Foundations of Trading Part 1

Im going to do a series of basic lessons on:
  • Market Structure
  • Andrews Median Line Tools
  • Trade planning
  • Money/Risk Managment
  • Self Managment

These foundational lessons will apply no matter what time frames you trade, instruments you trade, or methods you use to trade. Method and technique have there place but aren't very important in the big scheme of things. 

Don’t ever make your favorite technique the master of what your trying to do. What you trying to do is trade for a profit by analyzing supply and demand at any given time. Lets keep it simple and out of the abstract. 

We will use current markets for these lessons and from time to time I will show my trades to demonstrate how I use these lessons and make them functional (theory into practice).

Were going to start with some money management because if you don’t hang on to your money, none of the rest matters. I don't have many rules when I trade, but I always stick to these basics. Self discipline is something that you will need as a trader, so begin to foster it with your money management discipline. We will revisit this subject later and add to it. 

Rule one - Preservation of capitol: 

  • If your not currently profitable, cut your size down. You have to earn the right to size.
  • Alwasy use hard stops. Put in stop order at the same time you put in entry order
  • Figure out maximum dollar loss per trade and stick to it. I am at %1.6 of account per trade but you can work out your own. Just decide and stick to it.

We will talk basic market structure in the next part of this series. 

P.S. 

I would also like to talk a little about what we do and don't do in our live sessions. We teach the principles of trading, price flow, and Median line tools with structured lessons as well as with live markets. Its interactive with members asking questions live or emailing them. We don't have, use, or teach a system or any specific step by step method.  These kinds of things break down in real life moving markets. If we can understand and adhere to the principles it doesn't matter what, how, or what time frame we trade. 

 

Shane

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