IMMIGRATION GRANTS

Basically there are 2 different kinds of entry setups: · Trend-following.

When prices are moving up, you buy, and when prices are going down, you sell. · Trend-fading.

When prices are trading at an extreme (e.g. upper band of a channel), you sell, and you try to catch the small move while prices are moving back into “normalcy”. The same applies for selling.

In my opinion swing trading is actually one of the best trading strategies for the beginning trader to get his or her feet wet. By contrast, trend trading offers greater profit potential if a trader is able to catch a major market trend of weeks or months, but few are the traders with sufficient discipline to hold a position for that period of time without getting distracted. Most indicators that you will find in your charting software belong to one of these two categories: You have either indicators for identifying trends (e.g. Moving Averages) or indicators that define overbought or oversold situations and therefore offer you a trade setup for a short term swing trade.

So don’t become confused by all the possibilities of entering a trade. Just make sure that you understand why you are using a certain indicator or what the indicator is measuring. An example of a simple swing daytrading strategy can be found in the next chapter.

Step 3: Define exit rules. Let’s keep it simple here, too: There are two different exit rules you want to apply:

• · Stop Loss Rules to protect your capital and.
• · Profit Taking Exits to realize your profits. Both exit rules can be expressed in four ways:
• · A fixed dollar amount (e.g. $1,000)
• · A percentage of the current price (e.g. 1% of the entry price) · A percentage of the volatility (e.g. 50% of the average daily movement) or.

· A time stop (e.g. exit after 3 days)

We don’t recommend using a fixed dollar amount, because markets are too different. For example, natural gas changes an average of a few thousand dollars per day per contract; however, Eurodollars change an average of a few hundred dollars a day per contract. You need to balance and normalize this difference when developing a day trading system and testing it on different markets. That’s why you should always use percentages for stops and profit targets (e.g. 1% stop) or a volatility stop instead of a fixed dollar amount.

• A time stop gets you out of a trade if it is not moving in any direction, therefore freeing your capital for other trades.
• Step 4: Evaluate your day trading system. The first figure to look for is the net profit. Obviously you want your system to generate profits. But don’t be frustrated when during the development stage your day trading system shows a loss; try to reverse your entry signals. On our website www.rockwelltrading.com you already learned that trading is a zero sum game: So if you are going long at a certain price level, and you lose, then try to go short instead. Many times this is the easiest way to turn a losing system into a winning one.

The next figure you want to look at is the average profit per trade. Make sure this number is greater than slippage and commissions, and that it makes your day trading worthwhile. Day trading is all about risk and reward, and you want to make sure you get a decent reward for your risk.