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Rookie Corner : The Live Trade – Part II

July 5, 2018

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Good Day Tackle Traders!  We are back this week and we are continuing on with our first live trade.  Last week we determined our market bias, we did this by looking at the major indexes and the VIX to determine where we thought the market might be heading and we did this using solid technical analysis.  We then used a scanning tool to find a suitable candidate, one that was mostly congruent with our market bias.  We then ran the numbers to see if this trade might be to our liking.   These numbers that I am referring to are our SET numbers, stop loss, entry and realistic target.  Once we have these numbers we need to go a little further to see if this is actually a trade we want to place.  We need to ensure that our risk/reward ratio is within our trading system parameters.   Typically we talk about a minimum of a 2/1 reward to risk ratio, however, this may not meet the standards of your particular trading system and if it doesn’t then you need to adjust accordingly, whether that 3/1, 5/1 or whatever your system calls for.  Once we have determined our max risk then we can figure how much to put into the trade according to our risk tolerance rules, this is position sizing and by far and away the one thing you must do to be successful at trading.  After we have gotten all our numbers together and everything looks good we can then proceed to place the trade.  There is one thing that we should do before running all our numbers, we should check to see if the sector is going in the same direction as our equity, this will be a deal breaker for some folks and just a bonus for others, just know that if the sector is in your favor then you have a better shot at the trade going your way.  Once we place the trade then we need to track the trade and journal our trade so that we can follow our results and have proof positive that we are trading the right way and if we are not the journal is a great tool that can point out holes in our game.  So without further adieu…lets begin!

 

2 Replies to “Rookie Corner : The Live Trade – Part II”

  1. IreneMar IreneMar says:

    Thanks for walking us through the right sequence to place trade and journal.

  2. Avatar JocelyneGrzela says:

    Thanks Greg for another great video. I really appreciate the step by step explanation of managing the trade. You explain it in a way that is clear and easy to follow.

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