About Trading Concepts - Amazon Web Servicesebookguides.s3.amazonaws.com/SecretsToMultiplying... ·...

https://tradingconceptsinc.com/ © Trading Concepts, Inc. Page | 2

About Trading Concepts

Since 1994, Trading Concepts has provided investment education and personal mentoring, market analysis, online trading tools and portfolio management techniques to thousands of people from all over the world. Every day, our proven high-reward trading strategies help traders successfully navigate the markets and chart paths to financial security. In fact, we not only stand behind our pledge to provide the highest quality investment education and trading resources possible, We Guarantee lt.

Trading Concepts provides practical, step-by-step, easy-to use, high-profit, low-risk, low stress trading strategies. Avoiding overly technical or theoretical complicated material, Trading Concepts represents a practical, balanced approach to trading profitably in today’s markets. Since our inception in 1994, we have enriched the lives of an ever-expanding number of students in over 52 countries worldwide. Trading Concepts quickly established a reputation as one of the industries finest educational companies due to the powerful trading strategies that we’ve developed. Combining powerful futures, stock option trading strategies with sound trade and money management techniques, Trading Concepts has been able to help Individual at-home retail traders gain the power knowledge base that had previously only been available to professional institutional traders. Today, Trading Concepts teaches new and experienced (and everyone in between) traders worldwide how to succeed in today’s markets. We demonstrate step-by-step trading strategies in clear, concise terms, mixed with analogies and examples throughout all of our educational programs. You will therefore gain the correct mindset and money management techniques for trading whether you’re a beginner, intermediate or more experienced trader.

https://tradingconceptsinc.com/


Important Notice - Risk Disclaimer: Trading has large potential rewards, but also large potential risk. You must be aware of

the risks and be willing to accept them in order to invest in the markets. Don't trade with money you can't afford to lose. This

is neither a solicitation nor an offer to buy or sell Stocks, ETFs, Foreign Currencies, Futures, and/or Options. No representation

is being made that any account will or is likely to achieve profits or losses similar to those discussed in our training program.

The past performance of any trading strategy or methodology is not necessarily indicative of future results. Hypothetical or

simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not

represent actual trading. Also, since the trades have not actually been executed, the results may have under - or over -

compensated for the impact, if any, certain market factors, such as lack of liquidity. Simulated trading programs in general are

also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account

will or is likely to achieve profits or losses similar to those that may be shown.

Secrets to Multiplying Your Account Gains Quickly

A Step By Step Guide to Growing Your Account Exponentially With a

Powerful Position Sizing FORMULA

© Copyright by Trading Concepts, Inc.

All Rights Reserved

This training program, or parts thereof, may not be reproduced in any form without the prior written permission of Trading Concepts, Inc.

No claim is made by the Trading Concepts, Inc. that the trading strategies shown here will result in profits and will not result in losses. Trading may not be suitable for all recipients of this eBook. All comments, trading strategies, techniques, concepts and methods shown within this program should not be construed as an offer to buy or sell Stocks, ETFs, Foreign Currencies, Futures, and/or Options – they are opinions based on market observation and years of experience. Therefore, the thoughts expressed are not guaranteed to produce profits in any way. All Opinions are subject to change without notice. Each trader/investor is responsible for his/her own actions, if any. Your request for the Trading Concepts Secrets to Multiplying Your Account Gains Quickly eBook constitutes your agreement to this disclaimer and exempts Trading Concepts, Inc. from any liability or litigation.



Table of Contents

Money Management .............................................................................. 5 Adjust Your Risk Management Strategy for Different Markets ........................... 8 Position Sizing ..................................................................................... 9 3 Components of Position Sizing ............................................................. 10 Position Sizing Model ........................................................................... 11 Position Sizing Model Examples: EUR/USD ................................................ 12 Multiple Open Positions - Position Sizing Model (EUR/USD) ............................. 18 Position Sizing Model Examples: E-Mini Futures ......................................... 19 Multiple Open Positions - Position Sizing Model (E-Mini Futures) ..................... 26 Position Sizing Model Examples: Stocks & ETFs .......................................... 27 Money Management / Position Sizing Tips ................................................. 40 A Quick Word on Trader Psychology ........................................................ 41



Money Management

The Most Critical Aspect of Your Trading Plan Money management is the administrative side of your trading plan. It addresses the question of how best to use the capital available to you in the most effective manner possible with the goal of MAXIMIZING your PROFITABILITY while at the same time PROTECTING your CAPITAL by MINIMIZING the RISK of ruin.

The True Essence of Money Management Is Managing Risk Wise money management is the basis of any good trading methodology and is what ultimately will help distinguish a consistently successful trader from the trader that consistently loses. Many traders have fallen to the wayside trying to make a lot of money on a single trade – trying to hit that ‘home run’ – when they would have been better off making small (singles and doubles), steady gains. Once you start doing this (and thinking this way), you will see your account consistently starting to grow. Money Management includes consideration of the following factors:

Deciding on the OPTIMUM amount of money to commit to any one trade relative to your total available trading capital.

PROTECTING your PROFITS from erosion.

Avoiding (at all costs) turning a small losing trade into a huge losing trade.

o If you keep your losses small, your profits don’t have to be ‘home runs’ to earn a good living.

Knowing when and how to increase the size of your cash commitment when the odds are more in your favor (i.e. risk to reward is really tilted in your favor, etc.).

Recognizing the importance of taking some of your winnings off the table after a winning streak.

Always Know Your Exit Before You Enter

One of the cardinal rules of good trading is ALWAYS to have an EXIT point before you even enter a trade.

If you know your initial risk, you can express all your results in terms of your initial risk.



Choosing a different FOREX Account Type will make a big impact on your Risk Management Strategy. There are three types of Account Types available in FOREX:

“STANDARD” – designed for Experienced FOREX Traders

Approximate PIP Value is $10.00 per PIP (Profit/Loss).

Typically $2,500 Minimum Deposit required to Open.

One Lot of EUR/USD is €100,000 worth of U.S. Dollars.

“MINI” – designed for New and Experienced FOREX Traders


Typically $250 Minimum Deposit required to Open.

One Lot of USD/JPY is $10,000 worth of Japanese Yen.

“MICRO” – designed for New FOREX Traders


Typically $25 Minimum Account Size required to Open.

One Lot of USD/CHF is $1,000 worth of Swiss Francs.

The Two Currencies that make up an Exchange Rate are called a Currency Pair. The Currency on the Left is referred to as the BASE Currency, and the Currency on the Right is referred to as the COUNTER Currency.

EUR / USD

BASE Currency COUNTER Currency The value of the BASE Currency is always equal to ONE. The price of the Currency Pair represents how much of the Counter Currency is needed to Buy ONE unit of the Base Currency. For example, the Ask Price below refers to how many U.S. Dollars (1.4098) it currently takes to Buy ONE (1) Euro.



The value of a PIP is determined by the COUNTER Currency: If the COUNTER Currency is USD (e.g. EUR/USD, AUD/USD, GBP/USD):

The PIP value will always be denominated in U.S. Dollars, or 1 PIP will

always equal:

$10 per “STANDARD” Lot Size,

$1 per “MINI” Lot Size, and

$0.10 per “MICRO” Lot Size.

For example, if the EUR/USD increases by ONE “STANDARD” PIP:

1 STANDARD lot EUR/USD = 100,000 (100,000 x 1.4099 = $140,990) – (100,000 x 1.4098 = $140,980)

$140,990 - $140,980 = $10 U.S. Dollars If the BASE Currency is USD (e.g. USD/JPY, USD/CHF, USD/CAD):

The PIP value will always be denominated by the COUNTER Currency.

For example, if the USD/JPY increases by ONE “STANDARD” PIP:

1 STANDARD Lot USD/JPY = 100,000 (100,000 x 0.9042 = ¥90,420) – (100,000 x 0.9041 = ¥90,410)

¥90,420 - ¥90,410 = ¥10 Japanese Yen or ¥10 ÷ 0.9041 = $11.06 U.S. Dollars



Adjust Your Risk Management Strategy for Different Markets While a sound trading methodology will produce consistency in any market, a trader must consider the volatility of each market he/she is looking to trade so as to size his/her positions accordingly based on his/her individual risk tolerance and trading capital. Trading is trading, whether one is trading AAPL (trading at $668 with an Average Daily Range of $12.58) or BAC (trading at $8.75 with an Average Daily Range of $0.27), or even trading the E-Mini Futures or the FOREX market; it’s all basically the same. However, there are some differences, such as margin, leverage, times of day the markets are open, limit locks, and volatility. While each market does have its own “personality,” if you can trade one, you can trade the other. A determining factor in which market to trade is based primarily on your individual risk tolerance and trading capital. If the volatility of a market is a determining factor in position sizing accordingly, how does a trader define the volatility of a market?

What is Volatility? Most traders refer to volatility as the size of change in the value of a market or the amount of uncertainty or risk in a market.

A higher volatile market’s (i.e. stock’s) price changes dramatically in one day or over a few days of trading activity.

A lower volatile market’s (i.e stock’s) price does not fluctuate dramatically over a short period of time, but changes at a steady pace.

It is easy enough to look at the values on the right of a chart and determine whether or not you are looking at a volatile or a non-volatile market, however…

How does a Trader define Volatility?

RANGE is directly proportional to Volatility. RANGE is defined as the change of value in price per increment of time, or simply the difference between a stock’s HIGH price and LOW price for a particular time frame.

The Average True Range (ATR) is an indicator available in most charting software that measures volatility by defining the Average Range of price bars/candlesticks along with capturing volatility from an overnight gap up or down.



Position Sizing Most traders, as well as many top professional traders, do not realize the most important, non-psychological component of trading/investing success, Position Sizing! A Position Sizing Strategy helps you determine how much equity to risk on every trade you take. Its purpose is to help you meet your objectives. You could have the world’s best trading method (for example, one that makes money 95% of the time and in which the average winner is twice the size of the average loser), and you still could go bankrupt if you risked 100% on one of the losing trades. A Position Sizing Strategy helps you determine how much equity to risk given several inputs; your trading strategy’s risk, your personal risk tolerance, the kind of returns you want to make, and your own personal definition of ruin – whether that’s bankruptcy or some level of equity drawdown.



3 Components of Position Sizing

1) Traders’ Objectives: everyone has different objectives when he/she trades.

You must determine what your personal objectives are.

2) Trader’s Psychology: this influences the first component (the trader’s objectives).

What are your beliefs about your trading?

What emotions come up when you’re trading?

What’s your mental state?

3) Position Sizing Method: for a lot of traders, this is intuitive. In other words, they really don’t have an actual method or particular algorithm.

You really need an exact method of position sizing. A trader with NO Objectives and NO Position Sizing guidelines will position size TOTALLY by emotions.

Let me give you what I personally use…



Position Sizing Model A simple model for determining HOW MANY POSITIONS involves risking a percentage of your equity on every trade. You need to know three distinct variables: The CPR Model for Position Sizing

1. How much of your equity are you going to risk? This is your total risk, but we

will call it Cash (or C) for short. This will be the C in our CPR formula. For example, if you were going to risk 2% of your equity, C would be 2% of your equity. If you have a $25,000 account, C would be 2% of that, or $500.

2. How many contracts/lots/shares do you buy/sell (that is, what is your position sizing method)? We call this variable (P) for Position Sizing method. Which stock/ETF are you trading and how many shares do you buy/sell?

3. How much are you going to risk per contract/lot/share that you trade? We will call this variable (R), which stands for Risk. For example, if you’re going to buy the E-mini S&P 500 at 1239.50 and your risk is 3.00 Points or 12 Ticks (1236.50), then your risk R in this particular trade is $150. We will use this in our CPR Formula below.

Use the following formula to determine how many shares to trade:

P = C / R

(P) Position sizing = (C) total Cash at risk / (R) Risk



Position Sizing Model Examples: EUR/USD

A different Account Type will make an impact on your Risk Management Strategy: Let’s say, for example, with a $100,000 account balance:

You’re willing to risk 2% of your account balance ($100,000 x .02 = $2000), or C = $2000. You BUY the EUR/USD at 1.4237 with a risk of 50 Pips (1.4187), or R = 50 Pips. IF P = $2000 / 50 pips, THEN you can trade:

@ $10.00 per Contract, $2000 / $500 ($10.00 x 50 pips) = 4 Standard FX Contracts

@ $1.00 per Contract, $2000 / $50 ($1.00 x 50 pips) = 40 Mini FX Contracts

@ $0.10 per Contract, $2000 / $5 ($0.10 x 50 pips) = 400 Micro FX Contracts



Let’s say, for example, with a $50,000 account balance:






You’re willing to risk 2% of your account balance ($25,000 x .02 = $500), or C = $500. You BUY the EUR/USD at 1.4237 with a risk of 50 Pips (1.4187), or R = 50 Pips.

IF P = $500 / 50 pips, THEN you can trade:






@ $10.00 per Contract, $200 / $500 ($10.00 x 50 pips) = NO Standard FX Contracts









@ $0.10 per Contract, $100 / $5 ($0.10 x 50 pips) = 20 Micro FX Contracts Let’s say, for example, with a $2,500 account balance:







A different FOREX Account Type will make an impact on your Risk Management Strategy:



Multiple Open Positions – Position Sizing Model (EUR/USD) Let’s say, for example, with a $10,000 account balance: You’re willing to risk 2% of your $10,000 account balance on any one trade, and you have ONE open position. You are looking to put on another position, and you have to assume the first open position may be a losing trade; therefore, you need to base your Position Size of the second position on an account balance of $9,800.

First Trade ($10,000 x .02 = $200) or C = $200

Second Trade ($9,800 x .02 = $196) or C = $196

Third Trade ($9,604 x .02 = $192) or C = $192

First Position (based on Account Balance of $10,000)



Second Position (based on account balance of $9,800)



Third Position (based on account balance of $9,604)





Position Sizing Model Examples: E-Mini Futures

Let’s say, for example, with a $100,000 account balance: You’re willing to risk 2% of your account balance ($100,000 x .02 = $2000), or C = $2000.

You BUY the E-Mini S&P 500 at 1239.50 with a risk of 3.00 ES index points, AND your broker charges a commission of $5.00 round turn per contract, or R = $155 (3.00 ES index points x $50 + $5.00). IF P = $2000 / $155, THEN you can trade up to 12 E-Mini S&P 500 futures contracts.

You BUY the E-Mini NASDAQ-100 at 2294.25 with a risk of 5.00 NQ index points, AND your broker charges a commission of $5.00 round turn per contract, or R = $105 (5.00 NQ Index Points x $20 + $5.00). IF P = $2000 / $105, THEN you can trade up to 19 E-Mini NASDAQ-100 futures contracts.

You BUY the E-Mini Dow at 12026 with a risk of 25 YM index points, AND your broker charges a commission of $5.00 round turn per contract, or R = $130 (25 YM Index Points x $5 + $5.00). IF P = $2000 / $130, THEN you can trade up to 15 E-Mini Dow futures contracts.

You BUY the Russell 2000 Index Mini at 725.5 with a risk of 1.7 TF index points, AND your broker charges a commission of $5.00 round turn per contract, or R = $175 (1.7 TF Index Points x $10 + $5.00). IF P = $2000 / $175, THEN you can trade up to 11 Russell 2000 Index Mini futures contracts.





You BUY the E-Mini NASDAQ-100 at 2294.25 with a risk of 5.00 NQ index points AND your broker charges a commission of $5.00 round turn per contract, or R = $105 (5.00 NQ index points x $20 + $5.00). IF P = $1000 / $105, THEN you can trade up to 9 E-Mini NASDAQ-100 futures contracts.

You BUY the E-Mini Dow at 12026 with a risk of 25 YM index points, AND your broker charges a commission of $5.00 round turn per contract, or R = $130 (25 YM index points x $5 + $5.00). IF P = $1000 / $130, THEN you can trade up to 7 E-Mini Dow futures contracts.

You BUY the Russell 2000 Index Mini at 725.5 with a risk of 1.7 TF index points, AND your broker charges a commission of $5.00 round turn per contract, or R = $175 (1.7 TF index points x $10 + $5.00). IF P = $1000 / $175, THEN you can trade up to 5 Russell 2000 Index Mini futures contracts.



You BUY the E-Mini NASDAQ-100 at 2294.25 with a risk of 5.00 NQ index points, AND your broker charges a commission of $5.00 round turn per contract, or R = $105 (5.00 NQ index points x $20 + $5.00). IF P = $500 / $105, THEN you can trade up to 4 E-Mini NASDAQ-100 futures contracts.


You BUY the Russell 2000 Index Mini at 725.5 with a risk of 1.7 TF index points, AND your broker charges a commission of $5.00 round turn per contract, or R = $175 (1.7 TF Index Points x $10 + $5.00). IF P = $500 / $175, THEN you can trade up to 2 Russell 2000 Index Mini futures contracts.







You BUY the Russell 2000 Index Mini at 725.5 with a risk of 1.7 TF index points, AND your broker charges a commission of $5.00 round turn per contract, or R = $175 (1.7 TF index points x $10 + $5.00). IF P = $250 / $175, THEN you can trade up to 1 Russell 2000 Index Mini futures contracts.



Position Sizing Model Example: E-Mini S&P 500

$7,500 Account (Risk = 2.25 ES points) 2% of $7,500 = $150 max loss: IF $112.50 Risk x 1 = $112.50 + $5* = $117.50 AND P = $150 / $117.50 (per contract), THEN trade ONLY 1 ES contract! $10,000 Account (Risk = 2.50 ES points) 2% of $10,000 = $200 max loss: IF $125 Risk x 1 = $125 + $5* = $130 AND P = $200 / $130 (per contract), THEN trade ONLY 1 ES contract! $15,000 Account (Risk = 2.25 ES points) 2% of $15,000 = $300 max loss: IF $112.50 Risk x 1 = $112.50 + $5* = $117.50 AND P = $300 / $117.50 (per contract), THEN trade up to 2 ES contracts! $25,000 Account (Risk = 2.50 ES points) 2% of $25,000 = $500 max loss: IF $125 Risk x 1 = $125 + $5* = $130 AND P = $500 / $130 (per contract), THEN trade up to 3 ES contracts! $30,000 Account (Risk = 2.25 ES points) 2% of $30,000 = $600 max loss: IF $112.50 Risk x 1 = $112.50 + $5* = $117.50 AND P = $600 / $117.50 (per contract), THEN trade up to 5 ES contracts! $75,000 Account (Risk = 19 YM points) 2% of $75,000 = $1500 max loss: IF $95 Risk x 1 = $95 + $5* = $100 AND P = $1500 / $100 (per contract), THEN trade up to 15 YM contracts! *Calculations based on $5.00 round turn per contract broker commission.



Position Sizing Model Example: E-Mini Nasdaq-100

$5,000 Account (Risk = 13 NQ ticks) 2% of $5,000 = $100 max loss: IF $65 Risk x 1 = $65 + $5* = $70 AND P = $100 / $70 (per contract), THEN trade ONLY 1 NQ contract! $10,000 Account (Risk = 13 NQ ticks) 2% of $10,000 = $200 max loss: IF $65 Risk x 1 = $65 + $5* = $70 AND P = $200 / $70 (per contract), THEN trade up to 2 NQ contracts! $25,000 Account (Risk = 13 NQ ticks) 2% of $25,000 = $500 max loss: IF $65 Risk x 1 = $65 + $5* = $70 AND P = $500 / $70 (per contract), THEN trade up to 7 NQ contracts! $15,000 Account (Risk = 22 NQ ticks) 2% of $15,000 = $300 max loss: IF $110 Risk x 1 = $110 + $5* = $115 AND P = $300 / $115 (per contract), THEN trade up to 2 NQ contracts! $30,000 Account (Risk = 22 NQ ticks) 2% of $30,000 = $600 max loss: IF $110 Risk x 1 = $110 + $5* = $115 AND P = $600 / $115 (per contract), THEN trade up to 5 NQ contracts! $75,000 Account (Risk = 22 NQ ticks) 2% of $75,000 = $1500 max loss: IF $110 Risk x 1 = $110 + $5* = $115 AND P = $1500 / $115 (per contract), THEN trade up to 13 NQ contracts! *Calculations based on $5.00 round turn per contract broker commission.



Position Sizing Model Example: E-Mini Dow

$5,000 Account (Risk = 13 YM Points) 2% of $5,000 = $100 max loss: IF $65 Risk x 1 = $65 + $5* = $70 AND P = $100 / $70 (per contract), THEN trade ONLY 1 YM contract! $10,000 Account (Risk = 13 YM Points) 2% of $10,000 = $200 max loss: IF $65 Risk x 1 = $65 + $5* = $70 AND P = $200 / $70 (per contract), THEN trade up to 2 YM contracts! $15,000 Account (Risk = 19 YM points) 2% of $15,000 = $300 max loss: IF $95 Risk x 1 = $95 + $5* = $100 AND P = $300 / $100 (per contract), THEN trade up to 3 YM contracts! $25,000 Account (Risk = 13 YM Points) 2% of $25,000 = $500 max loss: IF $65 Risk x 1 = $65 + $5* = $70 AND P = $500 / $70 (per contract), THEN trade up to 7 YM contracts! $30,000 Account (Risk = 19 YM points) 2% of $30,000 = $600 max loss: IF $95 Risk x 1 = $95 + $5* = $100 AND P = $600 / $100 (per contract), THEN trade up to 6 YM contracts! $75,000 Account (Risk = 19 YM points) 2% of $75,000 = $1500 max loss: IF $95 Risk x 1 = $95 + $5* = $100 AND P = $1500 / $100 (per contract), THEN trade up to 15 YM contracts! *Calculations based on $5.00 round turn per contract broker commission.



Position Sizing Model Example: Russell 2000 Mini

$10,000 Account (Risk = 2.3 TF points) 2% of $10,000 = $200 max loss: IF $230 Risk x 1 = $230 + $5* = $235 AND P = $200 / $235 (per contract), THEN NO TRADE! $15,000 Account (Risk = 2.7 TF points) 2% of $15,000 = $300 max loss: IF $270 Risk x 1 = $270 + $5* = $275 AND P = $300 / $275 (per contract), THEN trade ONLY 1 TF contract! $25,000 Account (Risk = 2.3 TF points) 2% of $25,000 = $500 max loss: IF $230 Risk x 1 = $230 + $5* = $235 AND P = $500 / $235 (per contract), THEN trade up to 2 TF contracts! $30,000 Account (Risk = 2.7 TF points) 2% of $30,000 = $600 max loss: IF $270 Risk x 1 = $270 + $5* = $275 AND P = $600 / $275 (per contract), THEN trade up to 2 TF contracts! $50,000 Account (Risk = 2.3 TF points) 2% of $50,000 = $1000 max loss: IF $230 Risk x 1 = $230 + $5* = $235 AND P = $1000 / $235 (per contract), THEN trade up to 4 TF contracts! $75,000 Account (Risk = 2.7 TF points) 2% of $75,000 = $1500 max loss: IF $270 Risk x 1 = $270 + $5* = $275 AND P = $1500 / $275 (per contract), THEN trade up to 5 TF contracts! *Calculations based on $5.00 round turn per contract broker commission.



Multiple Open Positions – Position Sizing Model (E-Mini Futures) Let’s say, for example, with a $50,000 account balance: You’re willing to risk 2% of your $50,000 account balance on any one trade, and you have ONE open position. You are looking to put on another position, and you have to assume the first open position may be a losing trade; therefore, you need to base your position size of the second position on an account balance of $49,000.

First trade ($50,000 x .02 = $1000) or C = $1000

Second trade ($49,000 x .02 = $980) or C = $980

Third trade ($48,020 x .02 = $960) or C = $960

First position (based on account balance of $50,000)


Second position (based on account balance of $49,000)


Third position (based on account balance of $48,020)




Position Sizing Model Examples: Stocks & ETFs



Position Sizing Model Example: LOW

Let’s say, for example… You BUY Lowe’s Companies, Inc. (LOW) at the 38% Fibs LL to NH between the Mid to Lower Keltner Channel Band at 20.75, with an Initial Stop Loss at 19.95 slightly below the 50% Fibs LL to NH (just below the MAs). Your LONG Entry Price is 20.75. Your Risk is 0.80 points, R = $0.80. IF you are willing to risk 2% of a $100,000 account balance THEN you can trade up to 2500 shares. C = ($100,000 x .02 = $2000), or C = $2000. R = $0.80. If P = C / R, then P = $2000 / $0.80, or P = 2500. IF you are willing to risk 1.5% of a $100,000 account balance THEN you can trade up to 1875 shares. C = ($100,000 x .015 = $1500), or C = $1500. R = $0.80. If P = C / R, then P = $1500 / $0.80, or P = 1875.



Let’s say, for example, with a $50,000 account balance, you are willing to risk 2% of your account balance ($50,000 x .02 = $1000), or C = $1000. You BUY Lowe’s Companies, Inc. (LOW) at the 38% Fibs LL to NH between the Mid to Lower Keltner Channel Band at 20.75, with an Initial Stop Loss at 19.95 slightly below the 50% Fibs LL to NH (just below the MAs). Your Risk is 0.80 points, R = $0.80. IF P = $1000 / $0.80, THEN you can trade up to 1250 shares.

IF you are willing to risk 2% of a $25,000 account balance THEN you can trade up to 624 shares. C = ($25,000 x .02 = $500), or C = $500. R = $0.80. If P = C / R, then P = $500 / $0.80, or P = 624. IF you are willing to risk 1.5% of a $25,000 account balance THEN you can trade up to 468 shares. C = ($25,000 x .015 = $375), or C = $375. R = $0.80. If P = C / R, then P = $375 / $0.80, or P = 468.



Position Sizing Model Example (P = C / R): TRV Let’s say, for example… You BUY The Travelers Companies, Inc. (TRV) in an equal amount of shares between the Mid to Lower Keltner Channel Band at 56.20, at the 38% Fibs LL to NH at 54.50, and again at the 50% Fibs LL to NH near the MAs at 52.80 with an Initial Stop Loss at 50.70 slightly below the 62% Fibs LL to NH (just below the MAs). Your Average LONG Entry Price is 54.50. Your Risk is 3.80 points, R = $3.80. IF you are willing to risk 2% of a $100,000 account balance THEN you can trade up to a total of 526 shares. C = ($100,000 x .02 = $2000), or C = $2000. R = $3.80. If P = C / R, then P = $2000 / $3.80, or P = 526.

IF you are willing to risk 1.5% of a $100,000 account balance THEN you can trade up to a total of 394 shares. C = ($100,000 x .015 = $1500), or C = $1500. R = $3.80. If P = C / R, then P = $1500 / $3.80, or P = 394.



Let’s say, for example, with a $50,000 account balance, you are willing to risk 2% of your account balance ($50,000 x .02 = $1000), or C = $1000. You BUY The Travelers Companies, Inc. (TRV) between the Mid to Lower Keltner Channel Band, at the 38% Fibs LL to NH, and again at the 50% Fibs LL to NH near the MAs with an Average Price of 54.50 and you place your Initial Stop Loss at 50.70 slightly below the 62% Fibs LL to NH (just below the MAs). Your Risk is 3.80 points, R = $3.80. IF P = $1000 / $3.80, THEN you can trade up to a total of 263 shares.

IF you are willing to risk 2% of a $25,000 account balance THEN you can trade up to a total of 131 shares. C = ($25,000 x .02 = $500), or C = $500. R = $3.80. If P = C / R, then P = $500 / $3.80, or P = 131. IF you are willing to risk 1.5% of a $25,000 account balance THEN you can trade up to a total of 98 shares. C = ($25,000 x .015 = $375), or C = $375. R = $3.80. If P = C / R, then P = $375 / $3.80, or P = 98.



Position Sizing Model Example (P = C / R): A Let’s say, for example… You SELL Agilent Technologies Inc. (A) at the 50% Fibs HH to NL between the Mid to Upper Keltner Channel Band at 42.75, with an Initial Stop Loss at 44.25 slightly above the Upper Keltner Channel Band (just above the 62% Fibs HH to NL above the MAs). Your SHORT Entry Price is 42.75. Your Risk is 1.50 points, R = $1.50. IF you are willing to risk 2% of a $100,000 account balance THEN you can trade up to 1333 shares. C = ($100,000 x .02 = $2000), or C = $2000. R = $1.50. If P = C / R, then P = $2000 / $1.50, or P = 1333. IF you are willing to risk 1.5% of a $100,000 account balance THEN you can trade up to 1000 shares. C = ($100,000 x .015 = $1500), or C = $1500. R = $1.50. If P = C / R, then P = $1500 / $1.50, or P = 1000.



Let’s say, for example, with a $50,000 account balance, you are willing to risk 2% of your account balance ($50,000 x .02 = $1000), or C = $1000. You SELL Agilent Technologies Inc. (A) at the 50% Fibs HH to NL between Mid to Upper Keltner Channel Band at 42.75, with an Initial Stop Loss at 44.25 slightly above the Upper Keltner Channel Band (just above the 62% Fibs HH to NL above the MAs). Your Risk is 1.50 points, R = $1.50. IF P = $1000 / $1.50, THEN you can trade up to 666 shares.

IF you are willing to risk 2% of a $25,000 account balance THEN you can trade up to 333 shares. C = ($25,000 x .02 = $500), or C = $500. R = $1.50. If P = C / R, then P = $500 / $1.50, or P = 333. IF you are willing to risk 1.5% of a $25,000 account balance THEN you can trade up to 250 shares. C = ($25,000 x .015 = $375), or C = $375. R = $1.50. If P = C / R, then P = $375 / $1.50, or P = 250.



Position Sizing Model Example (P = C / R): NEM Let’s say, for example… You SELL Newmont Mining Corp (NEM) in an equal amount of shares between the Mid to Upper Keltner Channel Band at 63.10, and again between the MAs at 64.30 with an Initial Stop Loss at 66.20 slightly above the 50% Fibs HH to NL (just above the MAs). Your Average SHORT Entry Price is 63.70. Your Risk is 2.50 points, R = $2.50. IF you are willing to risk 2% of a $100,000 account balance THEN you can trade up to a total of 800 shares. C = ($100,000 x .02 = $2000), or C = $2000. R = $2.50. If P = C / R, then P = $2000 / $2.50, or P = 800.

IF you are willing to risk 1.5% of a $100,000 account balance THEN you can trade up to a total of 600 shares. C = ($100,000 x .015 = $1500), or C = $1500. R = $2.50. If P = C / R, then P = $1500 / $2.50, or P = 600.



Let’s say, for example, with a $50,000 account balance, you are willing to risk 2% of your account balance ($50,000 x .02 = $1000), or C = $1000. You SELL Newmont Mining Corp (NEM) in an equal amount of shares between the Mid to Upper Keltner Channel Band, and again between the MAs with an Average Price of 63.70 and you place your Initial Stop Loss at 66.20 slightly above the 50% Fibs HH to NL (just above the MAs). Your Risk is 2.50 points, R = $2.50. IF P = $1000 / $2.50, THEN you can trade up to a total of 400 shares.




Position Sizing Model Example (P = C / R): AMZN Let’s say, for example… You BUY Amazon.com, Inc. (AMZN) in an equal amount of shares between the Mid to Lower Keltner Channel Band at 215.00, and again at Fibonacci Retracement Confluence above the MAs at 208.00 with an Initial Stop Loss at 196.00 slightly below the Lower Moving Average (just below the 50% Fibs LL to NH2). Your Average LONG Entry Price is 211.50. Your Risk is 15.50 points, R = $15.50. IF you are willing to risk 2% of a $100,000 account balance THEN you can trade up to a total of 129 shares. C = ($100,000 x .02 = $2000), or C = $2000. R = $15.50. If P = C / R, then P = $2000 / $15.50, or P = 129. IF you are willing to risk 1.5% of a $100,000 account balance THEN you can trade up to a total of 96 shares. C = ($100,000 x .015 = $1500), or C = $1500. R = $15.50. If P = C / R, then P = $1500 / $15.50, or P = 96.



Let’s say, for example, with a $50,000 account balance, you are willing to risk 2% of your account balance ($50,000 x .02 = $1000), or C = $1000. You BUY Amazon.com, Inc. (AMZN) between the Mid to Lower Keltner Channel Band and again at Fibonacci Retracement Confluence above the MAs with an Average Price of 211.50 and you place your Initial Stop Loss at 196.00 slightly below the Lower Moving Average (just below the 50% Fibs LL to NH2). Your Risk is 15.50 points, R = $15.50. IF P = $1000 / $15.50, THEN you can trade up to a total of 64 shares.




Position Sizing Model Example (P = C / R): FLEX Let’s say, for example… You SELL Flextronics International Ltd. (FLEX) in an equal amount of shares between the Mid to Upper Keltner Channel Band at 6.58, and again at Fibonacci Retracement Confluence between the MAs at 6.78 with an Initial Stop Loss at 7.02 slightly above the 62% Fibs HH to NL2 (above the MAs). Your Average SHORT Entry Price is 6.68. Your Risk is 0.34 points, R = $0.34. IF you are willing to risk 2% of a $100,000 account balance THEN you can trade up to a total of 5882 shares. C = ($100,000 x .02 = $2000), or C = $2000. R = $0.34. If P = C / R, then P = $2000 / $0.34, or P = 5882. IF you are willing to risk 1.5% of a $100,000 account balance THEN you can trade up to a total of 4411 shares. C = ($100,000 x .015 = $1500), or C = $1500. R = $0.34. If P = C / R, then P = $1500 / $0.34, or P = 4411.



Let’s say, for example, with a $50,000 account balance, you are willing to risk 2% of your account balance ($50,000 x .02 = $1000), or C = $1000. You SELL Flextronics International Ltd. (FLEX) in an equal amount of shares between the Mid to Upper Keltner Channel Band, and again at Fibonacci Retracement Confluence between the MAs with an Average Price of 6.68 and you place your Initial Stop Loss at 7.02 slightly above the 62% Fibs HH to NL2 (above the MAs). Your Risk is 0.34 points, R = $0.34. IF P = $1000 / $0.34, THEN you can trade up to a total of 2941 shares.




Money Management / Position Sizing Tips

Have a written ‘trading plan’; this will help you stay focused on your goal of trading success. In addition, it will help you learn from your mistakes and successes, which thereby will help you improve your trading abilities as time goes by.

You should look only to take trades where there is relatively low risk compared to the reward potential for the trade.

Always use well placed stop-loss orders; this is the only way to limit any damage to your account and helps ensure your overall trading success.

You need to be willing to short the market as much as you’re willing to buy the market.

Never risk more than 2% of your entire account on any one single trade.

When you have a profitable month, pay yourself by withdrawing some money from your account and put it in the bank.

Until you know your trading methodology really well, I recommend that you risk a maximum of 1% of your entire account equity on any one position.



A Quick Word on Trader Psychology One huge reason why successful trading can be so difficult to achieve is the emotions that are wrapped up in the money we trade. If in our minds we are equating the money on the next trade with the money needed for the car payment, the kids’ tuition money, or the mortgage, we may be on a sure path to trading failure. If it is money we can’t afford to lose, it is money we simply can’t afford to trade. If we attach emotions to the money at risk, we are much more likely to commit trading errors, which is as bad as having a bad trading methodology to follow.

Trading Insight Something that has had a profound effect on my investing comes from Norman Vincent Peale, author of The Power of Positive Thinking:

"People become really quite remarkable when they start thinking that they can do things. When they believe in themselves; they have the first secret of success."

When you feel that you actually can take control of your trading and investment destiny, the empowerment of that control will take you to the success you are seeking.

“If you think you can...or if you think you can't...you're right.” - Henry Ford



About Todd Mitchell

I began reading about, studying and researching the mar-kets back in 1987, while I was still in college. Then, in 1988, I started to actively trade the markets with real money. My interest, which quickly led into fascination, in the futures and stock market began when I used to manually update my father’s charts on a daily basis. In 1990, when I graduated from college with a Business Finance degree, I decided to trade full-time because I had seen, firsthand, how much money could be made trading.

After a few successful trading years following college, I tweaked and perfected my trading strategies. I decided to use my knowledge and experience to launch Trading Concepts in 1994 to help fellow traders, just like yourself. Trading Concepts quickly established a reputation as one of the industries finest educational companies due to the powerful trading strategies that I developed. Combining powerful futures and stock trading strategies with sound trade and money management techniques, I have been able to help Individual at-home retail traders gain the power knowledge base that had previously only been available to professional institutional traders. Today, I teach new and experienced (and everyone in between) traders worldwide how to succeed in today’s markets. I demonstrate step-by-step trading strategies in clear, concise terms, mixed with analogies and examples throughout all my courses and personal mentoring program. You will therefore gain the correct mindset and money management techniques for trading whether you’re a beginner, intermediate or more experienced trader. I not only thank my dad to this day for introducing me to the markets, but for teaching me many Valuable trading lessons that I still use today.

Visit https://TradingConceptsInc.com/ to Learn More!



About Trading Concepts - Amazon Web Servicesebookguides.s3.amazonaws.com/SecretsToMultiplying... ·...

Documents

Transcript of About Trading Concepts - Amazon Web Servicesebookguides.s3.amazonaws.com/SecretsToMultiplying... ·...