How high will oil prices go? This seems to be a major concern among traders these days - well, that together with the general economic weakness and political uncertainties with the upcoming US Presidential elections. Perhaps these are the reasons the market has been relatively quiet of late. Traders are like crouching tigers, ready to spring upon the market whenever there's any breaking news or action. It's our job to grab some of that movement to make our profit objective. This means we may have many days of hardly any movement, and it is during such times that you realize the importance of patience in trading. If you are an active trader, you're not going to want to hold your trades very long. If you are a position or swing trader, you want those prices to move so that your capital isn't tied up in your trades any longer than necessary. If you are in a trade and it's not going the way you want it to, there's no point in holding on; it's important to follow specific trading rules so you enter and exit your trades at the right time.
In this issue, we at STOCKS & COMMODITIES focus on money management strategies that you can apply to making all your trades good trades - not necessarily winning trades. That means that you have to apply some objectivity, but it's the only way to take the emotion factor - which can make or break a trade - out of your equation. The article "Breakeven Analysis For Daytrading" by Roberto Chahín, which starts on page 42, discusses treating trading like any other business. Among other things, this means incorporating certain strategies to determine where your breakeven point is. We also had the opportunity to speak with money management expert Leo Zamansky of Rina Systems, who has spent a considerable amount of time designing programs that focus solely on money management. That interview starts on page 62. And what's money management without a discussion of risk and reward? Don Bright's article "Risk/Reward In Trading" fills that requirement. Once again, Bright shares his interesting insights with us.
In addition, what makes a good trade? To answer that question, we've introduced a new section to the magazine, titled "At The Close." Here, we'll walk you through a successful (not necessarily profitable) trade so that you can get a feel for the necessary rules and strategies. That way, if oil prices suddenly start falling, the economy starts showing strength, and we find out the outcome of the elections, with sound trading strategies in place, you won't be caught off-guard.
Originally published in the October 2004 issue of Technical Analysis of STOCKS & COMMODITIES magazine. All rights reserved. © Copyright 2004, Technical Analysis, Inc.
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