Trading strategies

Charting from eatsleeptrade

10 Chart Patterns

Trading plan

9 tips that will improve your Risk Management

Swing Trading

Trading Options

Risk-reward ratio

Exit Strategy

Shorting of Stocks

Trendline drawing is fun!


Brief steps for trade set up

“Begin With The End In Mind.”

1. Identify good companies with competitive advantages  OR  value stocks which has good earnings and recent rally to 52 weeks high (that is a little controversial), and has good trading volume (a few hundred thousands). This is to avoid liquidity risk.

2. Google for any recent bad/ good news on the company.
Check SGX stocksfact - Any recent Ex-dividend? Rights issue?

[You can also look at the volatility of the markets, the size of candles and much more to give you a feel into the momentum strength of the current market.]

3. Gauge your time horizon to hold positions (whether long or short) and do charting with that time frame e.g 1 month, 6 month, 1 year. 2 snapshots of time frame is ideal.

4. Charting:

- Review the macro and micro trends.
- Find trend, draw lines. Downtrend draw resistance line, uptrend draw support line.
(no trend don't enter, sideway stocks don't enter.)
- Determine the entry price (based on an established trend, indicators, risk-reward ratio or break-out point.)
- Determine the stop-loss price (based on resistance level, trend)

Managing risk...

5a. Position sizing, calculate what is a fair amt of shares to buy (risk not more than 1% of investment capital $$ calculate based on the difference between entry and the stop-loss price set). In BEAR market can consider buying up to max 10k per stock (should not be >5% of capital).

5b. Risk-to-reward ratio should be high eg. if it has more rooms for gain than loss at the target entry price then buy.

Trade risk = (Entry price - Stop loss price) x Quantity traded

6. If price still fluctuates within the trend channel, let your profit runs.
- Set trailing stop losses (based on new support levels) to reap profit before trend-reversal happens.

"Rule No. 1: Never lose money. 

Rule No. 2: Never forget rule No. 1."

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