How to Design a Share Trading Strategy

Before we start:

All Traders should have a mantra, as follows:

I will educate myself on how the market works.

I will learn how to find and place a trade.

I will create a trading plan and trade my plan.

I will not chase the market with emotions.

I will decide to be a day trader or an overnight trader (or longer) before I enter the market to help to control my emotions.

I will be patient and wait for a market set up.

I will never trade without a protective stop loss order.

The market will meet my criteria or I will not trade.

have refined a standard procedure that I use for the process of creating a trading strategy. I always start with the big picture and make increasingly more detailed decisions about the strategy.

I begin with the assessment of what type market action I want to trade and what kind of trader I am. Then I end up with making decisions on exits, and how far away to put my money management stops.

How can you adapt my strategy making to your personal psychology?

You Must Pick the Market

The first decision you must make is what type of market you want to trade. Although this may look like an easy decision, in fact, it is a difficult judgment, because most new traders only consider the profit aspect. They simply try to pick the strategy that they think will make the most money. Focusing on money will probably lead you to make the wrong decision. It is the psychological aspect of trading each of the markets that is the most important consideration. It does not make sense to create a very profitable strategy if you are unable to trade psychologically.

What is Your Trading Time Frame?

You need to decide whether you will day trade or trade on daily or weekly charts. It is very difficult to have a job and trade intra-day. It is not totally impossible, just very difficult.

Most people want to trade part time and still hold down a day job. If you want to do this, it is better to trade daily or weekly charts. You will only be able to look at the market outside of your working hours and your strategy design will have to take this into account.

The strategy should not require you to check the market during the day. I think that there is only a certain amount of money that you can get from the markets and that depends on the time frame you choose to trade.

Time frame choice is a personal decision, and of course there are no right or wrong answers. The ultimate decision is personal preference influenced by financial your considerations. But you have to make this decision before you start looking for indicators, as the choice of indicators is influenced by the time frame selection.

However remember the old saying: “if you ‘buy and hold’ then eventually everything will be fine. Remember the expression touted – “It’s time in the market, not timing the market.”

My guess is that more active investment management will be the key for anyone wanting to make a better-than-inflation return from shares over the next five years.

What I am trying to point out is that short term or day trading in this type of market is better than buy and hold. But it must fit in with your time availability.

The Types of Market

There are three types of market action: trending, directionless and volatile. I think a directionless market is very hard to trade, thus I will not discuss the directionless market here. I would suggest trading either a trending market or a volatility market.

You can choose a trend strategy, knowing that you are going to have to trade through periods of corrections during the directionless phase, or you choose a volatility strategy that will give you extended periods of doing nothing while you wait for the next trade. Which one is for you?

We will look at a volatile market and a trending market and build our strategy accordingly.

What is a Volatile Market?

A volatile market is characterized by sharp jumps in price, up or down. This type of market action involves a quick and unexpected change in volatility. One measure of volatility might be the difference or spread between two moving averages – the spread increases with volatility. Price action, such as gap openings or an increase in the daily range, can also be considered an indication of an increase in volatility.

Each of these two types of markets (Trending and Volatile) are tradable, but with markedly different trading strategies. Let’s take a look at each type of market behavior and the strategies that are appropriate to that type of market.

Strategy: Volatile market

Trades generated by this type of strategy are usually short-term, and when trading this type of strategy, you will be out of the market a significant amount of time.

Volatility strategies generate a high percentage of winning trades, although these trades usually generate small profits per trade. The Foreign Exchange (Forex) market is a typical market that I would class as volatile. Trend following strategies don’t work well in the Forex market.

Today’s market volatility is unprecedented, but so is the market opportunity if you have the right trading methodology. With CFD Trading you don’t have to worry about whether the market goes up, down or sideways as long as it stays within your boundaries. The record volatility has created great value for CFD or day trades, while allowing you to set conservative strike prices.

Whether you are a novice or experienced day trader, you now have the opportunity to learn how to take advantage of today’s chaotic market conditions and target attractive profits.

However you must realise that trading a volatile market, e.g. day trading, is inhabited by the sharpest minds in the game. They are all out to grab your money. The best way to start day trading is slowly, calmly and armed with all the education and the best mentorship you can muster. Look at your market indicators and learn how they interact.

Comparing medium or long term trading with day trading is like comparing a wombat with a kangaroo. Entry points, exit points and risk reward ratios are different. Go slowly when you begin day trading. Preserve your trading capital and most of all, don’t trade without a trading plan.

Let us have a look what indicators I use.

I use volume, 3 moving averages (MA), MACD and stochastic indicator.

Generally, I use a 5 minute chart with the MA set at 18, 39 at 50 periods. The MA18 and 39 are my main ones, while I keep the 50 as my trend indicator. I have also volume, MACD and stochastic on the chart.

When trading CFD, I set my daily range as per my Bias Indicator, as outlined on my web site. Then I look for possible trades on a number of charts in my watch list. I look for trends and volatility.

If the trend is going up, I watch for an opportunity to go long, if the trend is going down, I seek to go short. Always wait for a retracement, watch the MACD and stochastic indicators. In this discussion, I will concentrate on going long, however you can apply the opposite technique to go short.

Let us assume that we have an uptrend and the last few candles show a retracement. Watch your stochastic indicator. If it shows oversold, wait for it to turn up. Also watch your MACD. It should also start to turn up. If possible, candles should show a clear swing low.

A swing low requires at least three periods (bars on a bar chart) to be established. A swing low is formed when a period’s low is lower than both the period before it and the period after it. A swing high is the reverse. It is formed when a period’s high is higher than both the period before and after it. You cannot say that a particular bar on a chart is the lowest the stock will go until the stock experiences a period in which it does not continue to go lower. Therefore, in its simplest definition a swing low is not established until a period occurs in which a stock does not make a new low for the move.

This should establish your entry point to go long.

Exits are somewhat more intuitive, especially once you are in profit. I generally exit when I get a swing high, when the MACD starts to turn down or when the stochastic indicator starts to turn down. I am happy to exit with small profits rather than let them turn into a loss.

Day trading is part mechanical and part intuitive. You have to watch all the time, adjust your trailing stop loss and take profits when you can.

I believe it is one of the toughest ways of trading, but in a volatile market, can also be one of the most profitable.

Now let us explore how to set a strategy for a trending market.

Should we use weekly or daily charts?

Weekly charts are much more difficult to trade because it takes more discipline. To trade weekly charts, you must make your decisions on the weekends and not make any changes until the next weekend. For most traders, this is very difficult to do. It is very easy to yield to temptation and move a stop loss or a money management stop, or want to keep your profits and exit the market early.

Most people don’t think of trading weekly charts. My experience is that when following trend trading, there is a lot of money to be made trading weekly charts, simply because so few traders are able to do so. To make money in the markets, you have to walk where the average traders do not venture. Weekly charts are one of those places. However, whether you us weekly or daily charts, the strategy remains very similar. There is more price detail in the daily chart, but also more price noise.

What is a Set-Up for a Trade?

Let us look at some of the indicators which we could use. For a trending market, trading for the medium or longer term, I prefer to use Exponential Moving Averages (EMA) of 150, 50 and 20 periods. I would like to point out that I rarely enter a trade long if the price is below the 150 day EMA.

The other guide I use is volume. Volume indicates interest by other traders and momentum in the market.

I am sure that most traders have tested the Moving Average Crossover Strategy sometime in their trading career. The average trader will look at this strategy and believe that the only thing to test is if the two or more moving averages cross over.

New traders will experiment with many different lengths for the averages. As I said before, I prefer to use Exponential Moving Averages (EMA) of 150, 50 and 20 periods.

When they don’t find any that work to their satisfaction, they discard the moving average strategy concept entirely and move on to something else. They keep looking for that Holy Grail indicator that they hope can instantly make them successful.

We have all been there and have all discarded many great ideas. The discarding of an idea, more often than not, is a mistake. I believe that for the most part, any indicator can be made into a profitable strategy. Yes, I said any indicator. When we discard the moving averages, it is usually a mistake because the moving averages by themselves only represent one half of the strategy development process.

The second half of a strategy, the half that most traders ignore completely, is what I call the “Entry Point.” I will talk about exactly what these two terms mean and how using them. Together they can turn something as simple as a moving average crossover into a promising new trading technique.

To develop and execute a successful strategy, we need a set-up and an entry signal. The set-up is the set of conditions that are necessary prior to considering taking a position in the market. It consists of the indicator or group of indicators that tell us to get readyto enter the fray. Set-ups don’t get you in the market; they simply make you aware that a trade could be possible.

Here are some examples of a trend following set-up:

A fast moving EMA crossing over a slow moving EMA.

Price moving close to or outside a channel, e.g. Bollinger or Standard deviation channel.

Prices reaching the upper or lower line of a moving average envelope.

Sudden increase in volume.

There are countless other indicators and conditions that could be used as set-ups. In the final analysis, you are limited only by your creativity.

Once we have defined our set-up rules, we can then establish our Entry rules.

Creating Entry Rules

By trading only set-ups, you lose the added accuracy and increased profitability of a strategy that uses both set-up and entry. If trading set-ups by themselves worked and was profitable, trading would be easy and all traders would be rich.

An entry is the signal by which the trader purchases the contract in the market. It is the technique that a trader should use to take a market position once the rules for the setup have been met.

Entry selection is dependent on the type of set-up you’ve designed. The entries must be designed differently depending on the type of strategy you choose to trade.

There are two rules which should be followed to enter a trade.

The first rule requires prices to move in the expected direction before entering the market. If our set-up indicates a long position, we would require the price action to move up in some specified manner before we would be comfortable taking a position. We want the price action to confirm the set-up and force us into taking a position.

For instance, let us assume that on today’s close our set-up has given us a long signal. We might require a breakout above the high of today’s bar to confirm that the market is in bullish mode. With this breakout as a condition of entry, we have now required specific market action in the direction of the set-up before we risk taking a market position.

You may decide to place a buy order if the price is a set number of points above the previous day’s close. It is up to you to decide what your entry point should be, once you have a set up.

The only limit to creating viable entries is your creativity. There are potentially many techniques that make interesting entries.

The second rule requires you to enter the trade if your entry point is met. You should not hesitate to enter.

Trading the set-up and entry concept and making sure that you follow the rules gives far superior results when compared to trading either set-ups or entries by themselves. Using both a set-up and an entry together enhances the performance and profitability of a strategy.

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Strategy Designed For the Meta Traders

FOREX EA shark is an automated system, trades with out any user intervention and returns stable profits. Shark expert advisor is the ultimate intraday trading system, evaluating over twelve indicators, pivots, fibs, and support and resistance levels on multiple time frames to analyze the market. The result is a system which executes an average two trade’s even trading day and wins 85% from all trades.

Features:

1. Online time payment updates are included.
2. Trading in LIIVE accounts
3. Tested back in 1999
4. Built in money management
5. Stable in any market condition
6. Low risk trading system is possible.

This FOREX EA shark has the capacity of real money accounting performance with initial deposit, current balance and also capital growth rates.
For example where as the real money balance accounting is concerned the exchange rates may start from $0 to $120,000 etc…with every year analysis and growth rates are concerned.

EA shark has also a Back testing performance.It can be analyzed by tick-by-tick data basketing as EA shark generation.for example $7,169,732 in profits if it runs from 1999 to present. This proves that FOREX EA systems EA shark is stable system for a long period of times.

FOREX EA shark is comprised of experienced traders and professionals programmers who develop high end automatic and manual trading systems.
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Thus by this way FOREX EA shark can be determined or analyzed for all set of EA based systems.

4 Strategic Planning Tools For Business Model Innovation and Business Strategy Design

There are strategic planning tools for pretty much any objective a business executive can conceive of. However, for managers and entrepreneurs wishing to innovate their business model, it can be challenging making the leap from conventional thinking to the sort of creative but realistic thinking from which the next generation of sustainable profits can develop.

Knowing the types of tools you can use for various kinds of business strategy tasks can you get far more innovative results from your strategy development sessions while cutting the time it takes to arrive at good business models.

Tools for Mapping and Dominating Uncontested Market Spaces

1. Strategy Canvas

The Strategy Canvas is a tool first introduced in the book, “Blue Ocean Strategy” by W. Chan Kim and Renee Mauborgne. It is a chart that plots the positions of business competitors relative to the factors important to the customer marketplace. The horizontal axis plots the factors of competition (hopefully established through customer knowledge), and the vertical axis plots the degree of offering or service level.

Using this chart differences between current and potential business competitors can be graphically portrayed. The primary point of the strategy canvas is to illustrate divergence between market and business strategies as it relates to customer needs. By using a strategy canvas, you can create a new value innovation that breaks the conflict between low cost and differentiation – the heart of blue ocean strategy.

The strategy canvas is also a great tool for USP development.

2. Strategic Control Point Index

This is a tool used to assess the level of strategic control a business has in its industry relative to competing businesses and organizations. It was best articulated by management consultant Adrian Slywotzky in “The Profit Zone” (a book which I highly recommend). The strategic control point index classifies these control points according to the level of “profit-protecting power” they confer to a business.

Simply put, it is a simple description of the path to monopoly power (or at least near-monopoly) in any business design. The profit protecting power of these strategic control points go from “None”, “low”, “medium” to “high”. Some examples of strategic control points given by Slywotzky include:

10 to 20 percent cost advantage in commodity product (low)
One-year product development lead (slightly higher, but still low)
Two-year product development lead (medium)
Brand, copyright (slightly higher, but still medium)
Customer relationship ownership (High)
String of superdominant market positions (Higher)
Management of the Value Chain (Even higher)
Standards Ownership (Highest)

3. 6 Paths Framework

This analytical tool is another from “blue ocean strategy” and masterfully gives strategists a way to think across the “six conventional boundaries of competition” to systematically construct new assumptions and stimulate product or business design breakthroughs. The idea is that one of these unconventional ways of looking at the competitive landscape may crack open a strategic breakthrough.

a) Look across industries – Compete with alternatives and substitutes for your product/service rather than those you think are your competition.

b) Look across strategic groups – Look at how your new strategy can be developed between the naturally assumed strategic boundaries in your industry.

c) Look across the chain of buyers – Consider how you can change the game by changing the defined “primary buyers.

d) Look across complementary products and services – Thinking about the whole system of your customer’s typically solution (in which your current offering might be just a small part).

e) Look across functional or emotional appeal – Examine how you may be able to create a new value curve by adding emotion to a functionally oriented industry, or removing stripping out emotion and reducing a product or service to its functional core.

f) Look across time – Adjust your time horizon to a different point or cycle than is typical in the rest of your industry.

4. Business Design Matrix

The business design matrix is a great analytical tool that you can use to help understand and analyze “at a glance” the business models of your competitors. It is largely derived from the work of Dr. Adrian Slywotzky. The criteria across which you analyze your competitors as well as your own organization include:

Customer selection
Profit Capture System(s)
Differentiation / Strategic Control
Scope of offerings and presence

These core four considerations provide a foundation for deciding marketing strategy – a foundation upon which a larger business strategy can comfortably rest.

101 Marketing Strategies – Designing and Selling Packages

In 101 marketing strategies we are looking to identify the fastest and easiest ways to build your business, increase profits and make you successful. One of the fastest ways to do all of this, particularly to increase profits in your business is to increase the average sale price of each sale. If you have already gotten the person to the point of sale, increasing that sale can have a profound impact on your bottom line. There are a few ways to do it, and a really good one, that many small business owners and entrepreneurs overlook, is selling packages. A package is a bundle of products and/or services grouped together and sold as a unit. And, guess what? They often sell better than single products alone.

The reason packages often sell better is they create more value for the customer at the point of sale. They often allow you, as the business owner, to offer a better price value, you can group together things that will serve the client more effectively, and ultimately, you end up with bigger end sale price without having to add much extra effort into the sale once the packages are designed and offered. Some common examples of packages might be if you are selling vitamins offering a 3rd month free with the purchase of the first 2 months, or if you offer seminars, offering each course for a fixed price individually, or if you buy 2 you get the third one for free. If you sell a software package for businesses you can bundle it with training and coaching, which you can also offer separately, but as a package it makes the software more desirable.

Figures vary for different business owners, but my research has shown that up to 80% of the transactions in situations where packages are offered are a ‘package’ sale. You can have small packages where three items that are usually $10 each are grouped and sold for $24.95, or big packages where individual training or seminar programs that are usually sold for between $1995 and $5995 get grouped together for a package selling for $30,000 or so, depending on all the parts put together. People love packages, so figure out ways you can create packages for your products and services.

One of the ways to create a package is by adding bonuses, if you add a few really amazing bonuses you can create what is known as an ‘irresistible offer’, where the person considering the purchase begins to understand that the deal is so good they would be silly to pass it up. In the end, think about what would get you to spend your money…why should someone buy if it’s not an incredible offer? Build up the package so that it is an amazing deal, give tremendous value to your customers, everyone wants to feel like they got a good deal, so make it incredible and it will be irresistible.

Also, be careful to take the time to explain any and all of the bonuses and parts of a package. Every time you add a bonus you need to clarify the value the client will receive and the actual price the bonus or item would sell for, that helps them understand the actual value of the package as a whole.

Come up with a crazy, amazing package, with bonus after bonus, give it a great name, and then share all the benefits with your prospects, they will be delighted to become your customer.

A Selection of Investment Strategy Designs for Making a Return

The scattered bunch of us who do excel in saving a little should focus on the optimum way to make a return on our savings package. Have a gander at some of the tips below to assist you jump onto the right track with regards to making investment strategies that outstrip the competition.

The first step is to assess how much money you actually have and how much you would be comfortable using in financial schemes and strategies such as shares, stocks, ISAs and bonds. You should have a comprehensive knowledge of your outgoings and the amount of cash you make in a given period from full time work and any sideline endeavours. Don’t be tempted to place money that you are not in receipt of in deals and schemes that could carry a massive rate of risk so be clever and stick with smaller sums until you become more accustomed with the investor market.

Your personality and nature are the next things that need to be looked at. Maybe you are a cautious saver and don’t appreciate the notion of playing on the stock market or maybe you don’t want to use ISAs that prevent you from taking out cash until your account matures? Generally people who have a strong temperament like to base decisions on strong sentiments but people who are considered and mindful like to use their common sense to form decisions.

Visit specialist internet sites for tips from advisers in the independent finance market who will evaluate your financial position and make viable suggestions. You’ll be able to benefit from their knowledge of dividends, mergers and acquisitions and stocks. Moreover they will be well suited to providing you with the know how to create best rate savings accounts, which will work symbiotically with your savings to make a tad more money.

A Notice Cash ISA could end up being the favourite strategy you wish to take and implement. Do your best to go about getting assistance from a reputable source because the investment sector can be overwhelming area that can leave even the most accomplished investor dumbfounded. Stay ahead of the game by doing your research and tracking down extra tips that will answer your remaining questions.

Mull over investing in ISAs, watch the stock market fluctuations and follow it up with gaining a good basic knowledge of financial stories in the news because that will set you up with a great base in which to start your programme of investment. Be quick and start right now to make the money you want for tomorrow!