Secrets of the Millionaire Traders Vol II

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"Tricks, tips and rules from interviews with Millionaire Traders - Volume II…"

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y small percentage of all traders aressful.

ome traders accumulate more thanlion dollars in trading profits.

t do the successful traders do differently?

hing for the answer to this question is what promptediews with several millionaire traders.

of the rules that millionaires use are familiar to all traders.s may be contrary to the common beliefs.

is volume II compiled from these interviews and follows onthe hugely influential first 25 rules, secrets and tips.

ver, some of the most powerful rules have been held backlume II…..

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Stop orders are easy discipline. They may help youcut losses short automatically.

An important factor is to place your stop when youplace your order. If you don't, you're tempted togive the market "a few more pennies", only addingto your potential loss.

But remember, you should use stop loss orderswith great discretion because stops that are placedtoo tight can put you out of the market with a lossvery quickly.

You can become "whipsawed" by poor placementof stops.

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When trading e-mini contracts, trading becomesvery thin in the last few days before the contractexpires. You may not find it so easy to exit at afavorable price, particularly if you have severalcontracts.

When trading commodities, the price of acommodity during the delivery month may bemore volatile. The beginning trader should moveinto later month contracts to avoid this addedrisk.

The profit potential in making and takingdelivery is one that should only be handled by theexperienced cash market trader.

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Although the price of corn historically goes downat harvest, one of the millionaire traders doesn't letthat influence his trading.

"Too many people try to trade seasonal trends, solook for a place to do just the opposite,"he suggests.

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This rule is one of the big keys some successfultraders use regularly. They trade divergence fromthe normal or from what is expected. If traders ingeneral believe the market is headed higher andthe rally fails, it's usually a good sell signal.

Wait for market traders in general to lean one way,then time a trade in the opposite direction.

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When you go against the trend, believing that themarket has either topped or bottomed, you aremaking yourself very vulnerable.

This can be a very costly lesson to learn, say themillionaires. They prefer to let the market priceaction prove that a top or bottom has been formed.

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If market rumors are bullish, then you should buyon the news.

But when the news reports turn into a reality, thenit is time to "sell the fact".

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There's an old stock market rule that says that bullmarkets can fall flat on their own weight whenprices get top heavy.

Be especially sensitive to bearish news if you'relong.

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Look for opportunities where the loss potential issmall in relation to the profit potential. Forexample, if a market is trading near its recenthistoric lows, it could mean a long position hasgreat upside potential in relation to possible loss.

Watching the trading range of a market over alonger time period helps you have the perspectiveto determine the odds.

Market fundamentals can also be helpful in findingthe "high odds" situation.

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Sometimes you take a position and within 48 hoursyou have more profit than you ever expected.

Rather than watching the market a few days tofigure out why the profit came so fast, themillionaires say "Take quick profits and run!"

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Most beginners tend to be bulls, which means theybuy markets that they think will go higher.

Since markets often fall faster than they rise, youcan frequently earn quicker profits by selling short.

Learn to trade from the short side of the market.

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The futures market is not kind to those whoprocrastinate. The rule of thumb the millionairesuse is to act promptly. This doesn’t mean youshould be impulsive, but if your judgement saysyou should liquidate a position, do it immediately.

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When your position is a loser and you decide toget out, don't make a 180-degree turn. Forexample, if you have been long and decide themarket is working against you, get out and standaside for a while before going short.

If you reverse a position you can be whipsawed -losing as the market goes down, then losing moreas the market moves up.

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If you want to be long, don't put a price limit orderin a couple of pennies below the market, hoping tofind a bargain.

People who try to squeeze an extra penny out ofthe market frequently find the market movesalmost to their target, then slips away.

In hoping for an extra penny, they may give upmuch more.

When you think it's time to do something, makeyour move.





You can identify major price trends by using linecharts, one of the fundamental tools of thesuccessful trader. The mistake that many tradersmake is to buy or be long while the markets arestill in a basic downtrend or selling short whenthey are in up trends.

Charting markets yourself or subscribing to a chartservice can help avoid costly errors of selling intoobvious up trends and buying downtrends.

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Some successful traders trade almost exclusivelyon this rule. They make bar charts. When pricesbreak through a trendline and trade outside of thetrendline for two or three days, it's usually a goodtrading signal. This violation of a downtrend lineis a buy signal; the reverse is also true for a sellsignal when an uptrend line is penetrated. Thetrendlines then give you some guidelines fordetermining stops.

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You frequently hear the market is in a "technicalreaction", which means that after a major move ineither direction the market has a tendency toretrace up to 50% of that move.

The millionaires would look for another chance tobuy when the price drops by 50%.

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This means finding out over what range a markethas been trading, then buying in the lower half ofthat range or selling in the upper half.

This rule is particularly useful in a trading marketor in a situation where the market is trading withina chart channel.





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When a market moves lower, but by a smalleramount each day, it may be a signal for an uptrend.

When the market moves up each day, but insmaller amounts, it's an early signal that adowntrend may be just around the corner.

These areas act as barriers that slow down priceaction. When you hear a market commentator saythere is technical support at a certain price level,chances are good that he is looking at a line chartwhich shows an old congestion area where tradingtook place over a narrow range for several weeks.

Major price moves may develop when the marketbreaks out of a trading area. Usually the longer themarket has been chopping around in the tradingarea, the further the price moves once it breaksout.





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A key reversal of an uptrend is usually indicatedwhen prices make new highs on high volume, butthen close lower than the previous day's close.

A key reversal of a downtrend is a move into lows,then a strong recovery during the day with a closehigher than the previous day's close.

A key reversal may come in the form of a two-dayreversal when on the first day the move is into newhigh ground and a close on strength.

On the second day the market may open near thehigh close of the previous day, then close sharplylower.

An island reversal is formed when prices gap intonew highs on one day, then gap lower the nextday.



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When you observe a chart pattern that resembles a"head and shoulder", it is usually a sign the marketis topping out.

Head and shoulder patterns are not obvious untilthe second "shoulder" is formed by a rally orsideways pattern.

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When the market action on a price chart indicatesa large "M", the price signal is to sell.

When a "W" is formed, it signals a move higher.



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After a market has hit a peak the second or thirdtime, it is a bearish signal. The reverse is true atthe bottom.

The millionaires watch these signals and use themas part of their overall trading strategy.

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When volume and price go up together, it's abuying signal. When volume increases and pricesgo down, it's a sell signal.

But when volume goes down, regardless of pricedirection, it's a signal to stand aside, or expect amarket reversal.

Click here to find out more about the futuresmarket and how to "read" volume.




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If open interest is increasing as prices rise, it's a

w

buying signal, especially if volume increases at thesame time.

The reverse is also true. If open interest increaseswith lower prices and on good volume, it is aselling signal.

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iscover The Way To Trade:



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ties - http://www.the-way-to-trade.com/commodities.php

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"Secrets of Millionaire Traders Volume II"

I hope you have enjoyed reading volume II just as muchas the first set of 25 secrets of millionaire traders.

If you haven't already done so, please take a moment tocheck out the Netfutures site and take a look at some of

the services they offer.

Best regards and wishing you continued success withyour trading.

Paul Handforthwww.The-Way-To-Trade.com

Avalanche Direct Limited





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Secrets of the Millionaire Traders Vol II