Trading Without Gambling (Trading, Book 432)
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Many people perceive trading as nothing more than a gamble. But there are still people who consistently make money trading. How do they do it? They've learned to separate gambling from trading. And the way they do this, says author Marcel Link, is by developing a proper plan. In Trading Without Gambling, Link shows how to create and use a sound game plan to improve every aspect of trading--including finding trades, timing, knowing how much to trade, where to exit, and how to adjust risk--while leaving very little to gambling.
Jones and S&P 500 futures indexes but the idea is the same. The market has been in a strong uptrend the last four months as I write this in November 2006, so I don’t do much in and out trading during the day; instead, I hold and monitor my trades, moving stops and adjusting risk and trying to figure out when the market may top and what I will do when it does. But as part of my game plan, I look for additional buying opportunities when the market opens lower, and I’ll make a day-trade after 3 P.M.
a change does to its overall profit and loss. FIGURE 5.1 5-Minute S&P Source: © TradeStation Technologies 1999. All rights reserved. You can also buy systems if you want to try that approach. If you read any trading magazine or go to a trading web site, you will see systems for sale all over the place. However, I don’t believe you’ll be successful trading a purchased system. First of all, it will be hard to follow it in the manner the creator intended it to be used. You will always be
cross-currency fluctuations of the British pound vs. the U.S. dollar. There is constant arbitrage taking place between the New York and London cocoa markets so the rate between the pound and the dollar is very important. This is something the average person may not be aware of but it’s good to know. Is the Market Weather Sensitive? Orange juice, oil, grains, the softs (coffee, sugar, cocoa, and cotton), cattle, and a few more, are very much weather-related products and a frost, drought,
consider staying with a long bias until it’s reached. All of these targets are not “get out when reached” targets, but are target areas where I would reevaluate. If a target gets hit and it still looks bullish, I obviously will stay in and come up with a new target level. FIGURE 10.3 Jan. 7 Daily Dow Source: © TradeStation Technologies 1999. All rights reserved. Next comes the risk. I see a few areas of support that I could use for stops. The first is pretty close and it’s under the low
cutoff point anyway you want, just have one in your money management plan, because the worst feeling in trading are the days you were up $4,000 at lunch and walked away up $34 at the end of the day. I find those days more demoralizing than the days where I actual lose $5,000 in a steady manner. The emotional high to low swing of these days can take a toll on you. A Longer Break So far I’ve only mentioned having intraday cutoffs, but you also should have a point where you acknowledge