Below are few trading tips that can also be an energizer for any trader-

• Why trade – To make money although a successful trader takes this much deeper
• What strategy – Trade plan should as detailed as possible when it comes to strategy
• What Markets for trade – there are 4 major classes and many markets within them
• How much capital is available – place your account sizes such that it lowers risk
• How much time – time determines whether you should be a day trader, swing trader, etc.,

Each person’s goals, life styles, account sizes and personalities are very different. Once you get your trading plan completed however and you have a successful track record of six months of solid trading results, lock that plan up and never share it with anyone. Use it to build an incredible life for you and your family. Hold on to the edge you have worked so hard to attain. Be happy to share your knowledge but that does not have to mean giving away your strategy.

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Simultaneously trend reaches a climax illustrated by price movement on the charts. This moment everybody start to jump on board the trend, whatever the price, whatever the direction. Smart traders go against the crowd by closing positions into such spikes and they occasionally experience stress due to trade exits or probably not. Other traders prefer to set targets for their trades. Target levels are frequently set near the next resistance level for long trades, or support level for shorts. Sometimes targets are based on a multiple of a market movement, or swing, already apparent on the charts. Other times, targets are set at a multiple of risk with no particular reference to the chart. As a day trader, there are certain psychological aspects to the stress exit which are important. A day trader can usually get into a trade quite quickly at the open. However, the exit may not come for a long time. Indeed, if no other trigger has arisen, the trade may be exited in the last few seconds of the market session. Ensure to decide your way forward whether to use an exit strategy or choose a strategy that lets you walk away.

Most of the traders want to be liberated from staring the screen for hours. This is to avoid psychological stresses as the market swings up and down. To avoid stress unnecessarily set a target, a stop loss, and a market order to exit at the end of the session if neither of the other two orders works. Another idea is to set an automatic trailing stop loss of fixed size. The trailing stop loss order may be connected through an OCA (one cancels another) group to a market order exiting the trade at the end of the session if nothing else has happens to experience minimal stress due to trade exits.

Only those with practical trading experience will really understand, but believe me, the most stressful trading hours are those spent watching each market tick. Even if you are winning, you go through the torment of seeing large paper profits severely eroded during pullbacks. Sometimes, you surrender and take a small profit while it is still on the table, only to see price turn right round and race back up to new highs.

If you are a day trader, I strongly urge you to adopt an exit strategy that can be automated, so that your trade is left to work as planned without your being tempted to tinker with it. Come back at the end of the session and check your results for a minimal stress or even not.

A trader is so diverted by opinion around outcome and money. They do not have enough focal point on the key mechanism of executing their trade. Similarly traders who are low in self-confidence fail to perform their trades and grab opportunities when they surface. There are few ways to enhance the trading performance.

A trading performance system comprises of 5 essential components:

a)       Monitor – watching the markets

b)       Spot – spotting a trading opportunity

c)       Enter – enter the market, place the trade

d)       Manage – management of the position

The trader concentrates on the process of each of the 5 components. The trader needs to ensure that each of the 5 stages is in relation to their trading performance. Essentially they then evaluate their trading performance against the quality of their execution of the trade. The trader should assess his performance by questioning himself with ‘How well have I traded?’ instead of ‘How much money have I made!’ This is a powerful one trading performance tip that can bring lot of changes. By developing these essential areas and shifting the mindset to ‘flawless execution’ will find an improvement in the quality of trading performance.

Confidence, Focus and Discipline are the areas that can take away non performance and enhance trading performance.

Confidence

Focus

Discipline

As we all know that no quick fix solutions vests to become a better trader. But your trading performance can always be enhanced by implementing consistently practical and proven strategies.

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Newbie traders get lucky and make some quick profits. That money is not utilized properly to buy time and set forth to learn the methods but they jump back for more money. What happens to these kinds of traders is that they will either slowdown to learn or go even pick up pace to recover losses and finally end up dissolving the money from their account. This particularly happens in a time based trading with miracles.

Make the best when miracle hits you:

1. Acknowledge you got lucky, admit it was a gift
2. Put yourself on probation for at least one trading day to get your mindset back to normal
3. Start trading smaller size with tighter filters
4. End the trading day early and on a small profits

Negative reinforcement is an effective constant reminder of what you shouldn’t do and it is easy to implement. Taking a break from the action is only a temporary band-aid. If you haven’t built your foundation of knowledge you are still on borrowed time. If you don’t take the time and make the effort to build a foundation, you will once again find yourself in the chasm.

In a time based trading a strong or weak market is irrelevant to a trader. Sometimes miracles and losses overlap but not always. All you have to do is just preserve your capital and your spirit levels for a long run.

Backtesting is just the procedure of using chronological records to experiment the act of some trading approach. Data Mining involves probing through data in order to establish patterns and find probable correlations between variables.

The Multiple Hypothesis Problem

Let’s presume that we backtest the approach against ten years of chronological marketplace data. The results are not very encouraging. Conversely, being violent and stumble traders as we are, we decide not to give up so easily. What about a ten day moving average? That might work out a little better, so let’s backtest it! We run another backtest and we find that the results still aren’t stellar, but they’re a bit better than the 20-day results. We decide to explore a little and run similar tests with 5-day and 30-day moving averages. Finally it occurs to us that we could actually just test every single moving average up to some point and see how they all perform. So we test the 2-day, 3-day, 4-day, and so on, all the way up to the 50-day moving average.

Now certainly some of these averages will perform poorly and others will perform fairly well, but there will have to be one of them which are the absolute best. For instance we may find that the 32-day moving average turned out to be the best performer during this particular ten year period. Does this mean that there is something special about the 32-day average and that we should be confident that it will perform well in the future? Unfortunately many traders assume this to be the case, and they just stop their analysis at this point, thinking that they’ve discovered something profound. They have fallen into the “Multiple Hypothesis Problem” pitfall.

Overfitting

Overfitting is a category of setback of the above problem. In overfitting we first look at the past and then build a single complex hypothesis that fits well with what happened.

Not likely, but we could always keep altering the model and taxing the approach in diverse samples (out of sample testing again) to see if our performance improves. When we stop getting performance improvements and the only thing that’s rising is the complexity of our model, then we know we’ve crossed the line into overfitting.

Conclusion

Data mining is a method to use our chronological price data to propose a feasible trading strategy, but that we have to be aware of the pitfalls of the multiple hypothesis problems and overfitting. The way to make sure that we don’t fall prey to these pitfalls is to backtest our strategy using a different dataset than the one we used during our data mining exploration. We commonly refer to this as “out of sample testing”.

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Trade price analysis is essentially a top down approach, working from the macro level of Market Structure such that we analyze the big picture first and then go down to the current trend within that structure. Finally take a look at the current price pattern through candlestick analysis or other method that works.

Market structure

The higher timeframe chart is opened and any areas of major support or resistance are identified. Support & Resistance are areas of past price congestion. Trade is a higher probability of price stalling or reversing at these areas of major support or resistance. Then narrow focus to the shorter trading timeframe and add to the market structure framework, by identifying areas of minor support or resistance. Thus Market Structure is simply identifying a support and resistance framework within which price moves.

Having defined the market structure an analysis on the trend to identify its strength is conducted. If the trend moves strongly, anticipate it being more likely to break through the next support or resistance levels. If it is weakening, a greater probability of the support or resistance levels forming a barrier to further price movement can be declared. We determine the strength of the trend by looking at its closeness to the support and resistance barriers within the framework.

Conduct further price analysis regarding the trend and how it moves within the support and resistance framework. The price may have just meandered slowly up to a major resistance level. The current price swing may clearly show less momentum than both the previous upswing and downswing. And the price bar range may be narrowing. This gives a reduced likelihood of the commitment required from the bulls to break through the area of increased supply. The shooting star pattern provides evidence of a clear rejection of prices at that resistance level. This provides a lower risk or higher probability trade in the short direction.

Instead of entering long on a cross reversal pattern, just because it matches the cross on candlestick patterns, conduct further analysis to see where this pattern occurs within the bigger picture of market structure. The trend may show a strong and accelerating move downward, on greatly increased volume, extending price rapidly to great distances below its average. This is an area where I expect increased demand. The cross shows a clear halting of the rapid move down, and allows me an opportunity to enter a low risk trade close to an area of major price support.

The end result might be the same. Over a lifetime of trading this approach will produce more favorable results than just entering because the pattern matched.

The market structure defines where we trade. The trigger, whether a candlestick pattern or some other form of entry trigger, tells you when to get in, only when you’ve first met the requirements of the market structure rule.

Think about where the current price movement is within a structure of support and resistance. Think about the changing strength of the current trend, or price swing, as it approaches this area of support or resistance. Watch for signs of strength or weakness in the trend, through the clues obvious in changes of drive and instability.

And don’t forget – always use stops, because there are no guarantees. This is a game of chance.

Open trade is a fantastic opportunity for the smart trader who knows how to identify supply and demand. Most of the time, our entry is within seconds to minutes of the opening bell. Prices gap up because there are more buy orders at the open morning than there is available supply at the prior day’s closing price. They gap down because there are more sell orders at the open than willing demand at the prior day’s close. Therefore, market prices are almost always at price levels where there is a supply and demand imbalance at the open in the morning trade technique.

The input is to not stare at candles on your screen as red and green pictures and patterns. You must recognize what is happening behind the scenes in the morning trade. Whether you’re trading stocks, futures, options, or forex, the logic and rules never change. Again, the market imbalances are greatest at or near the open of trading in all markets. By the end of the first hour of trading each day, a large amount of novice trading capital is simply transferred into the accounts of the astute trader. If you can’t see the novice trader in markets, you most likely are the novice trader.

The dramatic price decline can only happen because there is much more supply at that level than willing demand. The dramatic rate of decline suggests a strong supply and demand imbalance at that level. Now, notice what happens the morning of the upgrade. Our job is to find this novice trader and simply take the other side of his or her trade and make the best of morning trade.

When you enter markets at price levels where supply and demand are out of balance in a big way, especially at or near the open of trading, moves in the market are typically very fast. This trade and the thoughts and rules that went with it are not meant to impress you. I mean to impress upon you the importance of looking at markets for what they really are which is simply an ongoing supply and demand equation. Opportunity exists when this simple and straightforward relationship is out of balance. Everything else in and around markets is just noise that is meant to invite you into markets at the wrong time and in the wrong direction.