Notethatwedonotsellatradingsystem,butwedoencouragethedevelopmentofnewones.Anytradingadvicebelowisjustonewayoflookingatthings-oursoftwareallowsyoutouseanyrulesyouseefit.Systemsin<APPLICATION_NAME>areorganizedintocomponentscalledTradingBlox.
Thesecorrespondwiththetypesofdecisionsonemakesaspartofacompletetradingsystem:
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ÏÂÃæ½»Ò×ϵͳµÄÒªËØWhattobuyorsell
Âòʲô»òÂôʲôWhentobuyorsell
ʲôʱºòÂò»òÂôHowtobuyorsell
ÈçºÎÂò»òÂôHowmuchtobuyorsell
Âò¶àÉÙ»òÂô¶àÉÙWhentogetoutofalosingposition
ʲôʱºòÍ˳öÒ»¸öËðʧµÄÍ·´ç£¨Ö¹Ëð£©Whentogetoutofawinningposition
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Whattobuyorsell
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Thefirstdecisioniswhattobuyandselloressentiallywhatmarketstotrade.
Ifyoutradetoofewmarketsyougreatlyreduceyourchancesofgettingaboardatrend.
Atthesametime,youdon'twanttotrademarketsthathavetoolowatradingvolumeorthatdon'ttrendwell.
Anotherreasonthatamarketmightnotbegoodtotradeisthatitistooheavilycontrolledbyafewindividualsorthelocalsinthepits. ¡¾½»Ò×֪ʶwww.irich.com.cn § macd.org.cn ÊÕ¼¯ÕûÀí¡¿
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When to buy or sell
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One way to determinewhentobuyorsellisdecidingwhenanupordowntrendhasbegun.
Therearemanywaystodothis.Somemethodsrelyonbreakoutsofhighsandlows,
someusemovingaveragecrossovers,andothersattempttofindtopsandbottomsusingpriceformations.
Allthesemethodsattempttofindthestartoftrends.
Mostsystemsthattrytocatchthestartofatrendhavelowsuccessrates.
Thisisoneofthereasonsthatfollowingasystemisoftendifficult.
Itispossibletotradeformonthsorevenayearormorewithoutagoodtrend.
Afteralongseriesoflosses,mosttradersbegintoquestiontheirsystemandstarttohesitatewhentakingtrades.
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ÈçºÎ½»Ò×£¨ÈçºÎÂò»òÂô£©Makingtheactualentryonceasignalhasbeengeneratedisanimportanttacticaldecision.
Thisisespeciallytrueforlargeraccountswhereentryandexitofpositionshasheavycostbecausetheordersarelargeenoughtomovethemarkets.
Smallincrementallossescausedbypoorentrytechniquecanmakethedifferencebetweenwinningandlosingoverthecourseofayear.
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How much to buy or sell
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Thedecisionabouthowmuchtobuyorsellisabsolutelyfundamentalandyetoftenglossedoverorhandledimproperlybymosttraders.Acommon(butpoor)waytodecidehowmuchtotradeistopickafixednumberofcontractsperdollaramountandtotradethatamountforeachandeverycommodity.
Somestocktradersbuythesamefixeddollaramounteachtime.
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Thetwoaspectsoftradingthatrevolvearoundhowmuchtobuyorsellarediversificationandmoneymanagement.
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Inthecontextoftrendfollowing,
diversificationisanattempttospreadriskacrossmanyinstrumentsandincreasetheopportunityforprofitbyincreasingtheopportunitiesforcatchingtrends.
Toproperlydiversifyrequiresmakingsimilarifnotidenticalbetsonmanydifferentinstruments.
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Moneymanagementisreallyaboutnotbettingsomuchthatyourunoutofmoneybeforethegoodtrendscome.
Forthisreason,howmuchtobuyorsellisthesinglemostimportantaspectoftrading.
Mostriskfartoomuchoneachtradeandgreatlyincreasetheirchancesofgoingbusteveniftheyhaveanotherwisevalidtradingstyle.
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Whentogetoutofalosingposition
ºÎʱֹËðWe'veallheardtheadmonition:
"Cutyourlosses,letyourprofitsrun".
Yetitgoesagainstthehumanneedtoberight.
Formostpeople,itisfareasiertoclingtothehopethatalosingtradewillturnaroundthanitistoadmitthatthetradedidnotworkandgetoutofalosingposition.
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Gettingoutofalosingpositioniscritical.
Atraderwhodoesn'tcuthislosseswon'tbesuccessfulinthelongterm.
Almostalloftheexamplesoftradingthatgotoutofcontrolandjeopardizedthehealthofthefinancialinstitutionitself(Barings,Long-termCapitalManagement,andothers)involvetradesthatwereallowedtodevelopintolargelossesbecausetheywerenotcutshortwhentheyweresmalllosses.
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Themostimportantthingaboutcuttingyourlossesistohavethepointwhereyouwillgetoutpredefinedbeforeyouenteraposition.
Ifthemarketmovestoyourstoplossprice,youshouldgetouteverysingletime.Waveringfromthismethodwilleventuallyresultindisaster.
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Whentogetoutofawinningposition
ºÎʱֹӯ"Letyourprofitsrun"isoneofthehardestprinciplestofollow.Thereasonwhythisishardisthatinordertoletyourprofitsrunyoumustbewillingtogivebackthoseprofits.
Pricesnevergostraightupandthereforeitisnecessarytoletthepricesgoagainstyouattimes.Earlyinatrendthiscanoftenmeanwatchingdecentprofitsof10%to30%fadetoasmallloss.Inthemiddleofatrenditmightmeanwatchingaprofitof80%to100%dropby30%to40%.Thetemptationtolightenthepositionto"lockinprofits"canbeverygreat.
"Lockinginprofits"isdifferentfrom"lettingyourprofitsrun".
Fortrendfollowers,thequestionofwhentogetoutofawinningpositionbecomesoneofdecidingwhentheupordowntrendhasended.
Thereareseveralwaysofdoingthis.
Somemethodsrelyonbreakoutsofhighsandlows,someusemovingaveragecrossovers,andothersattempttofindtopsandbottomsusingpriceformations.
Allthesemethodsattempttofindtheendoftrends.
Summary
Amechanicalsystemisthebestwaytoconsistentlymakemoneywhiletrading.
Ifyouknowthatyoursystemmakesmoneyoverthelongrunitiseasiertotakethesignalsandtradeaccordingtothesystemduringperiodsoflosses.
Ifyouarerelyingonyourownjudgmentduringtradingyoumayfindthatyouarefearfuljustwhenyoushouldbecourageousorcourageouswhenyoushouldbefearful.
Ifyouhaveamechanicaltradingsystemthatworksandyoufollowitconsistentlyyourtrading
willbeconsistentdespitetheinneremotionalstrugglesthatmightcomefromalongseriesoflosses,
oralargeprofit.
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