T2W Trading Community

How do you pick your trades?
Trading opportunities are presented by my trading systems. I use over a dozen different scans every evening. I trade the ones that have tested best for the type of conditions the market is currently experiencing. Time should be spent carefully evaluating trading systems and market conditions, not each and every potential trade that the system identifies. The process I use for evaluating trading systems is outlined in an article on my website. Go to www.daisydogger.com and click on ‘Pullback Setups’.

 When presented with more trading opportunities than I am currently willing to take, I look for the opportunity that triggered on the largest increase in volume. Volume is the interest or pressure behind a move.

Carefully consider the point risk in the trade which is the difference between the entry price and the initial stop loss placement under the low of the setup pattern. Use this to calculate the number of shares or contracts to take as outlined above.

Know your exit point before you take the trade. If you don’t know exactly how will be taking profits do not enter the trade. Successful exit strategies will depend on market conditions, but if you don’t have one then you are in buy and hope mode. Hope is not a strategy.

How important is ‘volume’ in deciding your trade?
Volume measures the interest and pressure behind a move. Volume analysis is a critical part of most of my trading systems because backtesting results indicate that it makes a difference in results. One of my systems uses only volume analysis, it does not consider the price action at all, volume is very important in picking successful trades.

I am a student of price and volume. All indicators are derived from price and volume, and it is better to be able to read them directly than to have a complex or unknown math formula in the way.

I start by analyzing the current market conditions to determine what type of trading system, trading style, and exit strategies to use. I then select the best tools from my trading tool box and take trades that trigger.
I do not trade patterns or systems that I have not extensively backtested and have a clear understanding of how they work and how various factors and market conditions influence them