Traders frequently discuss the “Risk to Reward” ratio when entering a trade, and often cite that it must be “Three parts reward to one part risk” or the trade will be deemed unacceptable from a risk standpoint. But is this always the case? It seems logical that the higher the reward/risk ratio, the better the…
Some say that “going short” is more dangerous than being long – I’m open to debate the question, but I do like to point out charts of interest that show interesting situations that warrant further attention. Such is the case in Pulte Homes. We hear on the news just how horrible, unprecedented, catastrophic the housing…
ImClone stock probably is most famous for being the stock that “took down” Martha Stewart for potential insider information, but I wanted to show a recent power move and major gap fade that occurred within the last week for education’s sake. Ouch. Traders who bought – and there were many who did – around September…
In my trading, I frequently utilize strategies that are dependent upon an initial condition that arises from a new momentum high or low. The basic market principle that I derive these strategies is stated as “Momentum Precedes Price,” indicating that when a new momentum extreme is reached, a new price extreme in that direction is…
Folks, trading is NOT an easy game, especially if you are trying to predict the market and follow what seems natural to you. For those of you who are following the news regarding the “housing crunch” and “credit crisis” that has plagued the market recently, how many times have you heard about the dismal state…
Do you want to know what the “Big Boys” are up to in the Stock Market? It has often been said that if you follow the “Big Money” or “Smart Money,” then you will often have a greater chance at success in the stock market. Some traders profit entirely off of reading “insider trading” reports…
It pays to be selective with your trade set-ups and entries. Sub-prime setups often lead to sub-optimal trading results. How can you be sure you’re taking the highest probability trades? While a discussion on high probability trading is well beyond the scope of any singular blog post, it helps to be able to articulate –…
Thank you so much to all you readers and fellow blog authors. This weekend, we surpassed 1,000,000 hits on the Afraid to Trade blogsite! I cannot express enough thanks to you all for your support and continued readership of the site. I enjoy reading the comments and responding to the emails and communicating with fellow…
Previously in the post ATR Strategies to Test, I mentioned that you can create a trading system with random entries that produces a greater than 80% win rate. Despite this extraordinarily high winning trade percentage, the system had a zero or negative expectancy – in other words, it was a failing strategy. However, with the…
If you had to pick between consistent, steady small trading gains with large losses, or a handful of winning trades that result in large gains, but also consistent small losses, which would you choose? If you search yourself honestly, your answer would likely be “I prefer winning more times than losing more times in the…