www.vantharp.com http Van Tharp talks about R Multiples which he wrote about in the book Trade Your Way To Financial Freedom. R Multiples is a way of defining risk. It is the amount of money you are WILLING TO LOSE if you are wrong on a trade. So his definition of risk is how much you'll lose per unit of your investment (ie, share of stock or number of futures contracts) if you are wrong about the position that you have taken. This is called the initial Risk or (R) for short. One of the key principles for both trading and investing success is to always have an exit point when you enter a position. Trading without a pre-determined exit point is like driving across town and not stopping for red lights—you might get away with it a few times but sooner or later something nasty will happen.
www.informedtrades.com A Lesson on Bollinger Bands for active traders and investors using technical analysis in the forex, futures, and stock markets. The link that I refer to on Standard Deviation is here: en.wikipedia.org The link that I refer to with more resources on Bollinger Bands is here: www.informedtrades.com In our last lesson we learned about the Stochastic Oscillator and how traders use this in their trading. In today's lesson we are going to learn about an indicator which helps traders gauge the volatility and how current prices compare to past prices. Bollinger Bands are comprised of three bands which are referred to as the upper band, the lower band, and the center band. The middle band is a simple moving average which is normally set at 20 periods, and the upper band and lower band represent chart points that are two standard deviations away from that moving average. Example of Bollinger Bands: Bollinger bands are designed to give traders a feel for what the volatility is in the market and how high or low prices are relative to the recent past. The basic premise of Bollinger bands is that price should normally fall within two standard deviations (represented by the upper and lower band) of the mean which is the center line moving average. If you are unfamiliar with what a standard deviation is you can read about it here en.wikipedia.org As this is the case trend reversals often occur near the upper and lower bands. As the center line is a moving average ...
www.informedtrades.com A lesson on crowd psychology and how it relates to trading the stock, futures, and forex markets. The best summary that I have seen on this subject, as well as a great book on trading in general is Dr. Alexander Elder's book Trading for a living. As the Trader and Psychologist points out in his book, people think differently when acting as part of a crowd than they do when acting alone. Dr Elder points out that "People change when they join crowds. They become more ...
www.informedtrades.com A lesson on how most traders have unrealistic profit expectations which cause them to lose all their money and what realistic profit expectations are when trading the stock, futures or forex markets. The first step in understanding and building a solid money management plan, the key component in successful trading, is setting realistic profit expectations. All too often I see people open trading accounts with balances of 000 or under expecting to make enough money ...
www.informedtrades.com A lesson on the importance of money management in trading and how most traders of the stock, futures, and forex markets ignore money management because they do not consider it important and therefore loose money trading. Why the Majority of Traders Fail In our last lesson we finished up our series on Candlestick Chart Patterns with a look at the Inverted Hammer and the Shooting Star Candlestick Chart Patterns. In today's lesson we are going to start a new series on ...
www.informedtrades.com A less on how traders determine their initial stop levels when trading the stock, futures, and forex markets. In our last lesson we looked at the difficulty of overcoming a loss in the market to further emphasize the importance of protecting your trading...
