Thoughts

Ray once says trading success = psychology X plan with an edge X money management, and he ranked psychology highest of all. (note multipication sign and not a plus)

psychology is the hardest subject of the three. and i shall not cover it since i am not gd in it but i guess that cover in the character. Money management is the next important factor of the three

Money management:
= Expectacy + Position sizing
= Winning Gains must exceed losing ones (Let winner run, cut loses) + risk/reward ratio should b 3:1.

Plan with an edge:
= conceptual analysis + technical analysis

1) Reversal Trades - The market moves to or just beyond the edges of a trading range (a consolidation area, the value area from the prior day), cannot sustain buying/selling interest, and falls back into that range
- Extreme outliner of bollinger band, most on

2) Breakout Trades - Here we have a situation in which the market is range bound and surges out of the range.Very often, there will be a catalyst for the breakout (economic news; earnings) and the move will be reflected by other trading instruments and/or asset classes.
- Enter limit order on consolidation date

3) Continuation Trades - Here we have a trend in place, the idea is to wait for a pull back to enter the trend. A good continuation trade can be thought of as a trade that has already broken above or below its recent pivot level, hit its resistance or support level relatively quickly, and now is positioned for possible moves to resistance2/support2
- Buy or sell on confirmation of reversal, continuation or breakout and not anticipation

Trade Management
- Buy or sell on consolidation pt or channel borders

Rules
1. Have a cutloss plan
2. Never trade with no plan