The one thing I do know, when I trade well which is what I have been doing I tend to want to trade more. This is what gets every trader in trouble. It is seeking that next win, essentially a gamblers ruin.
From what I have heard risk management at Goldman Sachs proprietary unit encourages, if not mandates that traders that have great winning streaks are forced to take 72 hours off. This is exactly what I am going to do for the rest of the week.
"The lesson here again is that speculation itself is a business and should be so viewed by all. Do not permit yourself to be influenced by excitement, flattery or temptation."-Mark Douglas
Here is what I am looking at next:
Notice the uptrend denoted by blue line which is underneath the market (support). Also notice it broke through the months opening range (denoted by the green lines).
In my next post I will hopefully discuss in more detail as to how I purchase stocks and commodities. As far as how I determine where and when to purchase that is defined by the opening range and the markets reaction to the opening range and whether the market is below resistance or above support. In the case above, the market price of Citi is above what I would define as resistance (3.90). This was determined by the prior months action and a forumla that I use. Now the market held above the opening range (denoted by the green lines) for enough time to show that the market has stronger demand than supply that is the basis of the opening range trading strategy.
The more important question is, where would I get out of this trade? If the market price of Citi holds below the opening range for an amount of time that is equal to half of the defined range of time of the opening range. (opening range 5 days, therefore half that period of time).
Briefly, how I get in a particular trade is purchasing half of the entire position I am willing to take. Once you have some skin in the game then you have to watch and see how the market acts. If the market reacts in the direction you thought it would then you add to the position, or place your second half of capital into the trade.
Losers average Losers. The concept is simple, in essence you want to add to something that is working, not losing. Why would someone want to add to a losing business model? If your uncle decides to start a business with some of your seed capital and a year later the business is falling apart and he asks to borrow more money for the business would you give it to him? This is by far the most fundamental idea behind investing capital in markets.
Mr Bernanke, I hope you know what you are doing? Mike Tyson went Bankrupt and I hope we don't.