ProTrader Academy

/ProTrader Academy

Bonus – lesson 13 Market Secrets

What if the market “Gaps Up” when you have a buy order placed?             Let’s assume that you want to buy a stock if the price breaks through the $1.00 level and that the price has closed at say 98 cents. There is some good overnight news and the price opens at $1.11 the next day. You were expecting to pay about $1.01, what will you do? What will your broker do in this situation, whether a tradition broker or an

Lesson 12 – Review Your Trades

Trading Journal Keep a journal of your trades listing your trading plan criteria and how the buy/sell fits the plan. Create a daily trading journal to record feelings and actions. Print out charts and record entry signals and stop losses. Once the trade is closed print a chart and mark exit points. Apart from recording details of a particular trade I feel it is important to record your emotions prior to entering a particular trade. Your trading plan should give you

Lesson 11 – Exit The trade

Exits – general. Unfortunately very few investors consider having a process for exiting a trade or more importantly, taking profits. So often investors will own a stock where the price has risen considerably. They will then sit back, wait for higher prices that don’t eventuate. They will continue to watch prices decline until the trade becomes a losing position. Then they will wait for prices to rise again. Invariably prices continue to fall and the investor then chooses to put his

Lesson 10 – Managing the Trade

Add to a winning trade     Trends in quality stocks tend to carry on for several years. In the early stages of your trading career you will be tempted to take quick profits when they present themselves. To take advantage of these trends you need to consider adding to a winning position rather than selling far too early. To add to a winning position you need to look for another buy signal such as a new high price. My preference is to

Lesson 8 – Money Management Rules

Always sell your worst performing stock At some stage you may find that your portfolio is fully committed and you want to take advantage of another opportunity. The only way raise the necessary capital is to sell a stock. In this case always choose your worst performing stock; NEVER sell the stock that is in profit. If you were to continuously sell the best performing stock from a portfolio, you will end up with a portfolio full of losing stocks. Get rid

Lesson 7 – Risk management rules

Tip 1 – Always use a stop loss. A stop loss is exactly as the name suggests, an instruction to a broker to sell a particular stock if the price falls to a certain level, hence “stopping the loss”. If you can successfully do this your capital will remain largely intact ready for the next trade. A “stop loss” order is an instruction given to your broker (or placed on your trading platform) that is an instruction to “sell xyz at market

Lesson 6 – Fine Tuning Your Entry

Lesson Six – Fine Tuning Your Entry Market Depth Most trading platforms show market depth 20 levels deep. It is only the first five levels on the buy side and the sell side that interest me. Looking at the picture below we can see that the top 5 levels on the buy side (left) show 160 buyers wanting 10,710,316 shares while on the sell side there are 79 sellers offering 5,178,139 shares. This is the perfect situation! Twice as many buyers as

Lesson 5 – Confirmation signals

Study the “On-Balance-Volume” indicator. Any good stock market software will include computer indicators. Some applications have literally hundreds of these indicators. In my experience most of these indicators have very  little practical use and do not lead to trading success. After many years I have found that I only need one indicator,  on-balance-volume. In fact if I did not have that particular indicator I would not trade. On-balance-volume is absolutely invaluable. I have a rule: If on-balance-volume is not either steady or

Lesson 4 – Entry Rules

In my experience buying a “Breakout” brings about the best and safest method of entering a stock. Buying breakouts simply means buying a new high price after a period on price consolidation. At very least if you buy breakouts you are at least buying a stock that is rising in price at that time. The trick here is to have a clear idea of the resistance required to put the odds in your favour of a successful breakout. Never pre-empt the