December 20, 2015

How to Master Trading

Please read the disclaimer below, thank you!

In one of my previous posts, I discussed mastery and how important it is in trading. I'd like to go into more detail about this topic in this post. So what is trading mastery? I believe there are four pillars of trading mastery (think TAPER):

Technical Analysis
Planning
Execution
Review

Now let's go over each pillar in more detail.

Technical Analysis (TA)
-HTF support and resistance (horizontal and diagonal)
-HTF chart pattern (shows me where price is likely to go)
-LTF support and resistance (horizontal and diagonal)
-LTF chart pattern (shows me where high probability entries, stops, and price targets are)
-Update HTF and LTF TA continuously throughout the day

Planning
-Trading is a game of probabilities, so we're always looking to trade where the probabilities are skewed in our favor
-Institutions buy at support and sell at resistance; therefore, probabilities are skewed in our favor at these prices
-Confirmed broken support becomes resistance, confirmed broken resistance becomes support
-If the price action isn't clear on the HTF or LTF chart, don't trade, no trade is better than a bad trade, defense wins championships
-Set long or short bias based on HTF TA
-Identify potential profit targets based on HTF TA
-Set trade thesis based on LTF TA
-Identify high probability entry prices based on LTF TA
-Identify stop location based on LTF TA
-Identify high probability profit targets based on LTF TA

Execution
-Execute the trade plan without hesitation
-Exit if stop is hit because the trade thesis would be wrong at this point
-Always lock in high probability profits
-Notice how short this pillar is, there's a reason for it: TA and Planning are far more important than actual trading

Review
-Quality and accuracy of TA
-Quality and accuracy of Planning
-Quality and accuracy of Execution
-Identify things you did well, set a goal for tomorrow to do more of these things
-Identify things you didn't do well, set a goal for tomorrow to do less of these things

In the next several posts, I'll discuss what high probability entries are, what high probability profit targets are, how to set stops, and how to perform F2G technical analysis. I'm going to include much more visuals to include price charts because I think I've written enough text lately and my blog really should include more visuals to help convey these points. Also, if there's a topic you'd like me to discuss in more detail, let me know in the comments below! See you soon!

Disclaimer: I'm now a licensed financial representative (Series 7 and 63) but what I discuss in these posts is NOT ADVICE nor a recommendation to trade, buy or sell any security. This post is about what I believe about the markets and how I trade and this blog is for information and trading journal purposes only. Continued reading of this and ANY of my posts constitutes your acknowledgement of and adherence to this disclaimer. Thanks for your understanding.

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