In continuation of Previous Article
Trade in Private
Never under any circumstances reveal your trading positions to anyone. Your mind must be in complete harmony with your trading positions. When you reveal your positions to someone, they will immediately start to question the trade and start to erode your confidence and concentration in the trade. You will then be a less effective trader and eventually lose.
Margin
Over trading on low margins is why so many people lose in the markets. You should never put a position on the risks over 10% of your capital. Every position you have in commodities should be backed with 3 times the minimum exchange margins. That means if the minimum exchange margins on wheat is $700 then when you buy a contract of wheat, it should be backed with $2100. This backing can be done in several ways. You don’t have to have the money sitting in the brokerage account. It can be in a money market account or in Tbills.
Double Tops
Double tops offer you the best method of selling a market. What is happening is that a time and price high is being challenged. In most cases, the upward timing of the market has run out and it is in a downtrend. You should use the first rally to test the top as a selling point. In many cases, it ends up being a double top. Check back on the particular market you are trading on previous double tops and see what the market needed to do to get through and break the double top. It is usually 1-2 percent of the price of the current market. You should then set your stop based on that. The distance between double tops is
important. The longer the distance the more important it is. Double tops on yearly charts are the most important, and then monthly and then daily are important. This is why you should always be looking at long-term charts to see these tops
Double Bottoms
Just like double tops, a good double bottom offers an excellent trading opportunity. Most major bull markets are created from these bottoms. Always keep an eye on all charts for this development. Place the orders and use your protective stops to take advantage of these trades.
Inside Day
Watch the markets for inside days. This means that the previous day’s market high and low is inside of the previous day’s range. You will find that after a long-term price. Brokers are constantly bombard with conflicting news which distorts the current view move that this signal gives you an early warning that the market is about to reverse in the
opposite direction.
Reversal Signals
Understand and look for reversal signals. This will tell you the trend of the market short term. When the market runs up for more than five days and then gaps up, fills that gap,and closes lower for the day, it indicates low prices. You should expect the trend has changed. This is the strongest reversal signal. Another reversal is a market that runs up for 5 days or more and opens steady goes higher and then closes lower and under the previous days close. In many cases, the market will move at least 3 days in the opposite direction after one of these reverse signals.