Monday, September 7, 2009

Week 2

::::1.What is information literacy skills?:::





Literacy skills, especially reading and writing skills, need to be learned together, because one reinforces the other. Every reading approch should teach these skills in some way or another.



::::2. What is SQRW?::::



SQRWis a four-step strategy for reading and taking notes from chaptr in a textbook. Each letter stands for one step in the strategy.






Survey. Questions, Read, and Write.






::::Use Big 6 skills (step 1-6) of the topic you know best?::::







My topic is based on Trade rules.







Firstly i have to define the problems. then i have to identify the information requirments of the problems... In this topic the main focus is on Trade rules.



::::Task Definition:::





1. Trade pullbacks with the trend That means:



a. Never sell a low
b. Never buy a high
c. You go long a test of a higher low in an uptrend

































::::Information Seeking Strategies:::




2. Control
a. Buyers are in control as long as the market is making Higher Lows
b. Sellers are in control as long as the market is making Lower Highs
3. Support and Resistance
a. Resistance will be found, when the market is in an uptrend but is unable to make Higher Highs. As long as you see Higher Lows being made you might expect that resistance to be taken out eventually
b. Support will be found, when the market is in a downtrend but is unable to make Lower Lows. As long as you see Lower Highs being made you might expect that support to be taken out eventually



::::Location and access::::




3. Trend
a. You see identical chart patterns develop on all timeframes.
b. Uptrend: Market is making higher Lows
c. Downtrend: Market is making lower Highs
d. To determine the trend you take a higher timeframe and then take the entry signal from the shorter timeframe
e. The longer the timeframe giving the entry signal, the stronger the move.




::::Use of Information::::




4. Profits
a. Let the profits run.
b. Don’t give profits back.
c. Say you are long, the trend is up and the trade is showing you a profit. Where do you exit? Buyers are in control until Sellers are able to take control from them. That means you exit
at Resistance on a longer timeframe, because resistance usually is not taken out on a first try, or it would be no resistance.
If the market is making a Double Top. That means you need to sit through a pullback first. This pullback should have its low above your entry. That’s why we have the rule: Never go long at a top. If the market is unable to take out the previous high, you exit
If you trade (just) 1 contract, you take profits at certain targets, which have been proven in the past to be the average maximum range a trade goes before you see a pullback. It’s better to build your account step by step. The home runs are for a time, when you have mastered trading 1 contract.
d. I use an achievable daily goal of 375$/day per contract traded. Once I reach that, I stop trading, if I’m at it for more than 6 hours, if I have taken already 5 or more trades,
if I feel like I want to do something else. I trade to have free time for other things, so you need to take that time or the ultimate goal is not a real goal. e. If I make my daily goal in one or two trades, I continue trading and see what the day will bring further. I limit my loss in that case to the profits made so far. A day in green, where you made your daily goal already should never end red, as that’s a big emotional blow to your trader psyche. It’s like a contract making a new all time high and then reversing to close below yesterdays lows.



:::Synthesis: Putting it all together::::



5. What to trade
a. Trade what speaks to you. It really doesn’t matter what you trade. You need to be comfortable with the contract you trade, you need to know it in and out.
b. Trading different contracts is fine. But it will extend the learning curve as you need to learn not 1 contract in and out but multiple contracts. Each has its own quirks, each his own personality. Compare a Bond chart with an oil chart. It’s something totally different. There are groups of contracts which behave similar. Most indexes will move in a similar fashion, most currencies, a lot of commodities show comparable moves. But just because one contract is rising another must not fall or rise in sync. If you trade different contracts be sure you know the correlation between these contracts or you will be fooled by the markets.
c. If you trade Forex or currency futures be aware how each currency trades against each other. There is no longer 1 major currency in the world. We have 3 major currencies (US Dollar, Euro and Yen) and moves in one pair can be expressed in the other two as well. You might take a EUR/USD trade, but you might as well take a EUR/YEN and USD/YEN trade to get the desired position. The cross rates (major ones are EUR/YEN and GBP/YEN) need to be watched these days, as the carry trade was and is made or unwound in these currencies (If the interest rate differential between the EU and the US widens the new carry trade will be the EUR/USD, something we are already starting to see in the high Euro / USD exchange rate)





::::Evaluation::::


The better a trader you are, the smaller your stop can be without the risk of getting thrown out of a valid trade. (At least that’s what I assume)
The less wiggles the contract you trade shows, the easier it is to define where a stop needs to be placed to be sure a trade signal is no longer valid.
If you are still on the path to the expert level, you need to stack the cards in your favor to make sure you have a very high probability of the individual trade to be a winner. Only then will you be able to pay the unavoidable stops and still come out a winner.






Reference:-

http://globetrader.blogspot.com/2008/03/trade-rules.html

http://www.tradeport.org/tutorial/rules/index.html

http://www.zunia.org/cat/international-trade-and-trade-rules/


In this research i have followed steps:-





Step 1. Task Definition

Step 2. Information Seeking strategies


Step 3. Location and Access


Step 4. Use of Information


Step 5. Synthese: Putting it all together


Step 6. Evaluation

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