Three Methods Of Setting Trading Targets - Stock Trading Course

When you are doing a trade the question quickly rears its head :  How and when do you leave with a profit?   Pointing targets has to be a very important element of your  trading plan , and this is the subject of the next article in our series Stock Trading Course.

Objectives can be time-based (I’ll keep making the trade for 3 weeks ) or based on technically (I’ll keep making the trade until my slow moving average passes over my faster moving average)  or  found on profit (I’ll quit when I have an open profit of 1000usd ), or found on price (I’ll stop of the trade when it get to the certain price .)

Of the 3 methods every one has some advantages and liabilities .  Technical exits are often available and delete the element of personal thought , but go well only in effective trends , cause losses in congestion , and nearly all the time leave a lot of money upon the desk.  Based on time tools are helpful at times but just as often are net losers , and so shouldn’t be seriously taken as a solo implement .   Profit-based exits can teach a trader to take frequent earnings but what happens when the trade continues far beyond your pre-planned exit point ?  This violates one of the easiest rules of trading: let your winners go.

The best meaning of exiting is to decide price targets but only when these are soundly based in the market structure and point the market’s existing support and {resistance matrix}.  If your trade plan {takes into account} the natural assist and resistance of the market then the target of yours will be sound and the opportunities of yours of remove all that the market offers is much more higher then with arbitrarily chosen, fixed-dollar profit targets (which tend to be emotionally driven )  or a technical moving average tool (which by definition is compelled to leave huge amount of money on the desk ).

How are you going to set profit aims according to market structure instead of an arbitrary dollar objectives?  For somebody it is a hard question however for the dealer who has developed an understanding of multiple time period structure and the ability to project the support now and resistance levels forward in the coming days, pointing targets is not hard to finish. The first technique is to {use your higher time-period support} and resistance levels ( it should usually be one time-period higher than your trading time-period), and to aim your targets at the next logical assist  or resistance level over  the current price.

Stock trading course as follows: Say you are day-trading the S&P E-mini contract.  You’re using a five-minute chart and take a position using your favorite entry tool . The market begins to work in your favor and because you have five contracts to put on a position you quickly accumulate a profit of 750usd.  You feel glad and turn a bit greedy and that makes you want to grab profits quickly , especially as you see a slight retracement in thefive-minute chart. But, knowing that market structure is mostly at play, you walk back for a moment and view the everyday and weekly charts. On your Drummond Geometry charts you can quickly see that your entry was next to everyday and weekly support, in the end of the everyday envelope and close to the weekly envelope bottom as well .  You see that the logical target of this initial move is at the daily PLDot some 9 full points away, and that the development of the 5 minutes bar with its slight retracement is entirely common and continue with the idea that the market has {further upside}. You made a price objective at the daily resistance and set an alert to sound when that is full filled, so that you can take profits there .  You can then further assess if the market will reverse and step back to the first support level or pause and keep going to higher level of resistance.

The important thing is that when staring at market structure as opposed to arbitrary dollar value price aims you always control what the market is doing . As a stock trading course teaches, full control taken by you enhance you understand the structural aim always as the market flows between its higher time- period support and resistance levels.

Trading Congestion Action - Stock Trading Strategy (Part 1)

We speak here of congestion action trading .  A market that is in congestion action is a market that oscillates back and forth between the confines of congestion , between support and resistance ( or between the block level and dotted line in the terms of Drummond Geometry ). Within congestion this market action occurs, and when there is not a trend run. The level that was created by the preceding up trend’s highest high is what is referred to as the Dotted Line, or the lowest low created by the preceding down trend . The low of the very first bar that closes on the other side of the Pldot within an uptrend is the first Block Level , or in a down trend, the high of the first bar to close on the PLdot’s other side .

Once you have a sufficient understanding of the patterns, characteristics, and theory of congestion action trading, it can be quite lucrative . It is much like crop harvesting . You can earn your bread and butter with congestion action trading…. and even more, a table to hold the bread can be bought, and the house to hold the table , and for the house you can buy an estate, and the boat, care, plane, drivers, and so much more. Essentially, you have a huge potential to make money with this type of trading, if you take congestion action trading and learn all you can.

What exactly is congestion action trading anyway?

One effect of stock trading strategy this way through Drummond Geometry is that you get definitions that are very clear. Price is either in a trend run or it is not . When after more than three closes are on the PLdots one side and then it closes on the PLdots other side, this is not a trend run . If there is no trend run, then the market is in a congestion. It’s very clear and simple .

When the price ends up closing on the other side of the trending dot, the first bar is the congestion entrance bar . Then it can be said that the market is in congestion by definition . We know when the market first enters congestion a block level and dotted line are created . This block level is the first block level of the congestion . So , the name for this market action is congestion action which starts with a congestion entrance bar and continues for an indefinite period of time until on one side of the PLdot there are three closes, which marks the start of a new trend .

Let’s take a look at how congestion limits are defined with stock trading strategy, and how they can expand .

Congestion action defines the parameters of congestion , which may be called the confines of congestion.  Keep in mind the confines of congestion get defined by the block level and dotted line, and that the first block level is established by the congestion entrance bar .  These levels can be expanded upon. If prices goes outside the dotted line, or outside of the block level , while there is still congestion in the market ( without three closes being on the PLdot’s one side ), then price redefines the congestion confines and a larger congestion can occur. Before a new trend run occurs, this can happen various times.

This discussion of congestion trading will be continued in the stock trading strategy series.