The Red Pill or the Blue Pill?

Taking the Redpill

So let’s have some fun folks! “You take the blue pill, the story ends. You wake up in your bed and believe whatever you want to believe. You take the red pill, you stay in Wonderland, and I show you how deep the rabbit hole goes.” I’m sure most people are either familiar with the movie The Matrix or have heard the above quote. It’s an interesting premise I think. Let’s have a discussion and see how we can relate this to trading! To start with, I will just be open about my own personal frame of reference for all



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Position Sizing

stop this with good money management

Please also see the discussion on Stops This is one of the areas that almost killed my trading account. In addition to trading without a stop loss, I was trading position sizes that were far too big for my account. This was great if a trade was moving in my direction but if you add in leverage, the losses were magnified as well and I could easily have been wiped out. No one ever told me how to determine how much I should buy – certainly I was never told anything other than this kind of consideration “make sure you



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Louise Bedford Books

trading results in great profits if you have a plan

To buy click on cover. Click link below for Trading Secrets at The Book Depository Book Depository Link     When I had been trading for around 6 months, I was starting to become frustrated because both companies I had purchased trading education from were throwing me fish rather than teaching me to fish for myself. I started my trading doing covered calls which work quite well for producing income every month but they really only work well in a market that is going up in value. I found myself holding shares that had reduced significantly in value that I



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Volatility

trading tools of the trade

Investopedia has an article here but it doesn’t seem terribly helpful to me. Here is a document I wrote when I was trying to come to grips with it and also what my software was showing me. Volatility I have been on something of a crusade to understand volatility and how it is calculated in my charting packages Optuma and Beyond Charts Plus. First Historical Volatility. This is the standard deviation of the % change in price for a specified period (sometimes called the Interday return). There are a few different ways this can be calculated. In Microsoft Excel, it



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Bollinger on Bollinger Bands

bollinger bands indicate relative price

Click on cover for Amazon Click link below for The Book Depository Book Depository Link     I became very interested in using Bollinger Bands to help me with entries and exits particularly for mean reversion strategies on foreign exchange. Bollinger details a great methodology for determining if the current price is high or low on a relative basis. Almost every charting package these days includes the Bollinger Band indicators – or at least the simplest ones. John’s book has many more indicators and I have been able to add many of them to Optuma. If you would like these



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