Beginners Guide To Trading

With Alessio Rastani

LeadingTrader.com

Alessio Rastani

Alessio Rastani
I am dreaming of a recession Governments dont rule the world, Goldman Sachs rules the world

Alessio Rastani
Sir !avid "rost interview

"A must watch if you want to understand the Euro crisis and how markets work.
$o%ert &eston '(() (usiness *ditor+

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[Rastanis comments on being prepared] were !"#$E%E$& reasonable' especially for anyone who has been paying attention to the (nited )tates for the last three years.*
-all Street .ournal '2/th Se0tem%er 2111+

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/hy do we trade0

+eing self,dependent -ot ha.ing a boss +eing financially independent -o commuting into the ity Recession proof your life.

3*4$S
&redict 3our "uture
Income Statement
ncome

Trading Business/Job Rents

ncome !"penses

Job Si"#pac$ o% beer &e' Shoes (idescreen T) *ootball tic$ets Si"#pac$ o% beer

!"penses

Success Biographies Seminar on Trading Gym Membership Personal Coach

Assets: Education Shares 1,2,3.. Mindset: Focused Immediate Action

Assets: Home Mortgage Car a!ment Mindset: I dunno Home Mortgage Car a!ment "# $a!ment

%a&ance Sheet

Trading is a Game of Probability

Probabilities: 2and on R!. to 'in

(heel 3 (heel 4

P+TT &G T,! -..S & /-+R *A)-+R:

M & M S! R S0 MA1 M S! PR-* TS

Trading Success

11

Two Types of Information: Information for the masses Information for the !lasses"#
Ale$ander %lder
11

1nformation for the "asses 2the herd*3

12

1nformation for the masses

6ost of the information from news channels on 78, 9ews0a0ers, 6aga:ines -hat a%out )9() and (loom%erg; Switch off )9() and (looom%erg< 6ostl= G4$(4G*<

13

rash !f 4556

"arket rallies 4557,4588

1

European risis
1#

-ews is 1RRE$E9A-% 1t does -!% matter what the news is.

1,

/hat 1s REA$$& :oing !n0

%here are about 45 funds that do 65; of /orlds trading. %hey ha.e between <=5,855 billion under management. %hey employ smartest indi.iduals to figure out what the economic trends will be 2e.g. unemployment3. E>ample? 1f these @unds belie.e that in A month Bob figures will impro.e' they will decide to buy 2C .ice .ersa3

1/

harts 2price action3 Re.eal E>pectations of the cle.er money*

12

%he news itself does not tell you anything. #ay attention to the REA %1!-.

%DE REA %1!- to the news is what REA$$& matters.

15

/hat are the insiders thinking0

Are the @unds buying or selling on the news0

21

1nformation for the lasses

2insiders*3

21

1nformation for the lasses

-henever the smart mone= 'funds > insiders+ ma?e decisions, the= leave foot0rints &rice 0atterns and signals@ -e follow their foot0rints %= following the charts@ )harts are visual re0resentations of the mar?ets@
22

Eow %heory
%he "arkets re.eal all a.ailable information. E.erything there is to know is reflected in the markets through #R1 E. %he charts represent the sum of all the fears' hopes and the e>pectations of in.estors E.erything about earnings e>pectations' interest rate e>pectations' product launches' are priced into the markets.
23

4 %ypes of Analysis?

@undamental Analysis?
Earnings reports' economy etc. ashflow' +alance sheets'

%echnical Analysis?

harts

)tock "arket is a leading indicator of economy

)tock market cycle Economic ycle

2#

/here is this market going0

2,

1ts clearly going down.

2/

#rice action remains negati.e 2bearish3 despite good news* or recommendations. %herefore there is no reason to load up on this stock 2or market3 until the trend re.erses from downwards to upwards 2from bearish to bullish3.

#FE ratio +loomberg recommendation :ood earnings report

22

/hat are the )trongest C /eakest markets 2or industries30

25

)trong F /eak 1ndustries

$eading%rader.comFindustrytool

31

)trong F /eak 1ndustries G $ong %erm

31

Hey

oncepts

32

Hey oncepts
%he "ARHE% G consists ofI0 +(&ER) C )E$$ER) #rice is determined by I0 )(##$& C EE"A-E )upply C Eemand is determined byI0 %he aggressi.eness of +uyers 2bulls*3 C )ellers 2bears*3

33

+ullish C +earish

+ullish F +earish
+ullish? (u=ers are more aggressive than sellers '%u=ers are in control+ 6ar?et has greater 0ro%a%ilit= of rising@ +earish? Sellers are more aggressive than %u=ers 'sellers are in control+ 6ar?et has greater 0ro%a%ilit= of falling@
3#

$ong F )hort
:oing $!-:? (u=ing 'or %etting on mar?et going higher+@

)elling )hort 2going short3? (etting on mar?et going lower 'and 0rofiting from lower 0rices+@
3,

+ar harts 2D$! 3

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+ar

harts 2D$! 3

32

andlestick

harts

35

andlestick

harts

Chart Timeframes
1ntra,day %imeframes? e.g. = min' 8= min' J5 min' K hour Eaily' /eekly' "onthly %imeframes

5 minute chart:

Each bar forms after every 5 min block of time.

2

Daily Chart

Each bar forms after every single trading day.

3

Trading Styles
Position Trading (or S(ing Trading: Day Trading: Scal$ing:
investing!":
#olding a trade for more than a month (ty$ically % & ' months" Trading on Daily/Weekly/Monthly charts.

#olding a trade for more than ) day (ty$ically * & )+ days". Trading on 60 min/Daily/Weekly Charts.

Enter a trade and E,it on the same day. -o overnight $ositions. Trading on 5 min, 15 min, 60 min charts.

.ery short term. Entering and e,iting a trade for a fe( minutes / for a fe( ticks. -0T recommended for beginners1 Trading on 1 min or tick charts.

Recommended
lick Dere

harts C %rading #latform?

*7A )a0italB www.$eading%rader.comFet>

2use this link to apply for a new account G if youd like a demo account please email us on supportLleadingtrader.com 3

@or () C anada?
7radestation leadingtrader@com>charting
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harts C %rading #latform? $eading%rader.comFet>

harts C %rading #latform? $eading%rader.comFet>

)upport C Resistance

E1$1-: 2resistance3

@$!!R 2support3
5 eiling C @loors -!% solid 2not concrete3

)upport C Resistance
&rice levels at which 0rice sto0s going u0 or down@ (C3*$S '%ulls+ and S*DD*$S '%ears+ meet at these levels to do %attle E onl= one side will win

#1

Areas where buyers and sellers are in agreement. +uying power and selling #ower are in EMuilibrium.

#1

E>ample?

$*SIS749)*

SC&&F$7
#2

+uyers 2bulls3 belie.e the price is low. %hey +uy. 1ncrease demand. #rice rises.

As price rises' bulls become less aggressi.e. +ears become more aggressi.e.

+REAH!(% from ResistanceN

$*SIS749)*

SC&&F$7
#3

)upport C Resistance

Dighest Dighs and $owest $ows Any maBor top or bottom 7rend Dines 6oving 4verages
#

Three Ma5or 2e6els: 37 ,ighest ,igh 8 R 2o'est 2o' 8 S 47 Any MAJ-R pea$s or bottoms 8 B G ones

##

#,

#/

S
#2

A +REAH!(% occurs when #rice mo.es through either )upport or resistance. Either buyers or sellers become "ore aggressi.e 2based on market E.ents3.

S
#5

%rending .s. !scillating "arkets

,1

%rending F !scillating "arkets

7rending u0, 7rending down or Fscillating;

%RE-E1-: (#

'7rending+

%RE-E1-: E!/-

!) 1$$A%1-:
'$*8*$SIF9 7F 7G* 6*49+
,1

%rending or !scillating0

,2

!scillating O no directional bias

,3

%rending or !scillating0

%rending O market mo.es deliberately in one direction

,#

Trend Lines = General Direction 'oin ma(or $ea)s or *ottoms "o$s ,o-n+
4

%ottoms u$+

Pea$s
8 4 8

Bottoms

%RE-E1-: E!/2lower highs3

1-2

%RE-E1-: (# 2higher ,, lows3

53

%rends

,/

!nce a trend is in motion it will (sually continue in that direction

,2

%rend Re.ersal

/R1%E %D1) E!/-N A trendline is also support and resistance.

,5

!nly 4 %ypes of %rading

%rading an !) 1$$A%1-: market? using re.ersion to the mean strategies. %rading a %RE-E1-: market where the market mo.es in one direction deliberately? using trend based strategies.

/1

Re.ersion %o %he "ean

/1

$eading%rader.comFet>

Heltner hannels 8A'8.=

/2

Heltner channels are great for !scillating markets.

/3

%rending "arkets
Moving Averages
#R1 E #R1 E "A 8 "A 4

Bias towards sell side

Bias towards buy side

"!- %(E

/EE

%D(R

@R1
/

/#

/,

//

SELL SELL

SELL

BUY

BUY BUY
/2

"o.ing A.erages
4 moving average '64+ is a line that smooths out fluctuations in the stoc? 0rice@ e@g@ 4n 2 da= 64 is the average of 0rices for the 2 most recent trading da=s@ 7here are 2 t=0es of 6oving averagesB sim0le and eH0onential@ Sim0le gives weight to each da=s 0rice 2)"A3 *H0onential gives eHtra weight to recent 0rices 2E"A3 /5

)tarbucks 2)+(P3

21

)tarbucks 2)+(P3

ould you ha.e made money when shares were going down0

8. +uy puts options. 4. )ell short.

21

"o.ing A.erages
Cse a com%ination of 2 moving averages for crossoversB 6= favouriteB 6 and 48 E"A for crossovers@ 3ou could also useB 13 *64 for entries@ A-E A$/A&) ha.e on your chart? =5 )"A and 455 )"A 2used by @unds3
22

"o.ing A.erages

23

"o.ing A.erages 6' 8A' 48' =5' 455 "A

6 E"A 8A E"A 48 E"A =5 )"A

455 )"A

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"o.ing A.erage

2#

455 "o.ing a.erage is a strong support F resistance Qone

)C# =55 held 455 "A as support and resistance

2,

"o.ing A.erages /AR-1-:

-$I7* 7GIS !F-9< 6oving 4verage crossovers onl= wor? when stoc?s are 7$*9!I9G@ 7he= do 9F7 wor? when stoc?s are Fscillating 'reverting to the mean+ -e do 9F7 use them when stoc?s are oscillating@
2/

"o.ing A.erages /AR-1-:

22

%D1) 1) %DE +1::E)% #R!+$E" %RAEER) DA9EN "ost %raders do -!% know when the %ransition from an oscillating to trending market takes place. H-!/1-: %D1) 1) 1"#!R%A-%N
25

AEP G A.erage Eirectional 1nde>

AEP below 45 indicates /eakening trend 2and choppy market3

Rising AEP abo.e 45 indicates strong trend

51

$eading%rader.comFet>

AEP 2setting 8K3

51

AEP G A.erage Eirectional 1nde>

52

AEP G A.erage Eirectional 1nde>

53

Dow can we know when markets are transitioning from oscillating to %rending0
Cse 4!A E average direction indeH 'setting 1 + If 4!A is below 45 %eware of a cho00= mar?et E Cse reversion to the mean strategies@ "or increasing 7rend StrengthB 4!A abo.e 45@ &DCS )MueeQe breakouts.
5

)MueeQe +reakouts
SIuee:e (rea?outs

SIuee:e forms when (ollinger %ands '%lue Dines+ enter Jeltner )hannels 'red lines+@ If 64)! 6omentum is a%ove :ero E go long 4t %rea?out from sIuee:e 'and vice versa+@

5#

)il.er 2weekly chart3

)MueeQe breakout

Rising AEP abo.e 45 indicates strong trend

5,

$eading%rader.comFet>

+ollinger bands 245' 43' Heltner hannels 245'8.=3 "A E 26' 48'7 histogram3

5/

Important Re ersal !atterns

E!(+$E +!%%!"

DEAE C )D!($EER)

(#

52

Eow Rones 2&"3

55

Eow Rones 2&"3

111

:oogle 2:!!:3

111

:oogle 2:!!:3

112

:oogle 2:!!:3

113

11

11#

Bearis" Re ersal !atterns

11,

:old

11/

:old

112

:old

115

9olume

111

9olume
9olume is the fuel* that dri.es market mo.es. 1t measures the distribution of shares 2or contracts3 among buyers and sellers. An increasing .olume indicates that buyers are more committed to their position G more con.iction behind the buying.
111

"omentum

112

/e Eont @ight %he "omentumN

113

/e Eont @ight %he "omentumN

11

/e %ake %he #ath !f $EA)% Resistance

11#

/e %ake %he #ath !f $EA)% Resistance

%his gi.es you D1:DER #R!+A+1$1%& of success

11,

leadingtrader.com

/hat is the path of $east resistance in relation to trading the markets0

11/

112

%rading /ith "omentum

-etfli> 2-@$P3

115

%rading /ith "omentum

-etfli> 2-@$P3

(ottom; (ottom; (ottom;

"omentum +elow Qero

"omentum :oes abo.e Qero 121

:oldman )achs

$uleB when slow momentum 64)! is a%ove :ero, focus on long setu0s K ignore short setu0s@ -hen it is (*DFmomentum, focus on shorts K ignore longs@

"omentum +elow Qero

"omentum :oes abo.e Qero 121

A1:

"omentum +elow Qero 122

:old

"omentum abo.e Qero

123

"omentum
6easures the s0eed and force of a trend Imagine a %all thrown in the air 'it loses momentum and comes %ac? down+ -hen 'slow+ momentum is 4(F8* :ero, 0ath of least resistance is to the (C3 side@ -hen 'slow+ momentum is (*DF- :ero, 0ath of least resistance is to the S*DD side@ Cse a 64)! with 21, 3,3 setting@
12

$eading%rader.comFet>

"A E Distogram 2setting 45'KA'A3

12#

%rading :olden Rules

12,

%rading :olden Rules

1) Be decisive: Take Action 2) Cut your losses short

12/

%he %ypical %rader

BUY
!rice

SELL

122

Use Stop Loss Orders To Control Risk

Sell order

Unlimited !ro%it

Sell order

Limited loss
B#$

Sell order

2
Sell order

125

)top,$oss C Risk
S8. /here do we place our stop,loss at the point of E-%R&0 S4. Dow do we trail the stop0

131

"inimising Risk 2stop,loss3

$eading%rader.comFet>

A.erage %rue Range 2A%R3

131

A.erage %rue Range 2A%R3

Apple 2AA#$3

A.erage %rue Range 2A%R3 is a measure of .olatility.

132

A.erage %rue Range 2A%R3

Eow Rones 1nde> @utures , 4556

Digh A%R readings reMuire /1EER stopsN

133

A.erage %rue Range 2A%R3

Eow Rones 1nde> @utures , 4556

Digh A%R readings reMuire /1EER stopsN

13

A.erage %rue Range 2A%R3

2setting 8K3

Rule @or )top,$oss? 4 > A%R @or e>ample? if A%R is eMual to 85 points' then use a stop,loss 45 points away from your entry. /hy0 +ecause 2A%R > 43 O 285 > 43 O 45 pts
13#

%railing )tops using 48 E"A

%rail your stops behind the 48 "o.ing A.erage 2E"A3 G the blue line.

13,

%railing )tops using 48 E"A

%rail your stops behind the 48 "o.ing A.erage 2E"A3.

13/

@ibonacci Retracement
"arkets will usually Retrace =5; to J8.6; of their pre.ious mo.es.

132

@ibonacci Retracement
$eading%rader.comFet>

135

@ibonacci Retracement

1 1

@ibonacci Retracement

1 1

an you spot the @ibonacci Retracements0

Eow Rones 1nde>

1 2

@ibonacci Retracement
Eow Rones 1nde>

1 3

@ocus on following your plan -!% whether youre winningFlosing

:i.e up mindset of confirmation of

confirmation. "ake a decisionN
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/hat do you need to do to achie.e your wealth goals0

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