The Basics of Trading

This is a discussion on The Basics of Trading within the First Steps forums, part of the Reception category; Bill G Thanks for reply.I am trying to learn the art of opening a trade using the risk reward ratio ...

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Old Jan 28, 2003, 8:00pm   #15
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Bill G
Thanks for reply.I am trying to learn the art of opening a trade using the risk reward ratio I have read about on this site.I will try to explain what im after.Im using Sharescope EOD charts and want to open a trade after the chart has reversed down from an upward move .Lets say its come back 70% of the up move and I am looking to trade at this point. This would put the price 30% above a double bottom,therefore could i undarstand going long would give me a 30% risk (to a double bottom) and a 70% reward back up again to the previouse resistance. Am I correct in saying this will give 70% reward and 30% risk.
Hope this makes sense
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Old Jan 28, 2003, 9:19pm   #16
 
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AAL Chart

FTSE Beater started this thread Hi all

Well this is my analysis of it.

Click the image to open in full size.

The main thing that everyone picked up on was the long term trendline from early August to mid December and on onwards. The trendline / resistance was less obvious, but still valid if price reaches that point.

If I was looking solely at the chart (and I had no idea of what was happening in the world), then I would have looked for a bounce off the trendline, with a stop just below the trendline. The target would be the sloping trendline at the top of the chart.

Would I have traded this? - No. The only reason is that at the moment the markets are very unsteady and going long in this market carries a high risk. In calmer times I would have taken the trade.


Hi Techcherry. Well done on spotting the long-term trendline. I'm not sure that 930 is a valid resistance point. Mainly because the price went either side of that line without stopping. The only other thing I would say is that the red down trendline, I would only draw on a 60 minute chart. End of day charts, should represent longer term movements, but that would have been a great downtrend on a 60 minute chart.


Hi Paul102. I loved the way that you kept the chart simple, which is a good thing, as it focuses the mind on what’s important. The top trendline that you’ve drawn did get pierced in December, but the later test of the trendline in January held strong so that is a good trendline and well spotted. I probably wouldn’t want to see 862 broken, but if the price pierces 862 and then quickly reverses, then yes that would make a good entry.


Hi Bill G. The award for the most colourful chart goes to you – I didn’t know that Sharescope’s colours went that bright . Anyway, I like the resistance point at 940, that makes for a good target if it can get that high. I presume the dotted lines, are the partial trend lines that Sharescope draws in. I can never get those things to work, I find them too subjective and unreliable at best, but it does show how well it has been trending over the last 6 months.


Hi Fluke. Yes you are correct with regards the risk and reward calculations. I will hopefully later on this week be posting a thread on risk / reward and how it all fits in.


Thanks to everyone who has posted their charts, and if anyone still wants to post there thoughts on the AAL chart, please feel free.
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Old Jan 28, 2003, 10:03pm   #17
 
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Great to see members posting their charts, all thanks to your good self FTSE/B ,as you will know I posted my effort on the other thread and screwed it up with my chart (to wide) as I have a 19" screen could this be the problem ??? (dont no how to reduce chart to fit )HELP
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Old Jan 28, 2003, 10:33pm   #18
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Be Positive,

Your 19" monitor has nothing to do with posting of chart problems. There are a number of programs available such as Paintshop Pro that, once you have saved a file, allow you to change the size to whatever you may need to post on T2W. You may even have them on your computer already and it may be worth having a chat with someone local to yourself who could help.

All The Best


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Old Jan 28, 2003, 11:02pm   #19
 
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Hi,

Just a quick thanks to everybody who posted their charts and esp. FTSE Beater for his efforts. It is v. educational reading other peoples ideas.

Looking forward to the next one,

Paul.
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Old Jan 28, 2003, 11:35pm   #20
 
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Thanks trader 333 I have taken your advice and asked the WHIZZ KID from next door to come and help the PLONKER who is typing this message.
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Old Jan 29, 2003, 12:53am   #21
 
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fingers crossed (I think I CRACKED it)
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