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WINNING TRADING
STRATEGY
Best Trading,
Johan Nordstrom
http://www.TradingWalk.com
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© Copyright 2015 by Johan Nordstrom. All rights reserved.
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information in regards to the topic and issue covered. This
information is for your personal use only. You cannot
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TRADING PLAN
If you have a trading plan, you will always know how to act in
the market and where you are going to place your trades and
take your wins and losses. Your trading plan primarily consists
of a set of rules you should follow to profit in trading. You will
take out much of the anxiety being in a large losing position
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when you, for example, have stated in your trading plan; you
only risk one percent per trade.
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TRACK YOUR TRADES
I know many traders that cannot figure out why they do not
have the returns they know is possible for them to have. I
have tried to explain to them that they need to track what
they are doing to identify bad habits. Without a trading
journal, it is hard to remember exactly what made you act in a
certain way at the time.
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trades there is no feedback for you to fall back on when you
make mistakes and do not follow your plan.
I recommend you track your trade after each action you take
or before you leave the computer for the day. Tracking the
next day often make you forget much valuable information.
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MONITOR YOUR MIND
First, how much risk you take in every trade, should be stated
in the risk/money management section in your trading plan.
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Read more here: tradingwalk.com/top-5-trading-books-every-
trader-should-have-read/
The Strategy
This is mainly a reversal strategy of the micro trend in the
direction of the macro trend. An example can be a micro
downtrend in 1h chart but the daily chart, macro trend, is in
an uptrend. The strategy can be traded both long and short
and as a day trading strategy or swing trading strategy on
your favorite time frame, we mainly trade this on daily, 4h and
1h time frame. It is a ABC setup, but we will get to that.
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Setup
We can see that we have a downtrend, 1) the price action start
in the upper left corner and is now in lower right, lower lows
and lower highs 2) the red candle bodies are bigger than the
green ones (the daily is also in a downtrend). Therefore, we
look at a short trades. Now to the setup, to have a short setup
we want:
Trading Tip!
Round numbers often act as support and resistance, therefore,
place orders at these levels or just low/above round number
levels.
Trading Tip!
Symmetry is importaint, therefore, measure the A move and
anticipate that the C move might be similar. With symmetry
you increase the probability of a win.
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Entry
To find the area where the C move might end. We draw a Fib
extension between the low and high of the A move to get our
short area between the 1.279 and 1.618 extension. When we
have the area, we look left for a green small candle body and
place the entry at the open of that candle, close to 184.100.
Target
Exit the position at 182.500 closest round number to the open
of the red candle at the low point of the A move, giving us a
positive risk reward (reward is greater than our risk).
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Stop loss
Place a stop loss order a above the short areas closest round
number (above Fib 1.618 extension [184.575], closest round
number [184.600]) 182.620.
The outcome
Like many other times, we traded this strategy and produced a
winning trade.
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RISK MANAGEMENT STRATEGY
Example
Your initial account capital is $100.000. You invest everything
and suffer a 50 % loss, account decrease to $50.000
(=$100.000*0,5). You invest everything again and get a 50 %
gain, account capital increase to $75.000 (=$50.000*1,5), but
that is $25.000 short of what you initially had. You need a 100
% gain after a 50 % loss to come back to break even. Have a
risk management strategy so you do not end up in a deep
drawdown impossible to recover from.
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The Risk Management Strategy
I hope you understood the need to have a risk management
strategy. It is time to calculate how many contracts you should
trade with depending on how much of your account in percent
you are willing to risk per trade, say you only want to risk one
percent. You can then calculate your risk per trade in $. With
your $1.000.000 account:
Your risk for one trade is $10.000. Now you calculate the risk
for each contract depending on where your entry and stop-loss
is. For this example, you want to buy and placed a limit order
at $40 and your stop-loss at $37. The risk per contract is then:
Now that you have risk per trade and risk per contract, you
can precisely calculate the number of contracts you can buy
for the security, taking your risk per trade divided by your risk
per contract, you will get the number of contracts you should
buy.
You can now enter your trade with 3.333 contracts and if your
stop loss is hit you will know that you only lost one percent of
your account and you will live to trade another day!
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This is a simple risk management strategy, it is an essential
strategy you understand and apply to your trading if you want
to achieve trading success. Avoid blowing up your account, like
so many traders do every day.
Click here to read my blog post “Do Not Dig Yourself Into A
Hole”
Read more here: tradingwalk.com/trading-rules-do-not-dig-
yourself-into-a-hole/
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TAKE ACTION
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exceptional at making excuses, especially since it is an easy
way to make ourselves feel better about not taking action.
There are plenty of excellent excuses out there for not doing
what you said you were going to do - but in the end they are
all just excuses. Are excuses going to execute that trade for
you? Are excuses going to make you a better trader? Make
you more money? I highly doubt that an excuse is going to
magically manifest itself in a physical form and take care of
what you did not.
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You have motivation, and that is great, so now it is time you
get started today! I am sure you had enough time to read this
ebook, so why not set aside 15 minutes to begin working on
becoming a better trader?
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TRADING BOOKS PACKAGE + BONUS
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CONCLUSION
The next step is to take action, practice and trade this strategy
so you learn it by heart. I belive in you!
One more thing: if you liked this book, would you be kind
enough to leave a review and feedback on this, email me at
johan@tradingwalk.com
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CONNECT WITH ME
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