Effective Tools For The Trader Beginner
Published by Manny on Tagged Finance-Investing
Renowned trader David Jenyns conducts an interview with Stuart McPhee where matters of interest to the beginner trader are discussed, specifically trading the e-minis, getting a fill rate, CFD trading and using chart indicators.
David: We have been asked the question: is it practical to aim for consistently small fraction of profits day trading plans the e-minis s and p, e.g. to get two points out of the market every or most of the trading days, at the same time have risk management in place? It sounds simple but is extremely difficult to do.
Stuart: It’s certainly possible because I know people who do it. It is certainly possible but I think when we’re talking about things that are so volatile and things that move quickly, obviously our speed of execution needs to be fast. We need to be very decisive and then once we decide we need to execute and then have confidence in what we’re doing and be quick in our execution.
It’s absolutely possible but we need to have that winning methodology, the setup to be able to get us in to be in position at the right time to scalp to get those points out of the market that we want.
David: The next question is: ways or actions to ensure you get a fill rate within one to ticks when trading on a one minute ongoing chart, not previewing the market direction or preordering.
Stuart: When I think of fill and the beginner trader getting in when he wants, the thing that springs to my mind is liquidity and having active turnover and active trading plan and having a lot of buyers and sellers in that market. It’s being able to execute and get the price you want because there’s great price transparency because we’ve got a lot of participants, great liquidity and being able to get in and out when you wish.
David: Next question is: I use chart indicators to enter a trade but then get nervous when the price does not do what I thought it would. Could you provide some of your experience dealing with price action immediately after placing the trade?
Stuart: I’m considering here the idea of nervousness felt by the beginner trader about what the price does. Our stop is so far away there is no way the price is going to fall down to our stop today. So we really have no further actions required of us for this particular trade for the remainder of the trading day.
With my medium term trades, often within a few days my price is back down below my entry price. But that doesn’t bother me because it is still away from my stop which I set outside the trend channel. But the worst thing you can do is check it ten times in the ten minutes after you have bought it.
But I’ve often found as soon as you buy, off she goes, you’ve bought at the highest price, but what can you do, you’ve stayed within the rules, your stops are set, and if it hits your stops you get out, if not you stay in the trade. I think the best thing you can do is you enter the trade, close the browser, log off, turn the machine off go and do something else. It’s not going to hit your stop in the next day or two. It may, but it would be a very adverse move to come all the way down to your stop, and the beginner trader is rarely likely to experience this.
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