"Sales Tactics"

After completing the analysis of the market, the trader must know he will play in increasing or lowering. In addition, by this time he must decide what portion of their capital should be invested in the deal. And finally, the last step is the actual purchase or sale contract. This is a very complex part of the process of trade on margin, where the definition of a specific point in the opening and closing positions must be as accurate as possible. The final decision on how and where to enter the market should be based on a combination of technical factors, the principles of money management and the type of stock orders.

The peculiarity of the exact time of entry and exit on the basis of technical analysis is very short-term nature of this analysis and is defined days, hours or even minutes, not weeks or months. But in all cases using the same technical tools. Next, we consider the most general terms such an analysis.

1. Tactics at the break.
There are three options trader at the price breaks:
take a position in advance, in anticipation of a breakthrough;
open position at the time of the breakthrough;
wait inevitable retracement after the breakout.

There are arguments for and against each of the three approaches, sometimes used a combined approach. When working with several lots, a trader can open one position on each of three stages. You can take a short position prior to the expected breakthrough, then buy another immediately after the break and, finally, to open additional positions during a minor fall in prices during the correction following the breakout. If a trader sells a small position, then his decision primarily influenced by two considerations:
by what means he is willing to risk on this trade;
how aggressively he will act.

The most conservative trader in this situation, open a long position on a pullback in prices. But, paradoxically, expectant management may also be risky - in the sense that, expecting a backlash, in general, you can miss the moment of entry into the market.

2. The intersection of trend lines
This signal can enter the market or get out of it early enough, especially when there is a significant intersection, repeatedly "proven" trend line. Of course, we can not forget about other technical factors.

In the case of the trend line as the level of support and resistance are opened long positions when prices fall to sustainable levels rising trend line, and short - with the rise to the level of the descending trend line.

3. Using support and resistance levels
The breakthrough level of resistance may be a signal to go long, you can then protect with a stop order. It can be placed under the nearest support level or, for greater security, directly below the break, which will now act as support.

The rise in prices to the level of resistance at the downward trend and falling to the level of support in an upward trend can be used to open new positions and adding lots to the existing profitable positions. When you select levels of protective suspension should first pay attention to the support or resistance levels.

4. Using the price adjustment
With the rising trend of falling prices intermediate comprising percentages from the previous growth of Fibonacci can be used to open new or additional long positions. It should be noted that in this case the analysis of percentages of length adjustment applies to very short periods of market movement.

A good time to open a long position is a 38% retracement in prices that occurs after a bullish breakout in upward trend. Very useful to open short positions when the price bounces downward trend upward, covering from 38% to 62% range the previous fall.

5. Spacing
Price gaps are formed by bars of the chart can also be used to select the optimal moment of opening or closing positions. For example, the gaps formed in the process of rising prices, then often act as support levels. Therefore, if the rising trend it is expedient to open long positions when prices fall to the upper boundary of space, or slightly below, inside of it. A stop order can be placed under a space. If the downward trend short position is opened at a time when prices rise to the lower border of the gap or even partially fill it. Protective stop order in this case is located above the gap.

6. Averaging
Averaging is a strategy works when you make a mistake, or just made any transaction (the first that came to mind), and the price went against you, and you make the same type of operation is more advantageous price. The main disadvantage of averaging is that you do not know in advance as to what price would you go against the market. But averaging requires each time (after the first) to invest twice the previous amount of margin. But if you have a lot of money - you can afford the price movement of 100, 200 or more pips. While such shifts in the market occur infrequently - yet this is not the best strategy, especially if you see a mistake in determining the trend.

Possible strategies for working
The first strategy is long-term maintenance of open positions (from several days to several months). Such a strategy using strategic investors and speculators semi. Maximally effective in the emerging trends and the least profitable at the side or sluggish trends. Requires mandatory safety net, and related work on the futures exchange options market. When working on long positions are not as important as technical analysis, fundamental analysis is. The share of long positions in the practical work of a trader should not exceed 15% of the amount of margin. Also, analysis for opening long positions will assist you in a shorter game, namely:
define long-term support and resistance levels;
strong long trend will warn you when you work against him on short positions;
you will have a psychological confidence when playing for a short position in the direction of a long trend.

The second strategy is to work on medium-term trends with duration of up to several days. Also desirable safety net options. Most attractive to non-professionals. Average positions are more stable for profit, though the analysis in decision making for this game a little more complicated. The quality of work also depends on the ability to conduct short-game (to choose the moment of opening and closing the position). When you open the middle position is not only a technical analysis, but also carefully viewed: is what some news, fundamental to the close position, whether the closure of a regional market at this time. Psychological factors play into the background. With all the external stability, be sure to keep an eye on the market, because it is able to present any surprises at the wrong time. If you're mid-game based on the fundamentals, then watch carefully as to ensure that technical analysis, at least not contrary to your positions.

The third strategy is the short duration of the opening position from several minutes to several hours. It is used by professionals. Pros: there is no risk of adverse fundamental news and price changes during your absence. Cons: high costs (commissions, spreads, communication services, etc.), a high risk of adverse short-term price changes, requires constant monitoring, concentration and stress during the workday. The main work will help during the oscillatory methods of technical analysis (using the rules for choosing the opening). Do not obsess over small gains obtained in this work. You risk losing everything fast, that long and a large number of transactions earned.

WHY Trader "BLACK BOX" OR HOW MUCH IS PROFITABLE ADVISOR

It is often found on the Internet for sale traders profitable EA. According to the seller, a trader who buys it will increase your deposit by 100% in a month. The proof of this, usually a nice report from the Strategy Tester MetaTrader.

Often the counselor offered a trader in compiled form for MetaTrader without source code - the so-called "black box", without being able to somehow influence the sale of the adviser.

The cost of this "black box" can be up to $ 500 and sometimes higher.

Let's see how many can make a trader who buys a such a "black box" and expose it to real trading. Suppose the initial depot is 500 $ (I think that in any dealing center may open a depot for trade mini-lots with leverage of 1:100). Sold trader advisor doubles depot for a month, ie a month later, it will be $ 1,000 more a month - $ 2000. After 6 months, the trader will receive $ 32,000! It is not difficult to calculate that within a year depot trader will increase to $ 2048000. Not bad, yes?

Even if the adviser will provide only half of the declared profit (ie 50% per month, instead of 100%), then after a year of a $ 500 increase to the depot 64 000 $!. Even this is - a huge sum. And if you do not start with $ 500 and, for example, with $ 5,000 or $ 10,000 c!?

The question arises - why sell a profitable Expert Advisor? Why did not the seller sells them? The answer is simple - there is no profitable advisor is a crook, who vtyuhivaet inexperienced traders a nice report on the history of testing of MetaTrader. It is on sale advisor and he makes a profit. Most likely, such a seller has no relation to the traders, and just took all the appropriate advisor, make it fit the story, did a nice report in MetaTrader and sells the Grail traders who are not able to discern a vendor fraud.

Never buy such advisors! In such cases, you can always buy a test report on the history, not adviser, who will be profitable in the future. And the fact that the adviser no longer profitable, always get a response that, like, the market has changed, that everything is changing that ... blah - blah - blah ...

Seem more realistic test results advisers who bring 100% profit for the year. Let us imagine that the adviser sold will actually be double the depot for a year. After investing $ 10,000 now, you become a millionaire in 7 years. Do you think the cost of a such a trading system? And why sell it if you can get $ 10,000 (the cost of the domestic car) and turn them into millions? The answer again is obvious that vtyuhivaemaya traders trading system can not generate a profit. Even the seller does not trust their money to this system, then why should she trust you?

Now let's talk about what the trader makes sense to spend money.

The trader has the sense to buy a counselor at work which, before you buy, you can watch a demo account, but rather on real life. For the seller, it's quite easy to do - just open an account and start on it of the adviser, and anyone who wants to look at his work give an investor a password to log into this account in preview mode. Fortunately, that in the MetaTrader can. Any trader, for a sufficiently long test counselor will be able to verify its performance and to buy. It seems to me the most honest way to sell advisers. Even if you bought the adviser does not bring the promised income trader, it can not be related to fraud seller (provided that the adviser will be purchased to make the same deal, which is located on a demo account advisor seller, because it will remain there after the sale to attract other customers?). True, the cost of the advisor is not less than $ 10,000, and perhaps all $ 100,000. Why so expensive? And is it expensive? You see how much it costs a small plant something, and compare this cost with the profit that the plant can produce in one year. A counselor is different from what this plant? Buying a ready advisor, the trader gets ready and well-oiled business, making a profit, and such business is worth more money.

The trader makes sense to buy a variety of indicators or original scripts that simplify trade. In this case the trader does not promise anybody any money, but it gets more tools of the Forex market. It is the originality and uniqueness of such tools may increase the deposit trader.

The trader makes sense to book writing advisors in MQL - programmers (their list is www.autoforex.ru see "developers"), because in this case, the trader will receive the embodiment of his advisor automated trading system. A counselor will return this or not - depends on the system, which is incorporated in its trader.

The trader makes sense to buy different kinds of literature, if it seems useful to him. Even if you bought the book, in general, would be useless, some thought or idea of ​​it can still be of interest to traders.

The trader makes sense to pay different kinds of courses for traders if it is a more effective way of learning the art of trading in the Forex than self study.

Only one thing makes no sense for a trader - buy ready made income-adviser in the tester in MetaTrader stories, no matter how beautiful this report was not a tester.

And the next time you offer to buy ready-adviser, be smarter and ask yourself - why would you try to sell the goose that lays golden eggs?

"Why are most people so hard to make money in the markets"

Imagine a game for money, in which a bag of marbles backfilled, 60% are white. If you got a bag of white marble, then win the bet. The remaining 40% of balls blue. If you take out a blue ball, you lose something that risked. Waiting for this game = 20? It is true to a long series of games you make 20 cents for every dollar risked. This is much better than any game that you might find in Las Vegas. But what percentage of people who play it make money?

I represented many times in this game talks, seminars and conferences. We usually do not play for real money, but the winner (ie the one who will get more than just "money" after 50 tries) was rewarded. Typical results - a third of the audience loses outright, another third of the money lost and only a third of the participants can earn something. And these results are not unique.

Ralph Vince, the author of three books on money management, suggested that 50 doctors of philosophy, who knew nothing about money management and statistics, to play a game similar to the above on 100 attempts. They had no incentive to win (which could provoke imprudent behavior.) They were only asked to make as much money. Guess how many of them have made money at all? Only two, or four percent, were able to make money!

Usually, except for complete ruin, it turns out many different options for the game, how many people were in the audience. But they all start with the same amount of money and everyone gets equal treatment (ie, beads). But in the end there is a difference between the results. Why? Poor position sizing and undisciplined psychology. If people can not make money at 60% of th system of marbles, what are their chances to earn in the markets? Minimum!

There are three factors that determine victory: (1) system with a positive expectation, (2) position sizing and (3) individual psychology. All three factors are usually ignored on the average trader. To show why this is so, I would like to discuss the psychological propensities arising in people in the development and use of the system with positive expectancy and position sizing, rather than to talk about psychology as a separate subject.

Traders do not understand what the system with a positive expectation

Most of us have grown under the influence of an educational system that imposes on us the firm conviction - to be the best, you need to 94-100% of cases are right,. And, if you can not be right, at least 70% of you - loser. Mistakes are severely punished in the school system ridicule and poor grades.

By contrast, real-world hitter in baseball, only a few shots that are successful will receive millions. In fact, in the everyday world few people close to perfection. but most of us do a good job, is likely to be right less than half the cases. In fact, people have made millions on trading systems with the reliability of 30-40%.

Jack Schwager in The New Market Wizards quotes William Eckhardt, that most undermines the behavior of the average trader is the need to be right in the current transaction. This one factor destroys most of us when we try to beat the market.

Because of this factor, people are constantly looking for high probability trading system, which would make money at 70% or more of cases. To find such a system, they are constantly looking for the correct inputs. If someone teaches such a high probability of input at the workshops, it attracts thousands of eager followers. However, at these meetings you rarely hear on the yields and the amount of positions as people believe that the secrets are hidden in inputs.

Unfortunately, if you look closely at these systems a high probability you will notice the following: (1) shows are successful because they are illustrated by numerous examples of the best cases, (2) the outputs of attention is usually not paid, except for statements that you should keep a trailing stop, and (3) if you test these systems, their expectation will not be the most good, because the average loss will be higher than average profits.

We are conservative in the profit and loss account in the risky

Good operating systems are often systems with reliability 40%, but which have an average income and a much bigger deal than the average loss. Understanding and appropriate use of protective stops and profit taking is extremely important for the development of such systems. However, these outputs are most difficult for the average trader who tries to take risks when late, and shows conservatism, when pulled forward.

Let's look at an example. What would you prefer: (a) likely to lose $ 900, or (b) 95% of losing $ 1,000 plus a five percent chance to avoid losses at all? Select (a) or (b).

Now let's try again. What would you choose: (a) a guaranteed income of $ 900 or (b) 95% chance of getting $ 1,000 plus a five percent chance to not get any money? Again, select either (a), or (b).

Most people in the first task selects risk. They prefer to lose 95% of $ 1,000 plus 5% of the output without loss. You have chosen? Let's see how this decision. If you multiply $ 1,000 by 0.95, you get the expectation of $ 950. This means that you have chosen the worst expectations, a loss of $ 950 just for the sake of a small opportunity to save money. Is not this tells the first part of the golden rule of trading? "Abort their losses." That you have chosen in the second problem? Most people choose a confident earnings of $ 900. However, if you look at paragraph (b), then it gives you an expectation of $ 950 ($ 1,000 x 0.95). But this runs counter to how most people think. They would rather choose the steady income than to risk when they are already ahead. As the rest of the golden rule of trading? "Let profits run."

Good trading system with a high expectation generated using the corresponding outputs. But when the proper use of the outputs goes against how we used to think it is very difficult to develop a good system.
People completely ignore the choice of the size of the position

Position sizing - that part of your trading approach, which tells you "how." It does not appeal. She did not give the appearance of your control over the market, as do the methods of entry. It just tells you what you risk in this transaction. You have already learned to play with balls that many people lose money in 60% of the system, just because of poor position sizing. And a large range of results in this game depends entirely on how much they are at risk. And all this can be your best assistant in the market. So why is the right choice of position sizing is such a problem?

Problem # 1: Error gambler

How can you lose money in 60% of the system at rates of one to one? In 60% of the system you probably have seven or eight losses in a row over 1000 attempts. But you could easily get such a system, and five losses in a row in 50 attempts.

For example, suppose you have adopted a strategy of betting on 10% of its capital. For simplicity, we add that this capital at the beginning of a losing streak is $ 1,000. You start with a rate of 10% or $ 100, and get the first loss. Now you have $ 900. You decide to bet $ 90 and get a second loss. In the remainder - $ 810. Now you decide to bet $ 81 and get the third loss in a row. Now you have $ 719. At this point, your thoughts might be: "I have three losses in a row and now the chances of winning are high. In the end, it's 60%-I system. I think it worth the risk at $ 300." Now you have four losses in a row and only $ 419 in balance. You feel despair. You have lost almost 60% in just four rounds. You think, "Now victory is inevitable," and decide to risk another $ 300. The number of losses increases to five, and the capital falls to $ 119. You will now have to earn around 900% just to cover the losses of the last five games, but your chances for a very, very slim.

Some of you may think that it was necessary to wait up to five losses in a row and then bet $ 300. If so, then you have the same problem. It's called the gambler's mistake. Your actual chances of losing in any given round is 40%. It does not depend on what happened in the past. When you make a mistake and gambler bet $ 300, you might as well get a sixth consecutive loss.

Problem # 2: The complexity of position sizing

Science position sizing - a problem as complex as the art of entering the market. Moreover, since few people are interested (or clearly understood) of the position, software developers ignore it or completely ignore the problem. As a result, if you want to practice the position sizing in today's world of computers, you have to do it yourself, in the table.

From their research, and other sources, I know how many "wizards of the market." They have a good system with a strong positive expectation. But these systems are not very different from those that can get the average trader. The difference between good fortune in the markets, which has made most of them, and the average income only in determining the size of the position. Great traders are subject to clear rules of position sizing to good systems and have the discipline to stick to them. Just read the Market Wizards - Market Wizards, Jack Schwager and. All of them in interviews talk about the importance of position sizing.

Many years ago I spoke at the conference Wizards Market in San Francisco. One of the speakers, Ed Seykota, focused on position sizing. When someone asked him, "How do you get to choose the size of the position?" in response, he pointed to his head and said: "I think."

Most traders find that the easiest solution for position sizing - simply trade one contract. This solution is for traders with small capital (ie, for most traders) means no position sizing, because they will at least double their capital before they can increase the risk.

Problem # 3: Most traders do not have enough capital

At the same conference, said Ed Seykota that risking more than three percent of the capital in a single trade jokes with fire. Your risk in this transaction - is the difference between your entry price and your stop level. For example, if you open a position in gold at $ 400 with a stop at $ 390, then $ 10 stop up the risk of $ 1,000. If you have an account with $ 25,000, then your risk for one contract - a four per cent. You would be called playing with fire.

Most traders come to market with accounts of $ 10,000 or less. They sell just about everything and all of their transactions are very risky, because the account size is too small. Of course, you can trade in some agricultural markets, with $ 10,000 in the account. In fact, you can trade in many other markets, if your feet are close, and your system is designed to close stops. But most people who come to the market, simply does not have enough capital to do what they're trying.

Therefore, they do not usually think about the most important factor in trading - how much to invest, because they trade too much. If they hold out in the market, as their account starts to grow, they begin to think about the simplest form of position sizing. "I now have $ 20,000 in the account. Maybe I have to go to trade two contracts."

Where is the solution?

I have presented various problems to illustrate why the average trader is so difficult to make money in the markets. This includes two main issues - (1) Development of high expectation and (2) position sizing. They are usually not considered as a psychological problem, but rather as problems approach. But both of these problems stem from psychological biases that shape our thinking.

The first step in overcoming these problems - the recognition that they exist. For example, once you agree that the key issue of successful trading - a system with a high expectation of winning instead of dominance, you come a long way to find a "Holy Grail". You can start looking for exits that give you a high expectation rather than inputs, which increases the number of correct guesses for your system.

Second, when you have a system with high expectations, which gives you a lot of trades, you start to realize that the key to achieving this expectation - position sizing. If you know what you want to accomplish as a trader (eg, a high ratio of risk-reward, low drawdown and high annual profits, etc.), you can use position sizing to develop an approach for achieving these goals.

My "Special Report on money management," details the three different models of capital and nine different models of position sizing that amount in the total of 27 different models. The report also addresses the creative approach to the selection of the size of the position, showing how this promising area. The path to the Holy Grail - an application of the position size in a system with high-expectancy and self-control. When you realize that deep inside, then make a giant leap forward in its evolution trader.

"Why are most people so hard to make money in the markets"

Imagine a game for money, in which a bag of marbles backfilled, 60% are white. If you got a bag of white marble, then win the bet. The remaining 40% of balls blue. If you take out a blue ball, you lose something that risked. Waiting for this game = 20? It is true to a long series of games you make 20 cents for every dollar risked. This is much better than any game that you might find in Las Vegas. But what percentage of people who play it make money?

I represented many times in this game talks, seminars and conferences. We usually do not play for real money, but the winner (ie the one who will get more than just "money" after 50 tries) was rewarded. Typical results - a third of the audience loses outright, another third of the money lost and only a third of the participants can earn something. And these results are not unique.

Ralph Vince, the author of three books on money management, suggested that 50 doctors of philosophy, who knew nothing about money management and statistics, to play a game similar to the above on 100 attempts. They had no incentive to win (which could provoke imprudent behavior.) They were only asked to make as much money. Guess how many of them have made money at all? Only two, or four percent, were able to make money!

Usually, except for complete ruin, it turns out many different options for the game, how many people were in the audience. But they all start with the same amount of money and everyone gets equal treatment (ie, beads). But in the end there is a difference between the results. Why? Poor position sizing and undisciplined psychology. If people can not make money at 60% of th system of marbles, what are their chances to earn in the markets? Minimum!

There are three factors that determine victory: (1) system with a positive expectation, (2) position sizing and (3) individual psychology. All three factors are usually ignored on the average trader. To show why this is so, I would like to discuss the psychological propensities arising in people in the development and use of the system with positive expectancy and position sizing, rather than to talk about psychology as a separate subject.

Traders do not understand what the system with a positive expectation

Most of us have grown under the influence of an educational system that imposes on us the firm conviction - to be the best, you need to 94-100% of cases are right,. And, if you can not be right, at least 70% of you - loser. Mistakes are severely punished in the school system ridicule and poor grades.

By contrast, real-world hitter in baseball, only a few shots that are successful will receive millions. In fact, in the everyday world few people close to perfection. but most of us do a good job, is likely to be right less than half the cases. In fact, people have made millions on trading systems with the reliability of 30-40%.

Jack Schwager in The New Market Wizards quotes William Eckhardt, that most undermines the behavior of the average trader is the need to be right in the current transaction. This one factor destroys most of us when we try to beat the market.

Because of this factor, people are constantly looking for high probability trading system, which would make money at 70% or more of cases. To find such a system, they are constantly looking for the correct inputs. If someone teaches such a high probability of input at the workshops, it attracts thousands of eager followers. However, at these meetings you rarely hear on the yields and the amount of positions as people believe that the secrets are hidden in inputs.

Unfortunately, if you look closely at these systems a high probability you will notice the following: (1) shows are successful because they are illustrated by numerous examples of the best cases, (2) the outputs of attention is usually not paid, except for statements that you should keep a trailing stop, and (3) if you test these systems, their expectation will not be the most good, because the average loss will be higher than average profits.

We are conservative in the profit and loss account in the risky

Good operating systems are often systems with reliability 40%, but which have an average income and a much bigger deal than the average loss. Understanding and appropriate use of protective stops and profit taking is extremely important for the development of such systems. However, these outputs are most difficult for the average trader who tries to take risks when late, and shows conservatism, when pulled forward.

Let's look at an example. What would you prefer: (a) likely to lose $ 900, or (b) 95% of losing $ 1,000 plus a five percent chance to avoid losses at all? Select (a) or (b).

Now let's try again. What would you choose: (a) a guaranteed income of $ 900 or (b) 95% chance of getting $ 1,000 plus a five percent chance to not get any money? Again, select either (a), or (b).

Most people in the first task selects risk. They prefer to lose 95% of $ 1,000 plus 5% of the output without loss. You have chosen? Let's see how this decision. If you multiply $ 1,000 by 0.95, you get the expectation of $ 950. This means that you have chosen the worst expectations, a loss of $ 950 just for the sake of a small opportunity to save money. Is not this tells the first part of the golden rule of trading? "Abort their losses." That you have chosen in the second problem? Most people choose a confident earnings of $ 900. However, if you look at paragraph (b), then it gives you an expectation of $ 950 ($ 1,000 x 0.95). But this runs counter to how most people think. They would rather choose the steady income than to risk when they are already ahead. As the rest of the golden rule of trading? "Let profits run."

Good trading system with a high expectation generated using the corresponding outputs. But when the proper use of the outputs goes against how we used to think it is very difficult to develop a good system.
People completely ignore the choice of the size of the position

Position sizing - that part of your trading approach, which tells you "how." It does not appeal. She did not give the appearance of your control over the market, as do the methods of entry. It just tells you what you risk in this transaction. You have already learned to play with balls that many people lose money in 60% of the system, just because of poor position sizing. And a large range of results in this game depends entirely on how much they are at risk. And all this can be your best assistant in the market. So why is the right choice of position sizing is such a problem?

Problem # 1: Error gambler

How can you lose money in 60% of the system at rates of one to one? In 60% of the system you probably have seven or eight losses in a row over 1000 attempts. But you could easily get such a system, and five losses in a row in 50 attempts.

For example, suppose you have adopted a strategy of betting on 10% of its capital. For simplicity, we add that this capital at the beginning of a losing streak is $ 1,000. You start with a rate of 10% or $ 100, and get the first loss. Now you have $ 900. You decide to bet $ 90 and get a second loss. In the remainder - $ 810. Now you decide to bet $ 81 and get the third loss in a row. Now you have $ 719. At this point, your thoughts might be: "I have three losses in a row and now the chances of winning are high. In the end, it's 60%-I system. I think it worth the risk at $ 300." Now you have four losses in a row and only $ 419 in balance. You feel despair. You have lost almost 60% in just four rounds. You think, "Now victory is inevitable," and decide to risk another $ 300. The number of losses increases to five, and the capital falls to $ 119. You will now have to earn around 900% just to cover the losses of the last five games, but your chances for a very, very slim.

Some of you may think that it was necessary to wait up to five losses in a row and then bet $ 300. If so, then you have the same problem. It's called the gambler's mistake. Your actual chances of losing in any given round is 40%. It does not depend on what happened in the past. When you make a mistake and gambler bet $ 300, you might as well get a sixth consecutive loss.

Problem # 2: The complexity of position sizing

Science position sizing - a problem as complex as the art of entering the market. Moreover, since few people are interested (or clearly understood) of the position, software developers ignore it or completely ignore the problem. As a result, if you want to practice the position sizing in today's world of computers, you have to do it yourself, in the table.

From their research, and other sources, I know how many "wizards of the market." They have a good system with a strong positive expectation. But these systems are not very different from those that can get the average trader. The difference between good fortune in the markets, which has made most of them, and the average income only in determining the size of the position. Great traders are subject to clear rules of position sizing to good systems and have the discipline to stick to them. Just read the Market Wizards - Market Wizards, Jack Schwager and. All of them in interviews talk about the importance of position sizing.

Many years ago I spoke at the conference Wizards Market in San Francisco. One of the speakers, Ed Seykota, focused on position sizing. When someone asked him, "How do you get to choose the size of the position?" in response, he pointed to his head and said: "I think."

Most traders find that the easiest solution for position sizing - simply trade one contract. This solution is for traders with small capital (ie, for most traders) means no position sizing, because they will at least double their capital before they can increase the risk.

Problem # 3: Most traders do not have enough capital

At the same conference, said Ed Seykota that risking more than three percent of the capital in a single trade jokes with fire. Your risk in this transaction - is the difference between your entry price and your stop level. For example, if you open a position in gold at $ 400 with a stop at $ 390, then $ 10 stop up the risk of $ 1,000. If you have an account with $ 25,000, then your risk for one contract - a four per cent. You would be called playing with fire.

Most traders come to market with accounts of $ 10,000 or less. They sell just about everything and all of their transactions are very risky, because the account size is too small. Of course, you can trade in some agricultural markets, with $ 10,000 in the account. In fact, you can trade in many other markets, if your feet are close, and your system is designed to close stops. But most people who come to the market, simply does not have enough capital to do what they're trying.

Therefore, they do not usually think about the most important factor in trading - how much to invest, because they trade too much. If they hold out in the market, as their account starts to grow, they begin to think about the simplest form of position sizing. "I now have $ 20,000 in the account. Maybe I have to go to trade two contracts."

Where is the solution?

I have presented various problems to illustrate why the average trader is so difficult to make money in the markets. This includes two main issues - (1) Development of high expectation and (2) position sizing. They are usually not considered as a psychological problem, but rather as problems approach. But both of these problems stem from psychological biases that shape our thinking.

The first step in overcoming these problems - the recognition that they exist. For example, once you agree that the key issue of successful trading - a system with a high expectation of winning instead of dominance, you come a long way to find a "Holy Grail". You can start looking for exits that give you a high expectation rather than inputs, which increases the number of correct guesses for your system.

Second, when you have a system with high expectations, which gives you a lot of trades, you start to realize that the key to achieving this expectation - position sizing. If you know what you want to accomplish as a trader (eg, a high ratio of risk-reward, low drawdown and high annual profits, etc.), you can use position sizing to develop an approach for achieving these goals.

My "Special Report on money management," details the three different models of capital and nine different models of position sizing that amount in the total of 27 different models. The report also addresses the creative approach to the selection of the size of the position, showing how this promising area. The path to the Holy Grail - an application of the position size in a system with high-expectancy and self-control. When you realize that deep inside, then make a giant leap forward in its evolution trader.

Van K. Tharp, Ph.D.

GOAL - 20 pips a day. Forex Basics.

To survive in our favorite in the forex market, you should limit your losses to barely noticeable levels. And then you have to take more money than they lost in the statement. Quite simply, yes? But why do most traders is not able to comprehend this truth, the cornerstone of trading? Because of psychology?

Now let's move on to the title of this article - Set a goal to take the net twenty pips every day trading. I know it sounds boring. It is not so attractive as the deal of 100 pips. But you're trading to make money, not for fun, right? Otherwise you are likely to go broke, and pretty soon. So let's fix that in mind, it's - Business with a capital letter, which should eventually make a profit. Beginners should trade a mini account, where one unit has a size of 10 thousand dollars.

Quickly go through the math. First, let's discuss the margin and how honestly to determine your actual leverage. Brokers often tout the size of the margin account of 400:1. This does not mean anything else but if you think that trading with 400:1 leverage - a good idea, then you - fool. What does this mean in reality - the required security deposit for open positions will be extremely low. It's actually not bad, right? Well, I think so too. But not always. Remember, leverage the same increases and profits and losses. If you open a position with the actual leverage more than 5:1, this is a way to ruin. Actual leverage can be calculated if your net open to correlate the size of trading positions with the balance of your account. For example, if the total size of your open position is equal to 250 thousand dollars, and the account you have $ 10 000, your actual leverage - 25:1. 25:1 shoulder - a dangerous level, of course, if you do not want to end up trading a career for a couple of months. Once you find your way and you can win more than lose, you can go back to the issue of leverage. But until then you should play more conservatively.

We recommend that you trade with leverage of 4:1 maximum for a single deal. But try to add the transaction. Thus, we can at half a dozen open positions, with margin of 4:1 each, combined to bring leverage to 24:1. We know how to do it and try to tell you. So let's limit the maximum amount of leverage on one trade ratio of 4:1. Let's also assume that the Friday - not a very good day for a beginner in trading. Believe me, this is so. And let us aim to capture 20 pips profit every day with the margin of 4:1. This may be one-off 20 pips or 2 times for 10 pips or 4 times for 5 - output will still be 20.

Next we are led by a mathematician. Trading 4 days a week, capturing 20 pips profit per day with a shoulder 4:1, your actual income per week was 3.2%. You laugh at paltry 3.2%? What a waste of time and effort, you say ... You could not make mistakes more! Even if you have a whole year will not increase the lot size in the deal, but keeping the original settings, and stay true to its goal of 20 pips for the day, this tiny weekly earnings by 3.2% per year pays off to 166.4%. You still funny? I think not.

Now many of you take over payments, checking to see if there errors. That's understandable. Let's say you have a trading account at Forex in the amount of $ 10 000. If the above scenario, the initial size of the transaction will be 40 000 (10 000 $ x 4 - four minilota). When target 20 pips per day for a week you get a profit of 80 pips on four lots of 10 000. Thus, your 80 pips multiplied by the four lots in the deal, turn to 320 pips per week on one lot. Pip on a mini account for most couples is $ 1 per lot. So, within a week you get a profit of $ 320. Big deal, you say. Yes, I alone accounts for more than a week pay the ...

Exactly! You can not survive on income from trading in the account size of $ 10 000, hoping to stay in the market longer than a few months. You will always try to catch the big moves, so your feet will be very broad. You in an instant lose your shirt, and housing. If you want to live on income from trading, you should find out how much money do you need a week to make enough to live, and do not forget to add a little for unforeseen expenses. Now go back and calculate the size of the account from which you will need to begin to quietly sell and be able to pay the bills. Now imagine that you are not every day you will be able to do my goal is 20 pips, no matter how hard.

In the meantime, without giving up their essential work, trade in your spare time, make target pips and save up for these paltry 3.2% return per week, increasing his own expense until such time when you can afford to trade full time. By the time you obviously already mastered the art of trading for a purpose and a shift to trading, as the main lesson, you will be much easier.

If you are dissatisfied with the annual return 166.4% on invested capital, you - an idiot and you should stay away from the business of currency trading.

Marcus Locke aka "MakoML" - a fund manager at Mako Fund Management Group, specializing in forex

Ten Laws of Technical Trading John Murphy

Which way will the market? How far up or down? And when it changes its direction? Here are the basic questions of a technical analyst. In addition to charts, graphs and mathematical formulas used in the analysis of market trends, there are some basic concepts that apply to most theories used by today's technical analysts.

John Murphy, the leader in technical analysis of futures markets, based on his thirty years of experience developed ten basic laws of technical trading: rules that are intended to help explain the general idea of ​​technical trading beginner and simplify the methodology for the more experienced trade practices. These regulations define the key tools of technical analysis, as well as how to use them to identify opportunities to sell and buy.

Mr. Murphy was a technical analyst for CNBC-TV, for seven years led the popular show "Tech Talk" and is the author of three best-selling books on the subject - Technical Analysis of the Financial Markets, Intermarket Technical Analysis and The Visual Investor.

His latest book demonstrates the essential "visual" elements of technical analysis. The basic principles of the approach of Mr. Murphy to technical analysis illustrate what is more important to determine where the market goes (up or down), than why it happens.


Here are the ten most important rules of technical trading by Mr. Murphy
1. Trend Map
Examine the long-term charts. Begin analysis chart with the monthly and weekly charts spanning several years. A larger scale "map of the market" provides the best long-term visibility on the market. As soon as the long-term trend is set, analyze the daily and intraday graphics. The mere presentation of a short-term can often be misleading. Even if you trade only in the shallowest time frame, you will do better if you make a transaction in the same direction as the intermediate and longer-term trend.

2. Determine the trend and follow it
Market trends come in many sizes - long-term, intermediate and short-term. First, determine what you are going to trade and use the appropriate chart. Make sure that you are trading in the direction of this trend. Buy the bottom if the trend is upwards. Sell ​​at the top, if the trend - down. If you're trading the intermediate trend, use daily and weekly charts. If you are - day trader, use daily and intraday charts. But in any case, let the longer-term charts to identify trends and then use the shorter term chart for timing of entry into the transaction.

3. Find it highs and lows.
Find support and resistance levels. The best place to buy - about the level of support. The best place to sell - about the level of resistance .. Once the resistance line was broken, it will usually be supported on subsequent pullbacks. In other words, the old "high" becomes the new "low". In the same way, when the support level was broken, it usually will mean follow-ups for sale - the old "low", can become the new "high".

4. Calculate kickbacks
Measure the correct percentages. Market corrections up or down usually recover a significant portion of the previous trend. You can measure the correction of the current trend in simple percentages. Fifty percent of the restoration prior trend is most common. The minimum recovery - usually a third of the previous trend. Maximum recovery - usually two-thirds. Fibonacci 38% and 62% are also worth watching. During a rollback in an uptrend, therefore, the point of purchase stands at 33-38%.

5. Hold the line
Draw trend lines. The trend lines - one of the easiest and most effective tools. All you need to - direct and two points on the chart. Uptrend line held by two successive lows. Line downward trend held for two successive peaks. Prices will often pull back to trend lines before resuming its movement along the trend. Violation of the trend line usually signals a trend change. Reliable trend line should touch the prices of at least three times. The longer the trend line is stronger and the more it has been verified, the more important it becomes.

6. Follow the middle
Follow moving averages. Moving averages provide objective buy and sell signals. They will tell you that the existing trend is still in force, and will help to confirm the change. However, the moving averages do not tell you in advance, which will inevitably change in trend. Schedule a combination of two moving averages - the most popular way of finding trading signals. Here are some popular combinations - 4 - and 9-day moving averages, 9 - and 18-day, 5 - and 20-day. Signals are given when the shorter average line crosses the longer. Intersection of prices above and below the 40-day moving average also provide good signals to trade. Since the moving average line - trend-following indicators, they work best in developing markets.

7. Study spreads
Watch for the oscillators. They help identify overbought and oversold market. While moving averages confirm the trend change, oscillators often warn us in advance that the market rose or fell too far and would soon unfold. Two of the most popular - Relative Strength Index (RSI) and Stochastics. They both operate on a scale from 0 to 100. For RSI, the values ​​over 70 indicate overbought, while readings below 30 - oversold. Overbought and oversold for Stochastics - 80 and 20. Most traders use 14-day or weekly stochastics and 9 or 14 days or weeks for RSI. Differences oscillator often warn of market turns. These tools work best in a trading range. Weekly signals can be used as filters on daily signals. Daily signals can be used as filters for daily schedules.

8. Remember the warning signs
Trade MACD. Indicator (MACD) Moving Average Convergence Divergence (founded by Gerald Appel) combines a moving average crossover in with overbought / oversold elements of an oscillator. A buy signal comes when the faster line crosses the slow upward and the two lines - below zero. A sell signal occurs when the faster line crosses the slow down on the ground level. Weekly signals take precedence over daily. MACD histogram is based on the difference between these two lines and gives even earlier warnings of trend changes. It is called "histogram", because it uses vertical bars to show the difference between the two lines on the chart.

9. Trend or not?
Use ADX. Average Directional Movement Index (ADX) helps determine whether a market is trending or in the hallway. ADX measures the degree of trend or direction of the market. Increasing ADX line suggests the presence of a strong trend. Fall ADX line suggests the presence of the corridor and the lack of a trend. Increasing ADX line suggests to use moving averages, falling ADX - oscillators. Constructing ADX line, the trader is able to determine which trading style and which set of indicators is most appropriate for the current market situation.

10. Remember confirmations
Include volume and open interest. Volume and open interest - important indicators confirm the market. Volume precedes price. It is important to ensure that more the case in the direction of the prevailing trend. In an uptrend, a larger volume should be seen in the days of growth. Increase the open interest confirms that new money is supporting the prevailing trend. Decrease of open interest - often warns that the trend is near completion. The uptrend should be accompanied by rising volume and rising open interest.

MYTHS ABOUT FOREX - FAQ

Is it possible to actually make a profit, and regularly working on FOREX?


FOREX has existed for over 30 years, and during that time many people did trade on the foreign exchange market in their profession, regularly getting a steady income.


As for our country, there is the opportunity to trade in FOREX has appeared in the early 1990s, and since then hundreds of thousands of people have chosen a job a currency trader and gained financial independence.


Is the assertion that the lower the spread, the better terms of trade?


No. Spread - not the most important in terms of trade. Why?


First, the announcement by the very low or almost zero spreads is often a common marketing ploy to attract customers. In the terms of trade are always steal reservations about the possibility of expanding the spread at a rapid price movements. In practice this means that the low spread is available in some real bargains, but most of this spread is preserved only in the indicative quotes that are available for public viewing, and on demo accounts. In many cases, at the conclusion of a specific transaction the customer may be offered a much greater spread. Or quote an elementary shift to the disadvantage of the client side, especially at closing. This is understandable, because the spreads - the main source of income dealing company, and in fact no such company simply could not exist and the more stable operation in ultra-low spreads.


Secondly, the populist claims of near-zero spreads, as well as on other unrealistic to market conditions, are often used recently formed companies that only seek their own niche in the financial services industry. If the company really starts to deliver on its promises, in any case it is short-sighted policy. And it necessarily involves high risks for a company and hence for its customers, and therefore incompatible with long-term financial stability, stable income to the company and, therefore, to secure bank guarantees safety of your deposits and your profits.


Finally, very often for the conclusion of the most profitable trades far more important than timely and accurate service, which allows for rapid changes in the price that suits the client to quickly get the quote. And if the terms of trade registered a very low spread, then quickly to a deal on the market at this price is impossible for the company.


Is the assertion that trade on the FOREX market can only banks and organizations that have large sums of money?


Trading on the FOREX can be anyone, because you can start trading, with its relatively small amount of money.


Another thing is to understand the logic of currency movements on the FOREX and find patterns, it is necessary to study the mechanisms of decision making in daily trade of major financial institutions around the world. After all, they buy and sell large quantities of most currencies, which means that it is their decisions are driven by the market.


In the educational centers of our company we have a detailed account of strategies used in the investment and hedge funds, influential banks. And most importantly, how on their basis can build their work on the FOREX market and private investors with little capital.


Is it true that FOREX - is a kind of "pyramid", which earned only by those who came here long enough?


Work and earn in FOREX millions of people around the world. Among them are those who have been doing this for a long period of time, and those who are just taking its first steps in FOREX. So you can start trading in the forex market right now and secure financial independence.


To learn more, go to free tuition and open a demo account! Your personal results of the training trade show, how well you can apply the knowledge. This will help to understand whether there is in you the makings of a currency trader, and to assess the level of expected initial income.


Traders - it is really super-professionals, which can be considered to be one?


Successful traders - people with different levels of education, technical and humanitarian mindset unlike each other, men and women of all ages. Become a trader can, in principle, anyone who expressed such a wish. Sign up for our free seminar on FOREX and see for yourself! And your personal results of the training trade show, how well you can apply the knowledge. This will help to understand whether there is in you the makings of a currency trader, and to assess the level of expected initial income.