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The old battlefields of the middle ages are not gone, they have merely changed form. Hundreds of years ago normal men would set out to build their empires by conquering lands through the force of arms. Today, normal men like you and i set out to build our financial empires by conquering markets throught the force of self. The blood soaked battlefields of yesterday have made way for the cash soaked commercial battlefields of today, with the large private armies of Family warlords making way for large pools of  family capital. Just as armies were needed to shape empires of the past, so too is capital needed today in order to put modern commercial plans of conquest into action.

In there, lies the reason as to why many forex traders fail. They go into battle risking too many soldiers (capital) and without the knowledge of tactics needed to win the fight.

Lets look at that again. 1. They risk too much capital, 2. They do not understand Forex markets.

Many traders both successful and miserable have made these mistakes, the main reason for me writing this article is so you can learn this lesson here and do not have to make this mistake and lose money, or at the very least be cautious enough to minimise your losses.

No general will risk a majority of his men in a battle that he has no plan for and where he has no idea about his enemy. So my question to you is, why would you risk your capital in market conditions you know nothing about? Luckily two remedies exist for the forex general who finds himself in this situation.

1. Make it a rule to only risk 1% of your capital in any one trade. This is to minimise your losses.

2. Educate yourself so you can recognise your chance to strike but also recognise when it is neccessary to withdraw. Learn to read the conditions of the forex battlefield. Great generals of the past would spend years learning battlefield tactics, luckily we can achieve this in a couple of months.

So in summary only risk 1% of your capital in any trade, and educate yourself about how forex markets work.

Extended Hours Trading Nyse

Some trading styles have become associated with specific time frames such as swing trading, but can be applied successfully to other time frames. The Swing and Position trading styles we will be covered in this article have unique trade management rules, gap trades require require specific set ups surrounding gaps, and scalping requires a few extra intraday tools. Extended Hours Trading Nyse

Swing Trading
Swing trading is a style of trade selection and management that is typically associated with the daily charts. This style of trading takes advantage of short term swings and has the trader taking profits proactively at predetermined areas of support or resistance. Profits are also taken defensively when prices go in the wrong direction. Losses are minimized by trailing the stop by 1 or more price bars previous to the current period. The trick with trailing stops is to give the trade enough room to breath without giving back profits. If stops are kept too tight, the odds increase that the trade will be closed before profit objectives are met.

Although this style of trading is popular with traders in the daily time frame, it is also conducive to the the hourly and weekly time frames. This style works best in trending markets. Some choppiness is O.K. in the major market induces; however, the swing trader will scan for individual stocks or time frames that exhibit smoother trending patterns. The object is to choose trades that have the highest odds of reaching targets before reversing.

Position Trading
Like Swing Trading, position trading is typically used with the daily time frame, but also works well for the hourly and weekly charts. This method can be very profitable during extended market trends such as the 1998-2000 tech rally. It does not work well in choppy markets. If the major markets are trending but somewhat choppy, the astute trader will scan for stocks with higher quality trends or move down to a time frame that has better opportunities.

The advantage of position trading is that traders can take partial profits AND add to their positions for as long as the trend lasts. Here is how it works. The initial trade is like any other: one standard lot size, a stop loss, and profit objectives. If the trade makes it to its first target, profits are taken with 1/2 of the lot. When another trading set up presents itself, another full lot is put at risk in addition the the 1/2 left from the initial trade, a total of 1 1/2 lots at risk. At the next target, profits will be taken again, leaving you with 3/4 of a lot. At the next pullback or breakout, you will add another full lot, giving you 1 3/4 lots at risk. Extended Hours Trading Nyse

Stops for this style of trading are typically placed beneath major support levels such as pivot lows or consolidation lows. As long as the stock keeps making higher highs and higher lows, profits can grow exponentially. This style of trading risks loosing profits on each pullback for the potential opportunity of a new trade and increasing profits.

Scalping
Scalping is a day trading style used within the shortest of time frames: tick, 1 minute, or 2 minute charts. It is one of the more demanding styles because it demands precise execution and market timing. Several tools used by scalpers to stay in line with the ebb and flow of the market are: Level II Screen, Time & Sales, S&P Futures, TICK, TRIN, and New Lows. Scalpers try to align as much information he can gather to confirm his trading set ups.

Level II screens are used to find the depth of interest on the bid or at the offer. Unlike the Level II screen, the Time & Sales cannot lie. Every buy or sell order must be displayed on the print. By observing the patterns and trends of the S&P futures, the scalper gets a feel for the ebb and flow of the major markets and the relative strength or weakness of his stock or ETF. The TICK is another tool that is used to confirm a trader’s market bias. It tracks the number of NYSE stocks currently on an uptick. The TRIN is a ratio: (Advancing Issues/Advancing Volume)/(Declining Issues/Declining Volume). Also known at the Arm’s Index, the TRIN is a market timing tool. A rising TRIN is bearish, a falling TRIN is bullish. The New Lows indicator gives information on selling pressure.

Gap Trading
This is a specialized form of trading that combines the daily and intraday time frames. Gaps combined with various price patterns can create powerful, very profitable moves. There are three types of gaps: continuation gaps, exhaustion gaps, and ignition gaps. Each gap set up must be evaluated based upon its shock value and its proximity to areas of supply and demand. Gappers typically trade independently of the market and last 1 to 3 days. Some can turn into longer term trades. These trades can be found before the market opens by scanning for %movers at various news portals. Another source for potential gappers is the NASDAQ Heat Map. Extended Hours Trading Nyse