Introduction to Trading
- Day 1 -
1. Share Trading Foundations
During this session students are introduced to the key concepts and disciplines needed to become a successful trader.
2. Charting and trends
Most of this session is focused on building up the various concepts and tool on the whiteboard.
Items included in the session are:
- The Bar Chart
- Support and Resistance
- Construction of a Falling Resistance Trend Line
- Definition of “Falling Resistance Line”
3. Trend lines and Indicators
Some of the topics covered in this session (and revised from the previous session) include:
- Using a trend line to tell the trader when not to trade
- Falling Resistance and the boundary of negative sentiment
- The Reference Price
- Market Noise
- The “buy” signal
- Stop loss placement
- Stop management
- The “sell” signal
- The real role of technical indicators
- Introduction to the MACD-Histogram as a confirmation tool
4. Confirmation, Horizontals, Back Testing
Material covered in this session included:
- A real trade example using falling resistance trend lines and the MACD-H confirmation tool
- Use of horizontal resistance for conducting re-entry trades
- Flowchart of the trading decision process
- Application of the tools covered during day 1 to the current share market
At the completion of the session instructions are given about what is expected for the trend line drawing exercises that formed part of the homework.
Introduction to Trading
- Day 2 -
1. Review
The first session for day 2 is a review of the exercises that participants completed after day 1. To get maximum benefit from the session, students need to have completed the exercises for themselves.
2. Risk Management
The four main areas of risk for traders are identified. From there it is a matter of putting in place some strategies to minimise (and preferably eliminate) the effect of each of the risk areas.
This session looks in detail at:
- The 2% Risk Management Rule
- The [12.5% or 20%] Equity Exposure Rule
- A simple way to reduce exposure to market sector crashes
3. Risk Management continued
In this session students are taken through the main tools and techniques to protect them against:
- Problems with their trading technique
- Major catastrophic events on the stock market
This gives rise to discussion about back testing and paper trading procedures as well as looking into the 4:2:1 Capital Allocation Rule to protect against major catastrophic events.
4. Flags, Pennants, Trading Plan and Final Instructions
During this final session flag and pennant patterns are introduced as both trading vehicles and as forecasting tools.
Traders must have documented trading plans. Some comments are made about how to construct a comprehensive trading plan.
Nobody should think that he or she can walk away from a two day share trading workshop and know how to put all the newly acquired knowledge into profitable action. The real journey is about to begin as the knowledge is used to develop the skills of a trader. Some ideas are put forward to help the students put in place some realistic plans for their development as traders.