to develop and test for yourself. There is no Holy Grail, no system that is 100% successful. After a long testing period, every trader should evaluate their statistics to find their edge. What percentage of trades are profitable? What is the average winning trade? What is the average losing trade?

What is the average profit per day? What is the equity curve? What are the potential drawdowns. Testing a trading system is a gradual and painstaking process. By paper trading, the trader can develop his/her skills and evaluate a trading system. The next step is trading minimum size positions and testing system results. You need to keep well within your risk tolerances at this stage so that you can learn the system, and control your emotions. Keeping a trading diary and tracking performance as the system develops can establish the system’s edge and odds of success. Keeping a journal is a MUST on Teach Talk

Trades list of successful things to do. By keeping a trading journal, the online trader can assess the trades and performance which will help you become a professional trader.Please take advantage of the FREE 7 DAY TRIAL to The Morning Call ( we discuss 21 futures, ETF’s, E-minis, NASDAQ & Solar & Alternative Energy issues ) & The Mechanical Monkey where we discuss our mechanical trades.