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WINNING TRADING
STRATEGY
THE ONE TRADING STRATEGY
YOU WISH YOU KNEW BEFORE
TRADING
INTRODUCTION
I want to thank you and congratulate you for downloading the
book, Winning Trading Strategy: The One Trading Strategy
You Wish You Knew Before Trading.
Trading is a constant battle, you have to learn accurate tools
and tricks to have and edge in the market and make money.
Learn this one trading strategy, and your trading is really not
going to be that difficult.
In this book you will learn important rules on trading success
and the one strategy that can hl you master your trading
success and g n t become a millionaire trader. Here is a
preview of what you will learn:
The importance of a trading plan.
Why you should track your trades.
The importance of knowing yourself and your mind.
The one trading strategy.
And much more!
Thanks again for downloading this book, I really hope you
enjoy it!
Johan Nordstrom, TradingWalk
is
for
your
personal
use
only.
You
cannot
electronic,
or
mechanical,
including
photocopying,
TRADING PLAN
One of the biggest mistakes most new traders make, is to
trade on emotions, tips and whatever catch their attention, it
can work for some time, but not in the long run. To be a
consistently profitable trader, you need have to have some
rules on how to act in the market. Have you ever experienced
something like the example in the chart below?
If you have a trading plan, you will always know how to act in
the market and where you are going to place your trades and
take your wins and losses. Your trading plan primarily consists
of a set of rules you should follow to profit in trading. You will
take out much of the anxiety being in a large losing position
when you, for example, have stated in your trading plan; you
only risk one percent per trade.
The Strategy
This is mainly a reversal strategy of the micro trend in the
direction of the macro trend. An example can be a micro
downtrend in 1h chart but the daily chart, macro trend, is in
an uptrend. The strategy can be traded both long and short
and as a day trading strategy or swing trading strategy on
your favorite time frame, we mainly trade this on daily, 4h and
1h time frame. It is a ABC setup, but we will get to that.
To keep it simple, we use two charts to define the micro and
macro trend. We define trend by looking at the candlesticks
body range, if red candles are bigger than the green the
trend/momentum
is
down.
You
can
certainly
use
your
Setup
We can see that we have a downtrend, 1) the price action start
in the upper left corner and is now in lower right 2) the red
candle bodies are bigger than the green ones (the daily is also
in a downtrend). Therefore, we look at a short trades. Now to
the setup, to have a short setup we want:
A break to new lows.
A rally against the trend (A move).
A move to the downside (B move).
A Break of the rally high (A point) creating a new high (C
move).
We try to enter as high as possible on the C move before
it reverses back down with anticipation of breaking new
lows.
! Trading Tip
Round numbers with one decimal point often act as support
and resistance, therefore, place orders at these levels or just
low/above of round number levels.
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Entry
To find the area where the C move might end. We draw a Fib
extension and get our short area between the 1.279 and 1.618
extension. When we have the area, we look left for a green
small candle body and place the entry at the open of that
candle, close to 184.100.
Target
Exit the position at 182.500 closest round number to the open
of the red candle at the low point of the A move, giving us a
positive risk reward (reward is greater than our risk).
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Stop loss
Place a stop loss order a above the short areas closest round
number (above Fib 1.618 extension [184.575], closest round
number [184.600]) 182.620.
The outcome
This trade trade like many other times we traded this strategy
was a winning trade.
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Example
Your initial account capital is $100.000. You invest everything
and suffer a 50 % loss, account decrease to $50.000
(=$100.000*0,5). You invest everything again and get a 50 %
gain, account capital increase to $75.000 (=$50.000*1,5), but
that is $25.000 short of what you initially had. You need a 100
% gain after a 50 % loss to come back to break even. Have a
risk management strategy so you do not end up in a deep
drawdown impossible to recover from.
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The Strategy
I hope you understood the need to have a risk management
strategy. It is time to calculate how many contracts you should
trade with depending on how much of your account in percent
you are willing to risk per trade, say you only want to risk one
percent. You can then calculate your risk per trade in $. With
your $1.000.000 account:
One percent (0,01) * $1.000.000 = $10.000 risk per trade.
Your risk for one trade is $10.000. Now you calculate the risk
for each contract depending on where your entry and stop-loss
is. For this example, you want to buy and placed a limit order
at $40 and your stop-loss at $37. The risk per contract is then:
$40 $37 = $3 risk per contract.
When you now have risk per trade and risk per contract, you
can calculate the number of contracts you can buy for the
security, taking your risk per trade divided by your risk per
contract, you will get the number of contracts you should buy.
$10.000 / $3 = 3.333 contracts.
You can now enter your trade with 3.333 contracts and if your
stop loss is hit you will know that you only lost one percent of
your account and youll live to trade another day!
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CONCLUSION
Thank you again for downloading this book!
The next step is to practice and trade this strategy so you
learn it by hearth and can go on and profit for life.
Finally, if you liked this book, then I would like to ask you for a
favour, would you be kind enough to leave a review for this,
email me HERE. I would be deeply thankful!
Thank you and I wish you good luck!
Johan Nordstrom, TradingWalk
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