Trading in The Zone, by Mark Douglas. 3 ° Delivery
Sunday, June 1, 2008
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is that we have translated a beautiful jewel that will help us further understand through which this game. THANK YOU !!!!!!!!!!!!!!!!
CECI
3 ° Delivery.
PREPARING THE YEAR
CHOOSE A MARKET: CHOOSE
an Active Trader stock market or futures contracts. No matter what it is: how important it is liquid and you can meet the requirements trading margin to at least 300 shares or 3 per trade futures contracts.
choose a set of variables that define an edge (EDGE)
This can be any trading system. It can be mathematics, mechanics or visual (based on figures chartists). No matter how you design it or buy it and it should not take long or be very selective tratande to find the best system. This exercise is not about developing a test system or an analytical capacity.
Whatever system you choose, it must meet the following specifications:
- Entrance to the trade: use variables to define its border must be absolutely accurate. The system must be designed so that does not require influenced by any subjective decision about whether its edge is present. If the market is aligned in a manner that complies with the rigid variables of your system, then you must make the trade. Otherwise, no trade. Period! There may be other random factors in this equation. Departure
Stop-Loss: The same conditions apply to exit a trade that is not working. Your methodology should tell you exactly how much you need to risk to find out if a trade will work. There is always a sweet spot in which the possibility of a trade does not work is so diminished, especially regarding the potential of profit, which is best for you take the loss and let your mind clear to play at the next edge. Let the market determine which structure is the optimal time, instead of using an arbitrary amount of money you are willing to lose in a trade. In any case, any system you choose, it must be absolutely accurate and do not require a subjective decision. There can be no random factors in this equation.
- Time Frame: you can trade Forex at any time frame, but all input and output signals have to be at the same time-frame. However, trade in one time frame does not mean you can not use other time frames as filters .. For example, you have a filter rule that only execute trades that are in the direction of the larger trend.
TAKE PROFIT
If you do not have clear where to take profits, the best strategy from the perspective psychological position is to divide your three or four parts, and go out part of his position as the market move in their favor. When I started as a trader in 1979, I discovered that was rarely gland in a position before the market moved at least a few tics in the direction I expected. Then calculated that if into the habit of removing at least a third of my original position every time the market moved three or four twitches in my direction, at the end of the year these winners accumulated yielded much time to pay my expenses. As of today, without reservation or hesitation, removes a portion of a winning POSICON soon as the market gives me a bit to drink. What finally got to this is to reduce the risk and if the market finally estopea me, the loss will be lower. If the market continues to move in the expected direction, take the next third of the portion of gains have come to some profit target, usually based on support or resistance test or a maximum or minimum prior significant. When I take the second gain usually also move the stop to breakeven. From this point, I have a net gain in a trade, no matter what the outcome of the third portion. In other words, I have a chance "risk free." If, in normal circumstances there is no way to lose, really experience what it feels like to be in a trade with a relaxed and peaceful state of mind. To illustrate this point, imagine you're in a winning trade, the market makes a significant move in the direction expected by you. but did not take any profit because you thought it would come even further. However, instead of going further, the market returns to the input of its trade. You enter panic and settle their trade, but not well done, the market starts to move in the direction you expected. If you have partially removed some of the profits and had been placed in a situation of risk-free opportunity, would be very unlikely to have felt stressed or anxious or panicky. I would still be the third part of the position. And what do I do? Seeking the most convenient place where the market will stop and there I place my order without worrying about squeezing until the last tick of the market. I've discovered over the years that the latter is not worth it. Each meal you make a trade will contribute to make you believe that is a consistent winner and the numbers are aligned better to the extent that their belief in their ability to be consistent to become stronger.
Another factor to consider is the risk-benefit ratio, which ideally should be at least 3:1.
TRADING IN SIZES OF SAMPLING
The typical trader lives or dies (emocinal speaking) by the results of their most recent trades. If he won, continuing to make glad the next trade. If it was not, begins to question the validity of the edge (edge). To find out which variables work, how well it works and what does not, we need a systematic, not random variables taken into consideration. This means we need to expand our definition of success or failure from the limited perspective of trade and trade the trader typically a sample size of 20 trades or more. Any edge you choose should be based on some limited number of market varable or relationships between these variables that measure the market potential to move up or down. From the perspective of the market, each trader has the potential to place or remove a trade can act as a force in eye movement and prices, therefore, a market variable. There is no border or technical system which can take into consideration each trader and his reasons for entering or exiting each trade. As a result, any set of market variables fefinan a border that is like a photograph of something very fluid, which captures only a limited portion of all possibilities. When you apply any set of market variables, they can work very well for an extended period of time, but after a while, you may find that their effectiveness decreases. This is because the dynamics of interaction among all participants (the market) is changing. New traders come to market with their own unique ideas of what is high and what is low, and other traders are removed. Gradually, these changes affect the dynamics of how the market moves. No photo (rigid set of variables) that can take into account these subtle changes. You can compensate for subtle changes and still maintain a consistent approach trader sample sizes. The size of the sample must be sufficiently broad to give your variables a fair and adequate test, but also small enough that if their effectiveness diminishes, you can detect it before losing a significant amount of money. I found that a sample size of at least 20 trades meets both requirements.
Regards and good weekend. Cecilia
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