Best trading rules ( mental and common rules)
All traders at their beginning concentrate on the fundamental and technical analysis, whereas much more important are mental rules and money management. There are many topics in this article, like money management (margin utilisation, portfolio, stop loss), trading vs. gambling, panic, euphoria, probability, mental calmness, amount of money and noise.
Trend Lines is an very important tool in technical analysis for both trend identification and confirmation. A trend line is a straight line that connects 2 or more price points and then extends into the future to act as a line of support or resistance. The general rule in technical analysis is that it takes 2 points to draw a trend line and the 3rd point confirms the validity. Channel is the area between 2 parallel trendlines and is often taken as a measure of a trading range
Murrey math lines (MML): – oversold and overbought zones:
Murrey math lines (MML) is a relatively new trading indicator showing resistances and supports, and helps in finding trends and trend changes. The indicator Murrey match lines has some similarity to pivot points and Fibonacci retracement.
Harmonics patterns: – alert for pullback. Harmonic price patterns take geometric price patterns to the next level by using Fibonacci numbers to define precise reversal point.
The pivot point is the level at which the market direction changes for the day. Using some simple arithmetic and the previous days high, low and close, a series of points are derived. These points can be critical support and resistance levels. The pivot level, resistance and support levels calculated from that are collectively known as pivot points (levels) . Because so many traders follow pivot points you will often find that the market reacts at these levels. This give you an opportunity to trade
Indicators: – confirm strategies or patterns
The tools used by the mathematical trading methods are oscillators and moving averages. Oscillators are trading tools that offer indications of when a currency is overbought or oversold. The most important are:
SMA – EMA (Simple and Exponential Moving Average)
MACD (Moving Average Convergence-Divergence)
Bollinger Bands
RSI (Relative Strength Index)
Chart patterns:
A chart pattern is a distinct formation on a stock chart that creates a trading signal, or a sign of future price movements. Chartists use these patterns to identify current trends and trend reversals and to trigger sell and buy signals.
Head and Shoulders
Cup and handle, Rounding bottom
Double bottom, Double top, Triple bottom, Triple top
Triangle patterns, Flag and Pennant
Gaps
Hanging Man, Marubozu, Shooting Star, Abandoned Baby, Doji ….