 Hello Extraders, and in a previous video we actually covered the trading strategy that I use and I wanted to cover there very briefly the most important steps because I want to use what has happened this week as an example of basically how everything can just go out the window, alright, and as a trader you have to be prepared for this. So in the trading strategy that I set forth in that previous video, and I'll try to link that video in the description, we covered basically the following points. The first point or the first topic was the three realms into which you have to dive into and master as much as possible. The first one was the technical, it doesn't have to be in this order, the second one was the fundamentals, and the third one was basically general rules, and this part is very important because these two, the technical and the fundamental might fail, okay. Fundamental is a very logic driven analysis, fundamental is also a very logic driven analysis, and the rules, which you as a trader must incorporate into your trade strategy, basically are there to save you whatever these two logically defined analyses fail, okay. So that is what I'm going to use as the main example for today's video. So let's start with technicals, and the technicals, and as you can clearly see I haven't finished this presentation, but in the technical analysis when we covered this in the first video, we basically mentioned these four points, the trend, you must be able to identify trend, you must be able to identify SR or support and resistance levels, and there are a few ways of doing that. You must be able to identify if there are patterns in the price chart, and you must also be able to use indicators, learn how to use them, and more specifically, more importantly, learn what they tell you, but also what they don't tell you, okay, or what it doesn't mean. I've heard a lot of people try to start out trading using the MACD, you know, just the MACD, you know, whenever, you know, the MACD signals, then oh, he jumps into the trade or vice versa. That's a very dangerous way to trade. And then the fourth and final point, which we didn't really cover in my first video, was that once you have these things basically, you know, mastered, then you definitely need to get into the Greeks, and there's two Greeks that I will cover in this future video, which is basically Theta and Vega, and how to quickly cover, you know, these topics in technicals, then we'll jump over to fundamentals, and then rules, and then we'll discuss what happened this week, okay, so identify the trend. You obviously must be able to identify, yes, this is a clear uptrend, you know, and then within that trend, you can find choppiness, you know, as you can see a trading channel here, choppiness from here to here, but then there's a new trend forming, which is the downtrend, and then you must be able to identify trend, basically up, down, or chop, so beside the trend, you needed to be able to identify support levels, and we talked about swing points. We also talked about multiple touches and the fibs, fibs help you, and I usually add them in the end, so after I've added the swings and the multiple touches, I'll go ahead and I'll draw from the highest, from the all-time high to the all-time low, or the 52-week high to the 52-week low, so what you do is you take, as I mentioned in the earlier video, the next resistance higher to where you currently are, which would be right here, and then once that breaks, then resistance target 1, resistance target 2, and so on and so forth, or you take the nearest support below the current price, and that's your entry level, and then you have target price 1, target price 2, okay, and then the price patterns, if you are able to find, such as this head and shoulders here, and to wrap up the technical analysis, we looked at indicators, and we use simple moving averages, and sometimes the exponential moving averages as well, we use them as support and resistance, we use the MACD and the RSI to determine momentum and overbought or sold conditions, we use the volume profile, which tells you what price level has had the greatest volume, and we have a indicator called the Neptune Trading System, which is available on Xtrades to use on TradingView, developed by one of our analysts, JTW over at Xtrades, and it basically gives you, you know, long and short, bull and bear, and it gives you these flags and these signals that you can use to identify entries and exits, okay, so we were done with technicals, and then we moved over to fundamentals, and in fundamentals, we cover these four areas, and they're very important, there's market sentiment, general market sentiment, then there's also economic data that you need to be able to understand and parse through, there's production GDP, there's price information with CPI, PPI and PCE, there's job less claims, okay, there's the PMI, there's mortgage apps, which basically tell you what, you know, how strong the housing market is, and then you can dive into specific sectors, okay, because some sectors might be green, and some sectors might turn red, and finally you need to look at the TV news, because there's rumors, there's politics, and you know, political decisions affect different sectors in different ways, if they pass a law that's going to affect the energy sector or the housing sector, then that is obviously going to have a huge effect on tickers, or the last slide are analysts recommendations and upgrades, all of this taken into account, we developed a couple of trade plans, and you could see the trade plans or the watch lists, the different analysts posted for this week, you know, and a lot of them were bullish, I remember that a few, quite a few tickers that analysts were watching were actually very bullish, and then we get some economic news, right, so we got the PPI, the ISMPPI, sorry, the ISMPMI, which was specifically the sector, the services ISM, which is basically how did prices behave in the services sector, and that was not very good, it wasn't terrible, but it wasn't good, it wasn't what people were expecting, and there's so many tensions right now with China, with the Ukraine-Russia conflict, and basically that can take a really good technically, okay, a good technically analyzed trade plan that gives you a bullish target to the upside, and you were looking, let's say that this was a company, I believe that this is the Dow Jones, but that's the DJIA, but let's say that this was a ticker, and you also had, you know, like very bullish market sentiment coming out of the weekend, into the trading week, and the sector for that particular ticker was looking good, and that particular ticker even had an upgrade, all right, it's very likely that both technical and fundamental analysis was pointing you in the bullish direction, okay, but then something happens and everything comes crashing down, so what are the general rules? Risk management, number one, perspectives, you have to look at it from the right perspective, you have to look at your trades from the right perspective, types of assets that you're trading, strategies that you're using, and then platforms and tools and whatnot, so let's go over some quick risk management, the sizing of your trades is important, I'm sure you've seen the data, I'm not going to cover the specifics if you only use 1% or 5% of your trading portfolio, you know, whatever, the sizing is very important, so make sure that your trading strategy covers what size trades you're going to use, and I'll talk about this a little bit further in a moment, but one of the important things that is related to sizing is runners, whatever you size has to leave room for runners, okay, so whatever the size of your trade, of your trade plan is going to be, if let's say that you decide you're only going to spend $100 a week, which means very clearly you can only lose $100 a week, that's your max loss per week, alright, so you decide that you're going to take trade for exactly $100 on Monday, if that thing goes to zero on Monday, then you're out for the rest of the trading week, you know, you're done, do not break your rules or it's not going to work, so if you take the $100 trade on Monday and you lose, you're done for the week, you have to leave room for runners, okay, and what that means is that if you're going to have $100 to trade, if that's going to be your limit, then go ahead and try to find trades that allow you to get multiple contracts, and that means be able to accommodate runners, alright, number two is the different perspectives, do not use absolute values, please focus on return percentage, if you're going to look at a trade, make sure that you're looking to get out at 15%, not at $100, I say this to people so many times during the week because, oh, but I was only up, I was only up like $50, you know, I wanted $100, or I wanted $200, no, that's not a problem of not having enough return, that's a problem of you not having sized correctly, and I'll get to that really quickly in a minute here because we're almost out of time, and obviously perspectives you want to make a different, you know, you want to, you definitely want to define if you want a day trade or if you want a swing trade, I'm not going to get into this because this percentage return is the one that I want to cover in more detail, of course there's different assets, there's stocks and options, and if maybe options are not for you, you know, maybe they're very sexy and appealing concept in general, but maybe you don't have it in you at first to be an options trader because of the time factor, there is a huge factor working against you in making money and options, and that is time, okay, which does not occur in stocks, and then there's a lot of different strategies, do not limit yourself to single or naked options contracts such as buying calls and puts, there's a lot of other things you can do and we will explore these in future videos, there's a lot of tools, trading platforms that you can use, indicators that you can buy on different trading platforms such as TradingView, and I do not want to leave out the drinks, you know, a lot and we'll probably dedicate a different video for this, I use you know, a drink here and there to basically calm my nerves because I know that I'm a jittery person, so all right, so getting back to the sizing and the risk management which is basically what I was trying to get at when I started this video and I said no matter what happens in technical and fundamentals, even if everything is going right, anything can throw off the market and therefore your trade, which is why you must follow rules, so let's look at what I was talking about, you need to determine what kind of trader you are, okay, and if you're a more conservative risk averse trader then you must be careful when you talk about or when you view your trades as being, as having a percentage return versus an absolute return, why? Because it is a mistake to get one small single contract, just as it is a mistake to get one large single contract, okay, the reason why I say this is because when you are looking and this is where I'm going to end this video, when you are looking at a position that you have sized, if you size it too big like $500 that's going to make you way too jittery and you're probably going to end up getting out before the thing actually turns around and takes off and you're going to hate yourself for it, okay, so definitely do not go all in on just one contract that's worth $500, that's not going to work, okay, what you want to do is you want to be able to have more than one contract, okay, you want to be able to have more than one contract, so that means why? Because you want to be able to have runners, let's say that you get two contracts, then the first one you get out at 15% and then the next one the runner, you can let it ride until whatever percentage you want, but make sure that you lock and profits on that first contract and normally what you would do is instead of getting the $100 contract, get $250 contracts and then let the first one go to, let's say, you know, 15% out of 50 would be, multiply here, like $57, $58, okay, if you want more than $8 return on a $50 trade, don't go for a smaller contract, okay, what you want to do is you want to get more contracts of that same value, so what you want is instead of getting two of 50, maybe you get ten of 50, alright, what that means is that you'll reach your 15% and that 15% is going to be a lot more than $8 and that is what you want, that is how risk management works properly and that's why you have to size properly, you have to leave room for runners and it is a mistake to get small single contracts, sometimes we get smaller contracts because they're cheaper, but the problem is that if you get a cheaper contract and you didn't look at say, for example, the delta on that contract, which is why somewhere in here is the Greeks, okay, if you didn't look at the delta and that contract has a probability of going in the money of 10% or 15%, then basically what you did was you threw your money away, yeah, it was cheaper, you know, it was only $10 per contract so you were able to get ten of them so that you're able to get a lot of runners, but guess what? That small single contract, all of those small single contracts are basically just going to go to zero, so be careful, you have to be able to determine your size, how much you're willing to risk in a week, if you're going to risk $100, then try to find trades where you can get at least two contracts, start out with at least two contracts, that means $50 per contract so you can have one where you get out at 15 or 20, whatever percent, and then the next one you let it run to 50, and once you're comfortable with that and you've got a couple of trades or few trades under your belt where you did that, then go ahead and get three contracts, even though that pushes you up from $100 a week limit, maybe to $150 a week limit, but you already have practice with the whole proper sizing, scale out, leave runners. What you don't want to do is go in the other direction and get very small individual contract or very small multiple contracts of something that's 15% in the money probability, all right? So with that I'll leave it, I don't want to make this video too long, I just wanted to cover that really quickly and we will be looking into a little bit more one-on-one trading using visuals in the next video, so I hope you enjoyed this and if you have questions go ahead and ask me either in Discord or just comment on this video below, all right? Have a good one!