How do you identify supply and demand zones on a chart? Areas of supply for a market is at overhead price levels is what creates resistance. An area of supply is a price zone where many traders and investors are holding a stock and willing to sell it. Overhead resistance is created when people sell […]
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Bruce Kovner was one of the biggest traders in the world in the interbank currency and futures markets during his career according to author Jack Schwager. He is the founder and chairman of Caxton Associates, a global macro hedge fund. Kovner retired from the hedge fund in 2011 after managing it for over 30 years. In
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Trend Following by Michael Covel is the bible for traders interested in learning how trend trading works as a method. This book explains the principles and concepts that you will need to understand for how the best trend following traders made their outsized returns on capital. It will teach you the key principles that the
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An online options profit calculator can help with the math of understanding the dynamics of an option play from opening it until it is closed and whether it is profitable. An option play can be long or short with one leg (position), it can be a spread with more than one leg (positions), or a
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Market Wizard Richard Dennis was a legendary commodities trader nicknamed the “Prince of the Pit.” Early in his trading career in the 1970s, he was loaned $1,600 and is said to have grown it into $200 million in approximately a decade of trend following trading. He traded a lot of breakouts and momentum signals in
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How much would you think a penny doubled everyday for 30 days would end up being just guessing? $10 dollars or $100 dollars maybe? How about over $5 million dollars? How is this possible? Through the power of compounding. “Compound interest is the eighth wonder of the world. He who understands it, earns it; he
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A trading journal is a trading book you write about your own journey, system, risk management and lessons learned. It helps you clearly see your past mistakes so you don’t repeat them in the future. Your edge as a trader is the advantage you have over other traders with your system, psychology, risk management, or
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Here is a link to a great stocks and options tracking spreadsheet template on Google documents that can be used for tracking your trades. This spreadsheet allows you to keep track of each of your trades and manage them in one place. Click here to access the Options Tracker Spreadsheet on Google Sheets Created at
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To manage the risk of ruin in trading position sizing should be managed to never lose more than 1% to 2% of total trading capital on any one trade. If a stock trader has a $100,000 account, they should position size and set stop losses to limit losses to no more than $1,000 in a
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How does short selling work? Selling short reverses the normal order of buying and then selling. Selling short means to sell something you do not own. When you sell a stock short you borrow the stock from your broker and sell it to a buyer. You then owe the broker the shares. You receive cash
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The Quasimodo chart pattern is a lesser known bearish chart formation in technical analysis. It has also been called the Over and Under chart pattern. This pattern can identify a high probability confluence area on a chart at a resistance zone that can lead to a reversal in an upswing. It is a signaling pattern
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A bullish pennant chart pattern can be a powerful bullish chart pattern that is found during strong bull markets that is very similar to the bull flag. They are more rare than a bull flag. The price compression in the pennant can lead to explosive moves once there is a breakout. Many times these patterns
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After an entry the risk/reward ratio quantifies a trades potential for loss size versus the size of possible profits. When backtesting signals the average size of all the losing trades in a system compared to the average size of all the gains gives you the system’s risk/reward ratio based on historical price action. For discretionary
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Mukesh Ambani is an Indian billionaire businessman. He is the largest shareholder of Reliance Industries Ltd. (RIL). Reliance is India’s most valuable company by market cap valuation. Mr. Ambani is currently the richest man in India and Asia with a net worth of $77.3 billion if valued in U.S. dollars. Mukesh Ambani is the chairman
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The Risk of Ruin (Also called the RoR) is a statistical model in trading which quantifies the probability a trader will eventually blow up and lose all of the trading capital in their account. It measures the risk of ruin based on the metrics of a trader or systems win/loss percentage and the percent of
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There are two important things to consider before deploying capital with any trade, investment, loan, or business venture. Both the return on investment (ROI) and also when and if you will have a return of the investment capital itself must both be understood. Whether the potential for return is worth the risk taken depends on
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An order is an instruction on how and when to buy or sell you send to your broker. There are several different types of orders a trader and investor can use to execute their trade based on their goals. You may want to get in at any price or out at any price. You could
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Leverage, when taken literally, means an advantage in an endeavor through assistance. When using leverage as a verb its meaning is to have an advantage through using a tool like a lever. A lever creates the ability to move a heavy object that could not be lifted using effort alone. Leverage gives you the ability
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Mental accounting is also called psychological accounting as it tries to describe how people categorize and label financial income and outgo of money. This behavioral economic theory was first proposed by Richard Thaler. Mental accounting quantifies the emotional and mental connections made with money specifically directed to a budget and specific savings like investing, trading,
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To answer the question of who are the best traders in the world we have to consider several things. To be considered the best you would have to filter for these following quantified variables. Long term returns on assets under management. Size of assets under management. Consistency of returns. Size of drawdowns in trading capital.
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