A Guide to Trading Systems

As the thing is getting bigger and bigger I will continue in a word processor.....
I am not affiliated with any of the companies I might list. If asked to open a demo account, you can do it with any broker you like.

How these guide differs from other guides:
One stop guide. I will talk about everything. Here is almost everything you need.
No illusions. Facts only.
Lots of practical and theoretical assignements.
Final Exam, where you will post solutions here in thread. You will receive your score per PM. The actual solutions will not be posted.
The guide tells you exactly what to do, where to go, what to read and what to trade. It does not simply list things like indicators, it tells you to go there and to use this on that.
It is for advanced traders and for beginners. I will start with the most basic things and then slowly go into details and more complex things.
I will instruct you to read certain passages in certain books. Books are a great source of learning - far better what internet forums can offer. You can find those books in libraries, on amazon or in ebook format on the internet. List of books needed will be posted here later.
I have no interest to be some guy who knows everything, most of the things I write here are almost for me, simply writing for myself what I have learned about markets so far. It will be a great help for you


notes
run away from things like Free Trading Signals. Run as fast as you can.
Your capital is 10000, calculate 2% from capital..

part about extra inet cnn, two monis
flip coin experiment
ideal theoretical entry/exit
hrue
harder than normal job, full commitment, 12 hours a day, no vacation. mention things getting harder, need for constant adaptation, not a hobby.
no success in the beginning, the only time is when someone gives you the edge... to find edge you need lots of exp.
atr
show a chart showing points where a certain strategy with 2:1 in opposite direction will or will not work under trend edge.

follow what I say or leave. I only want those who can follow what is said. This is an extra exercise on its own, if you can't do what I tell you, then how are you going to adapt to those new things necessary to succeed?

There is no such thing as a win or a loss in trading, since there is no end in this game, you either continue loosing money and continue winning. Trading is
Why trading is not a get quick rich thing: Trading is not a lottery. It is not possible with a 1000 dollar account to become millionair tomorrow. You will need to enter trades
over and over and even you have no edge, even if you are in big plus, things will go against you and you will lose money.

Imagine you trade with 1:1 RR ratio (RR stands for risk to reward), which means, you win as much as you loose. No commissions, no spread and your strategy generates 50% winners.

You winn $100, loose $100, +100 +100 +100 -100 -100 +100 -100 -100 .... = $0.

You will end up with exactly 0 dollars in the end. Now we add commissions of 2$ per trade.

You win $98, loose $102, +98 +98 +98 -102 -102 +98 -102 -102 .... = -$20 (minus 20 doll

Myths about myths.
There is a myth: A perfect indicator exists. And there is a "wisdom" that states the opposite: indicators that will make you rich do not exist.

I am not a fan of that wisdom, because I know, there are little things, for example and indicator, that exists and that has an edge and that is profitable and that is making you money. Holy Grail is a word often used to describe a system that is fail proof and always makes money. I not only believe it exists, I know it exists. Here an example: Imagine, you are a first person to invent moving averages and all you need is to buy/sell on moving average crosses. Do you actually know, that it would bring you money until the moment where too many people know what it is and try to take advantage of it, which will turn into disadvantage and eventually the death of a simple moving averages cross?

Holy Grails exist, but the reason you don't have it, is because once you have someone else's Holy Grail it stops being a Holy Grail. These are important words: Holy Grails do exist, but you will never find that they do until you actually create one. That sentence must be your guide in trading: you need

Psychology during placing a trade:
Do you feel anxious, are you scared, you don't know will it rise or fall and the long you are about to enter, you are desperate, now, maybe sell better? Moving averages are up, but RSI is falling down, news show short, but MACD is a strong long, it's a daily pivot, it must bounce and fall, but fibonnachi must retrace and go long....STOP!
Don't place a trade if you feel any of the symptoms above. I can't stress it enough: find ONE thing that works and make a rule of entering according to that one thing and always take that signal regardless of what news or fibonacchi or your friend tells. Delete fibonnachi and pivots and everything from your chart and leave only that which you made rules for.

Discretionary trading: bars don't tell the whole story. Within one bar price can move in a differt number of ways, yet this information is lost inside the bar. Discretionary trading cannot be taught. From experience you gathered over long time you will see things happenning over and over and you will start wanting to take advantage of them. You will start noticing things after some month and maybe six months of trading and that may be equivalent to a thousand hours of screen time if you trade a lot you might find those repeating patterns. This is not a part of my discussions.

Picture of ideal entry.

draw downs (importance of it)

PART ONE - Getting Started
PART TWO - Practice
PART THREE - Psychology
PART FOUR - Trading Systems
PART FIVE - Final Exam & Preparation

My recommendation is that you also go through other guides and learn from other sources. Always read about the same subject in three or more different places. And always do the practical work. You read about MACD, you go to your charts and you put it on there and look how it looks.

PART ONE - Getting started.

Before I say a word, we need a demo account. I strongly recommend opening Oanda Fx Practice. Market index RBS uses the same platform as Oanda, you can go with that one too. You can use any of the demo accounts - I do not care, but the fxTrade platform let's you instantly see how much money you will lose or gain at certain stop loss sizes. It let's you move SL and TP right on chart (pretty good for a free platform). It's more user-friendly. If you don't know what TP and SL are, don't worry, I will explain in detail.

I chose a forex broker, because trading currencies is hassle-free (no problems short selling, you don't have to wait for market to open...) and of the easiness of opening a demo account. (if you don't know what short selling is, don't worry). But lo and behold, it is better to practice with real money. Many brokers let you open an account with $1. It will not be different from trading a larger account, but it feels a lot more real than demo, even if small money is involved.

-explanation of setting up a platform with pictures.

PART THREE - Psychology

1.I am not gonna talk a lot here, because there is one sentence that will improve your trading considerably: Always blame yourself.

This is a very very important sentence. The minute you start thinking someone is manipulating the price or a broker hunting your stops or just hell with the markets, this is the minute you are blaming someone else for your OWN mistakes. You lost a lot of money, because your position was too large? You did not follow rules? This is the most imporant sentence that you will ever find in any other activity where you need to succeed and be among the best. You did not follow your rules, blame yourself, you did not do your research well, blame yourself. When you do blame yourself, you are more likely to improve. It is like being your own coach. Many say you need to be disciplined, but what does it mean to be disciplined? You can't be disciplined until you start taking responsibility for your own actions and that is through accepting your own mistakes, accepting that you are the one doing them. You can read me between the lines: If you took someone's tip and lost, blame yourself, not him! Do you see, how this sentence actually prevents you from taking any tips? This is a one in all rule which if followed will trim your behaviour in a short time and you will make a huge leap forward in your education.


2.Assignement: Read The chapters one and two in Way of the Turtle by Curtis Faith.

3. Place .... trades ....
4. Read chapters 3-6