Category Archives: General Business

General Business

Profit Targets

Every trader should have a risk management plan in place before they start trading. Setting a profit target is a simple risk management tool that every trader should incorporate. There are several ways to implement profit targets into your daily trading. Depending on your goals and trading plan, not all profit targets will be the right one. Here we look at several ways to set profit targets so you can figure out which one is right for you.

Profit targets are a risk management method that many traders use. While setting profit targets can be a more conservative risk management method, many traders enjoy using profit targets because they are easy to implement, and they help a trader to remain disciplined in their trading. There are several ways to set profit targets and incorporate them into your daily trading.

Possibly the simplest way to set profit targets is to set a dollar amount. A trader would set a profit target as a dollar amount and incorporate this amount into their trading strategy. Let’s say we are trading the E-mini S&P 500, and we decide to set a $150 profit target for ourselves. Since one point is worth $50, we would get out of the market once we had had three winning trades in a row, or once our trading profits (with losses and wins taken into consideration) had reached $150. This profit target helps us get out of the market with a conservative profit, and makes sure we do not expose ourselves to unnecessary risk or potentially giving back profits.

Traders can also set profit targets by using a percentage price. Setting a percent price, however, also means that you would need to set a stop loss. If you are unfamiliar with stop losses, this method might not be the best for you. A swing trader who sets a percentage price might set their stop loss at 2% and their profit target at 3% of price. This means that the trader would exit the market if their loss was reached and exit the market if their profit target was reached. Setting profit targets this way is beneficial because it helps the trader to know when to close a position so that it does not go against them if they hang onto it for too long.

Profit targets can also be set based on support and resistance in a market. If you were to see the market moving up and you expected to encounter resistance in a certain area, you could set your profit target just below the resistance. This method would allow you to take profits out of the market as the market moved up to resistance.

A trader could also implement a trailing stop to set their profit target. This method has become very popular with many traders. A trailing stop adjusts based on moves in the market. A trader adjusts the stop loss with the trailing market in order to allow a stop to move higher when the market is moving up, and lower when the market is moving down. This approach allows a trader to lock in profits once that trailing stop is hit.

Profit targets are a great way to manage your risk in trading. Many traders feel that if they set a profit target they will be missing out on potential profits or opportunities. In some cases, perhaps this could be the result of setting a profit target. However, more often than not a profit target will save a trader from staying in a market too long and losing profits they had already accumulated. I highly recommend profit targets to any trader who is serious about making money with trading.

General Business

Guidelines For Money Management

There are so many money management strategies out there for traders that it is hard to know where to begin. Many traders choose a strategy at random without considering how that strategy will work with the other aspects of their trading. Here are a few simple things every trader should know before picking a trading strategy.

Money management is an important part of any trading strategy. Many traders feel that money management will hinder their trading, or that they can do without it. But time and time again it has been proven that incorporating money management into trading is the best way to limit risk and to increase returns. But before choosing a money management strategy, there are a few things you must remember.

First of all, money management will have the largest impact on how fast or how slow your account will grow over time. Money management will allow you to control how much growth you see in your account, as well as how quickly you see that growth. This can be hard for some traders who want to see fast growth, and want a large return on their account. Sometimes money management can make your progress more slow than you would like it to be. However, money management will also help you to increase your account size while decreasing your risk, and that is perhaps even more valuable than fast account growth.

Secondly, traders should always use anti-martingale money management techniques. Martingale money management might get you lucky once or twice, but they are not going to be how traders should trade the markets. There are many effective anti-martingale strategies for traders. It may take some time to find the one that works best with your trading, but a good money management strategy is worth the wait.

You should also always trade with enough capital to withstand early drawdowns. You should understand the potential drawdowns that can occur with your trading strategy, and you should make sure you have enough capital to withstand and to trade through any drawdowns in order to see your account grow.

Finally, a trader’s psychological makeup and goals should always be taken into consideration. There might be a perfect position size that would give a trader the greatest return on their investment, but if it is not appropriate for the individual trader, there is no point in using it.

It is always important to remember that money management cannot turn a poor strategy into a winning one, and it cannot make an unmotivated trader better, but it can make a good strategy great. If you would like to learn more about the importance of money management, and different approaches to money management, check out Rockwell Trading’s money management course, in which we discuss all of these topics and many more.

General Business

Day Trading Software Basics

Day trading software has made an enormous change on how day trading works as a profession. Whilst there have generally been tools that make you income in stock trading, from ticker tape with continually updated stock prices to telegrams and faxes with hot recommendations, what’s happened since the dawn of the internet is that these strategies have reached much more individuals plus the market has gotten considerably a lot more complex as a lot more financial instruments are devised by developers.
Day trading software programs are basically an automated information scraper. The far more sophisticated packages, like the day trading program, pull in data from a number of market segments and run it into analysis tools, then compare it to algorithms, exactly where billions of successful trades from extremely trained specialists have been programmed in.
These consist of logical statements for why specific trades happened with particular market triggers, and aggregates of numerous trades to figure out which ones have, in retrospect, the clearest read on the market as a whole.
Due to the fact stock trading runs on volatility plays, the capability of the software program to match market data to algorithms provides you a theoretical speed advantage; computers can compare information sets much more rapidly and efficiently than humans can. What’s changed is that the computing power to do this has migrated from the server rooms of investment banks and into the desktop computers of average buyers who’re just getting started into day trading.
And that is where the risk lies. Although it is achievable to produce income doing stock trading, and it’s attainable for someone to create a great deal of money performing it, it still requires judgment. While this software makes for a very good analytical tool, and it is going to even make suggested picks for buy and sell orders, it’s nonetheless employing the canned judgment of whatever it was programmed with.
Markets are fundamentally chaotic, and there are actually going to be market parameters that go out of the boundary conditions programmed into this software. If you do not recognize what the software is performing, this might be incredibly risky.
We are not saying do not purchase the day trading software programs. Quite the contrary – it’s an superb analysis tool and also a good sufficient automated trading program, and inside the boundaries of what it ‘knows’ and can ‘learn’ from trading patterns, it is an excellent tool for you to expand your trading arsenal.
That being stated, it’s just a tool. It is not a sure winning solution – it’s going to make some bad trades (and you or it’s going to need to determine why it created those trades). You still need to treat day trading as your job, and can’t appear at this program as some thing which will make you income when you’re out on the golf course.
So, think about it, but ensure you recognize the fundamentals of day trading before you put the day trading software program to make use of. Treat it like you’d treat a chainsaw – it is a useful tool, and it is possible to get a whole lot accomplished with it, but it is also going to require awareness and judgment to make use of soundly.

General Business

Stop Losses

Every trader should have a risk management plan in place before they start trading. A stop loss is a simple risk management tool that every trader should know and be able to use. There are several ways to implement stop losses into your daily trading. Depending on your goals and trading plan, not all stop loss methods might be the right one. Here we look at several stop loss methods so you can figure out which one is right for you.

A stop loss is a handy risk management tool that many traders use in their day to day trading. A stop loss helps to limit risk because it helps the trader see a limit that they have set for themselves. It is generally a number that a trader sets that tells them when they should exit a market. There are a few different ways to set this number.

The easiest way to use a stop loss is to use a fixed dollar amount. For example, a trader trading the E-mini S&P 500 might set a loss of $200 for his trading strategy. If one point on the S&P 500 was equal to $50, then this trader would know to exit the market after four losses. Four losses would mean a $200 loss on the overall account, and when the stop loss was reached the trader would know to stop trading and evaluate.

Another way to set a stop loss is to set a percentage of price as your loss. This is very popular with stock traders. Here is how it works: A stock trader might set a 10% stop loss on a given stock. Let’s say this particular trader buys a stock at $100. Because they are using a 10% stop loss, their stop is set at $90. Now they will look to participate in a move. If they are wrong, they know that they are going to get out with a 10% loss.

Other traders prefer to set technical stops. This kind of stop can be based on support or resistance patterns in the market. Imagine you are looking for a market to move up and you see there is a support level. Using a technical stop would mean that you would place your stop just below that support level. This kind of stop would allow you to participate in the trade and move to the upside. On the other hand, if you were expecting the market to drop, you would place your stop just above the resistance level.

The final method of setting stop losses was invented by Markus Heitkoetter, CEO of Rockwell Trading. In this method, traders place stops based on percentage of volatility. This method is very popular with traders who look at the average daily range of a market. A trader using this kind of stop will look at the average daily range, take the seven day average between the high and low, the session high band low, and use these numbers to determine the stop loss.

Stop losses are one of the best risk management tools a trader can incorporate into their trading. Not all stop loss methods might be right for every trader, but every trader should find a stop loss method that works for them.

General Business

3 Day Trading Rules You Should Never Break

Day trading is an addiction. It works like a drug. Both the success (profit) and failure (loss) in it results in more and more trading until it reaches to investor’s bankruptcy or to investor’s psychological imbalance. This could be saved if an investor follows 3 day trading rules given below. By following these trading rules you can make much money from day trading than you previously made following a hit-or-miss path.

3 unbreakable day trading rules

Trading rule 1: Stick to your plan, no matter what

Earning a lot of money every day before the closing bell rings could be the central idea, but it cannot be a plan, from any stretch of imagination. It can never pass for a plan. If this is all one got, the situation is not very bright. The sun will soon set in the horizon leaving a bitch-black darkeness behind.

It is, therefore, advised to have a proper plan for your day trading activities. And once a plan and the strategy to meet the goal set in the plan is created and tested, stick to it. Follow it to the dressing room, for even the best of the strategies, if not backed, will not succeed.

The worst thing a day trader could do to himself and his plan is to switch strategy at the drop of a hat.

Trading rule 2: Shun greed and be a nobleman

If you scan through the history of people losing money in day trading then you will see pages and pages of history littered with the stories of excessive greed. Greed, if controlled, could be a proponent of growth, but when left untamed, it brings disaster for its master.

Do not wait till the last minute for the bell to toll before you can surrender the winning hand. Sell it much earlier and remain satisfied with the profit you make, or even the loss you incurred.

Trading rule 3: Never be afraid of loss, it doesn’t matter

If day trading is a gamble, letting go of the bad cards dealt to you is the key to the pot. Many day traders are afraid of loss because of which they do not keep their minds and eyes open to see the bad trade they have done. At the end, they stick to a bad trade for long, which results in more loss.

The winner in the game of day trading is the one who knows when to hold it and when to fold it (surrender), so that the gain could be maximized and loss could be minimized. Keeping the losses small, in a sense, is saving money which didn’t flow through like sand from the clenched fist.

If you want to make real money in day trading then you should follow the day trading rules laid above. Breaking any of the day trading rules may push you away from your goal. Keep your goal in mind and follow the trading rules set above.