Fibonacci Sequence & Cycles

The Fibonacci Sequence and Cycles – Introduction

Overview & Course Objectives

The Fibonacci sequence (and relationships derived from it) are found everywhere in nature and are a central component of Elliott Wave Theory and analysis.

In a similar vein, the concept of cycles is a pervasive one, and the study of cycles (Cycle Theory) is critical to everything from social and physical science, to medicine and investing.

In this course, we’ll be taking a closer look at both of these topics, including an exploration into ways of classifying and ultimately working with cycles. Note that practical cycle work requires that the student have highly specialized software, so this course won’t delve too deeply into the topic – this is meant merely as an overview to give you familiarity with the topic.

With that in mind, by the time you reach the end of this material, you should be able to:

• Understand how the Fibonacci sequence is constructed, and be able to derive it yourself
• Understand how the key ratios are derived
• List the uses for Fibonacci numbers and their corresponding relationships in technical analysis
• Describe the basic concepts in the study of cycles
• Understand what cycle analysis adds to technical analysis
• Recognize the challenges and problems inherent in cycle analysis

Money Management – an introduction

Overview & Course Objectives (Identifying The Keys To Successful Investing)

Before we get to the actual overview of this course, we’re going to kick things off by letting you in on an age-old secret.
Since you first got interested in investing, you’ve probably been on the search to find it – that ironclad, fool proof secret you keep reading about, and hearing tantalizing hints about. Are you ready? Here it is!

Let those words sink in for a few minutes before you continue. There is no secret. Anyone who tells you they know of such a secret is trying to separate you from your hard-earned money. They’re scamming you.

Doesn’t it feel better to know that? Doesn’t it feel liberating? It should, because now that you know that there’s no deep, dark investing secret to be found, you can avoid those scammers and their promises of guaranteed profits and start focusing on the stuff the really matters.

Here’s another way of looking at it: If you follow American baseball, then you are no doubt aware of the notion of the batting average. The very best players in the league will have a batting average somewhere around 0.300. That’s actually an incredibly good batting average. What it means is that when the player in question goes up to bat, he actually hits the ball about 30% of the time.

Looked at another way, you could also say that about 70% of the time, the best players in the league FAIL! They swing and…miss.
Most human endeavors are like that. Success is a rarity. Failure is commonplace.

Even the best investors on the planet have more losing trades than winning ones, by a wide margin. You’re going to be no different.
The difference between successful traders and unsuccessful ones comes down to two things: Understanding the fundamentals and persistence.
Since you already know you’re going to fail more often than not, the first question is what can you do to improve your odds of success.
It’s a fair question, and it comes down to three things:
1) Understanding analytic methodologies (both technical and fundamental)
2) Understanding money and money management & having a coherent trading plan
3) And Understanding the psychology of trading.

The first of those points will be covered in other courses. We’ll be taking a closer look at the other two in this course, but what do those things mean?
The most fundamental element of becoming a successful trader is to develop a coherent trading strategy, because it is the thing that ties all the elements above together into a cohesive whole. Your trading strategy (whatever form it ultimately takes) is comprised of the following core components:
• Your knowledge and experience, backed up by a growing familiarity with analytic tools
• Sound money management skills
• A rules-based system that has been tested and verified
• A risk-management system that includes rules for cutting your losses (exiting losing trades quickly) and letting profits run
• Managing yourself and understanding the psychology of trading. While this encompasses a number of things, the biggest and most important are:
• The discipline to stick with the plan you have opted to follow
• And the patience to wait for the “right” trading opportunities to present themselves (i.e., those that align with the parameters of your trading plan)
A great number of novice traders believe that analysis is key. That only if they master this or that analytic methodology, they’ll magically achieve perfect success.

If only that were true. The reality is that all of the factors we mentioned above play an important role in contributing to the likelihood of your success, but none of them guarantee it. Our primary goal here will be to help you align as many of the above factors as possible in your favor so as to maximize (but not guarantee) your chance of success.
If that sounds good to you, let’s get right to it!

Switch – CFD Trading Strategy

The Switch uses the daily price bar to trade long or short based on a fixed set of rules, it is a simple but a complete trading strategy
The benefit of the Switch strategy is that it’s a ‘Mechanical’ CFD Trading Strategy, this means you can control your dollar risk and your emotions to a degree by applying the basic Switch trading rules. It’s a great way to learn to trade CFDs short term 1 – 10 Days

Introduction to the Switch

CFD trading strategy course

There are about a dozen modules, so you can learn at your own pace, you can also contact us for any personal assistance or mentoring which is included with being a TradingLounge member.

What is the Switch and how does it work?

The Switch is used on stock CFDs; it’s an End of Day CFD Trading Strategy that trades long and short.
The Switch uses the Daily Price Bar to set the Entry Order and The Stop Loss Order above and below the Daily Price Bar making it an End of Day trading strategy.

All new Entry orders and Stop Loss Orders are set before the market opens each day.

There is no need to watch the market during the day,
all the work is done before the market opens, that is, finding trades, entering new trades and moving stops is all done any time before the market opens, leaving the whole day free.

How long does it take to find the trades and place the trades and move the stops, well in the beginning it can take well over an hour but as your knowledge of the process improves you can get that down to 30 minutes, if you’re in a hurry?

How long do the trades last?

Most of the trades are under 10 days; average length of trades can be 3 to 4 days and can be short as 1 or 2 days, so the Switch is a short-term trading strategy which is perfect for CFD trading.

As you know using CFDs you can trade long or short and the Switch does the same, there is no difference in trading long or short, your aim is to become well balance in trading both sides of the market, after all the market is either going up or down or sideways, so being able to short a market creates another leg of opportunity within a market giving you two thirds of the market to trade

What is this type of trading called?

In a nut shell there are two basic styles of trading Discretionary and Mechanical
Discretionary trading is more of a freestyle approach, this could mean, reading the price and volume action, seeing the pulse of the market or news trading etc, this type of trading requires more experience.

Mechanical trading is a fix set of trading rules that you follow no matter what, even if you think something else is going to happen, you must simply follow the rules, but this is easier said than done, this is why there are many books on teaching discipline and TradingLounge has a meditation that can help with this in the course.

A Mechanical trading method with its fixed set of rules is a much safer trading method for beginners and intermediate level traders to trade.
Benefits of a mechanical trading strategy that they are less emotional to trade, because simply follow the rules, you don’t get stuck in the decision-making process, you can just get on with it.

The rules make up the Trading Plan, that’s the Trade Set-up pattern, the Entry trigger price and the initial Stop Loss price point, then that’s order is done, your work for the day is done.

The next morning before the Market Open you move the Trailing Stop Loss order to protect your capital and keep moving the Trailing Stop Loss Order until the trade is stopped out, that’s also the exit strategy, as a trailing stop loss is the best stop loss.
All the parameters are set, this makes trading less emotional, and it will still be an emotional experience, but a more controlled process that will improve over time.

Following the trading rules will also give you accurate data that you can use to understand your strength and weaknesses, this is a professional approach to moving forwards and TradingLounge has the CFD Portfolio software to help you build a better trading results.

Money Management

In the course you will learn Money Management, that is how much to risk per trade and how many share CFDs to buy with each order and why.
Once you have completed say thirty trades the CFD Portfolio will display usable trade data, such as Expectancy, R-Multiples, win/loss ratios etc. all critical data as the foundation of moving your trading forwards. Money management is simple, but it’s the most important element of trading, it’s the only thing that all professional traders that have different trading styles agree upon, but most new traders do include it in their initial year of trading, make sure you do!

Switch – How long does it take to learn?

This is a very simple trading strategy, but you not only need to learn it, you need to become familiar with the process, from finding the trade set ups through to keeping a trading journal, you will need to prove to yourself that you can do it, without risking your capital, so practice a CFD trading demo account first!

Becoming familiar with the whole process simply takes time; you will know when you are there.
But getting there, I can assure you that you will make all types of errors, such as key board typing errors with the orders, forgetting to move stops or write something important down or simply just not feeling up to it today because you had four losses in a row yesterday.

We are all human and initial errors will occur in difference parts of the process, so, the better organized you are the better results you’re going to get.
Give yourself three months to become comfortable with the process and you will learn that trading is a process.

Is the Switch successful?

When talking about profit, it’s also important to talk about risk and how profit is generated, especially with CFD Trading, as it’s highly leveraged, the CFD Deposit Margin can be 5% deposit for stock CFDs this high leverage can be a double edge sword, so it must be respected, the Switch respects this by only risking 1% of capital per trade including brokerage costs and uses a stop loss that changed each day keeping reasonably tight risk management

Profit

To be fair, let say out of 10 trades you get 5 losing trades and 5 winning trades.

You cap your risk at 1% of your capital per trade, that’s a 5% total loss from the 5 losing trades.

The 5 winning trades would be a variety of results, different percentages, some trades will do well other only a small percentage.

To average the wins, the 80/20 principle works well, so as a starting point you will make 80% of your money out of 20% of your trades, I cover this in the course.

You can watch all the videos in one day and learn a lot, but knowledge comes from experiences and time knowledge.

Trading Levels

This 6-part video course is designed for stock trading.

TradingLevels uses the Fibonacci sequence as a price ratio, the out come of this points out the prices where corrections are likely to take place, in turn this tells you where to get in and where to take profit. You will learn a new way of looking at the markets trends and corrections, the Trading levels also fit into the Elliott wave patterns, in fact it will strengthen your Elliott wave understanding and trading. The TradingLevels will deliver you an in-depth understanding of support and resistance making your trading a lot easier to understand.

TradingLevels
1. Major TradingLevels
2. Medium TradingLevels
3. Minor TradingLevels

TradingLevels for intraday trading Forex and Indices (using the TradingLevels to scalp the markets is a separate course)

4. Sublevels
5. Microlevels

The 6-part video course will show you the Price hierarchy of the Major, Medium and Minor TradingLevels and will also show you the types of patterns that occur at the TradingLevels, this is turn will teach you when to enter a trade and when to exit and where the stop should go.

Elliott Wave Certificate

The purpose of this course is to give you a broad understanding of the Elliott Wave Principle and its use as an analytic tool. As you work your way through this course, you’ll be tested on the following, to demonstrate your knowledge, understanding and proficiency:

• The conceptual basis of the Elliott Wave Principle, including how it relates and interconnects with the Fibonacci sequence, fractals, and Chaos Theory.
• Demonstrate proficiency in labelling waves using the standard labelling conventions set forth in Elliott Wave Theory.
• Be able to draw and label the basic bull and bear cycle, breaking it down to two lower degrees.
• Correctly label an impulsive wave structure without violating the rules.
• Correctly label an extended impulsive wave structure.
• List the four categories of corrective patterns.
• Correctly label a zigzag pattern.
• Identify a double or triple zigzag pattern.
• Correctly label a regular, expanded or running flat pattern.
• Identify and label a triangle pattern.
• Apply alternation guidelines for the likely development of a wave structure.
• Apply channeling guidelines for the likely extent of Wave 4 and Wave 5 movements.
• Apply ratio analysis for the likely length of a retracement.
• Apply ratio analysis for the expansion of wave structures.

CFD Trading Certificate

Module 01  Understanding CFDs

Learn the essential building blocks to master before you start to trade

Learning Objectives:
– understand why knowing the theory behind CFDs is important to becoming a successful trader
– define CFDs and the concept of derivatives
– express the advantages of trading CFDs

Module 02  Starting to Trade

Focus on the importance of having a plan and the part your own psychology plays in becoming a successful trader

Learning Objectives:
– understand the importance of a trading plan
– explore your trading personality
– identify the steps necessary to become a succesful trader
– explore common trading mistakes and ways to overcome them

Module 03  Mechanics of Trading

Focus on risk and portfolio management strategies as well as the practical aspects of record keeping and taxation

Learning Objectives:
– identify the daily activities required to analyse markets
– develop appropriate portfolio management strategies to manage risk
– learn the practical steps in making a CFD trade

Module 04  Exploring Trading Techniques

Learn about fundamental and technical analysis, Dow theory and trading tactics

Learning Objectives:
– understand how basic fundamental analysis is used for daily decision making
– understand how technical analysis techniques are used for daily trading activities
– learn the advanced trading tactics and how to apply them

Disclaimer

The information in this course has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the information in light of your objectives, financial situation and needs before making any decision about whether to acquire or dispose of any financial product. Derivatives can be risky; losses can exceed your initial payment and you must be able to meet all margin calls as soon as they are made. CFDs and Spread Betting are offered as over-the counter (OTC) products and are therefore not traded on an exchange. When trading CFDs and Spread Betting you do not own or have any rights to the CFDs or Spread Betting underlying assets. TradingLounge recommends that you seek independent advice from an appropriately qualified person before deciding to invest in or dispose of a derivative.

Also see TradingLounge’s Financial Services Guide and Terms and Conditions