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12 Steps to Trading Success

trading mentorHigh intelligence has nothing to do with trading success. There are more important characteristics and behaviours that go towards the foundations of successful trading.

Some are obvious, others not so obvious as on the surface they appear unrelated. In today's newsletter we could outline the 'Dirty Dozen' factors that have contributed to wiping out the trading capital of many a trader.

Instead we'll focus on the 'Decisive Dozen' that, if adhered to, will assist you to trade over the longer term.

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Stairs and Elevators

 stairs and elevatorsA nasty week in the markets last week.

After hitting new equity highs in recent months, my portfolios are now in drawdowns of between -8% and -14%.

They all remain within the realms of normal operations.

It's a reminder that trading isn't comfortable. Indeed it can get downright uncomfortable at times. If it were easy all the time then everyone would be doing it and be successful at it.

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Nick Radge interview with Quant News

Nick Radge 2018Nick Radge has been trading and investing since 1985, and has worked for global investment banks in Sydney, London and Singapore. He is an ex-Director at Macquarie Bank and ran his own hedge fund. More recently he has been appointed the Vice President of the Australian Technical Analysis Association. He is also the author Unholy Grails – A New Road to Wealth as well as the founder of The Chartist, an online advisory and research website designed for Australian traders and investors. He provides extensive personal consulting on trading and investment plans, computer modeling, technical analysis and other areas required by Australian and international clients. Today he resides in Noosa, Queensland, Australia with his family and actively trades CFDs.

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Do you have what it takes?

do you have itAlthough the statistics vary, around 75% of new traders quit after two years, with up to 90% packing their bags after four!

Sounds dramatic, yet these statistics are similar to anyone in the workforce who is trying to succeed at a higher level in their field.

However, most new traders don't have the training and support to help them succeed, unlike someone in a larger organisation. Or worse, feel they don't need these things to be a successful trader.

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An Indicator That Speaks Volumes

glabal chart researchVolume is a major indicator when analysing markets.

In the Global Chart Research we often mention the important relationship between price and volume. Volume can help determine market direction.

Yet the significance of volume is largely ignored or misunderstood by most traders.

Volume is the fuel that drives our markets.

How can we understand the meaning of volume when markets will go up on high volume one day, then do the same thing the next day on low volume? To confuse things more, price can head sideways or down on the same volume too.

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Will Rising US Interest Rates Drive Stocks Down?

US Interest RatesThe US Central Bank increased interest rates again this week - the eighth time since 2015 and cemented expectations for another rate hike this year. The Fed Funds rate is now at its highest level since October 2008 when Lehman Brothers collapsed.

The Fed cited an economy that remains strong and an inflation rate that hovers near the 2% target. More increases may be warranted through 2019.

Many investors believe this could be the trigger for a reversal of the massive stock market gains that have been created by record low interest rates and expansionary measures by global central banks.

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The Path of Least Resistance

trading pathLet’s continue our discussion on supply and demand. You can read our previous posts here and here.

1) If selling has decreased substantially on a down move it’s a sign that sellers are exhausted. Supply has waned. The market will have a tendency to want to go up.

2) If buying has decreased substantially on up moves, demand has waned. The market will tend to want to go down.

So, it will take an increase of buying on up days to make the market go up, and an increase in selling on down days to make the market go down.

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Current Research Project

research projectWith almost complete automation in my trading, and when not fishing, I spend considerable time researching the myriad of ideas that constantly pop into my head.

The latest is trend following with options as a part of the Trade Long Term Premium Portfolio.

Leverage aside, in theory options would allow lower capitalised traders to access higher priced stocks. The lowest stock price currently in the Premium Portfolio is trading at $242. The highest is just shy of $2000.

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Supply and Demand

supply and demandUnderstanding supply and demand can help us become more successful traders.

Supply and demand tends to be the professional trader's main focus.

This means researching the relationship between price action, volume and price spreads.

Novice traders however focus on technical analysis indicators; moving averages, stochastics, time cycles, astrological factors etc.

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