1.
Trading Rules And Conditions Apply
http://www.netpicks.com/trading-rules-and-conditions-apply/

2.
Having a set of trading rules and
conditions that you look for when
searching out trading opportunities is
really one of the keys to success.

3.
It doesn't matter if you use a 80-90%
mechanical system like Counterpunch
or DST from Netpicks that plots out
the opportunity or you use a
discretionary method based on sound
market truths.

4.
Without rules or demanding certain
market conditions exist, you are most
likely just guessing and that is no way
to expect a long and successful trading
career.

5.
With the mechanical systems, the
trading rules and conditions are built
into the system and once an
opportunity sets up according to the
system rules, all the relevant
information (entry, stops, and targets)
is printed on the chart.

6.
For many people, this is probably a
great route to go in their trading
career.
http://www.netpicks.com/trading-systems/

7.
Executed properly, you do have a
slightly easier time bypassing many of
the biases traders face during their
trading career. The key to mechanical
trading is sticking to the trade plan
perfectly.

8.
Discretionary is different but contrary
to the name, there are still rules
involved. Success in trading
discretionary means not wishing and
hoping the setup is a trade or seeing
things that are not there.

9.
It involves conditions that must be
present and close is close enough is
often times an overriding rule.

10.
I am currently short the USDCAD Forex
pair and I think breaking down the
trade will highlight discretion, simple
concepts, and truths about the market
that we often hear.

11.
The USDCAD has been moving up for
quite a while and this chart shows how
the pauses in the uptrend resolved.

12.
"A" is a beautiful test of the lows of
the range solidly rejected and price
broke with momentum
"B" has lower momentum into this
range but strong break to the upside

13.
A range formation takes place with a
brief test to the upside that was
rejected.

14.
The weekly chart superimposed at the
bottom shows the break of the
support zone.

15.
Once the support zone broke with
momentum, I was only alert for a
pause and then another leg down.
The key for this trade was:
Momentum on the break

16.
After the break I got the pause I was
looking for. These was a bullish green
candle that failed to take the currency
pair much higher. Once the
momentum showed up to the
downside, I placed a sell stop order to
get in when the market broke lower.

17.
The downward triangle shows the
trade trigger and the same day the
trade started to take heat. The next
day the trade was well under way.

18.
I am well aware that the overall trend
of this pair on my time frames is to the
upside. That simply means that I will
not let a rally go too far before exiting
on the trade.

19.
The reason for the counter-trend trade
is simple: The price action and
structure gave me a valid reason to
take a short trade.

20.
The trade dropped 175 pips from entry
and is finding itself held up at the area
marked "A" in the first chart.
There were conditions that I needed to
take place for this particular trade:

21.
Steady directional trend
Higher momentum thrust into "B"
than previous moves
Range formation
Break of support zone
Some type of flag formation

22.
Some may classify those as "rules" but
for me they were conditions of the
market that had to take place in order
to be interested in a trade to the
downside.

23.
The rules encompass the entry,
protective stop, and management

24.
For the entry, I needed a strong break
of the pattern to the downside which
occurred. This allowed me to stop my
way into the trade which would mean
price was heading in my direction at
the time of entry. The stop was placed
above the range just outside the range
of failure tests.

25.
Management would be scale at 1R and
watch for declining interest in the
downward move. This can take many
forms but the key is to ensure that
neither fear nor greed have any place
in the decision making process.

26.
You can see that this was a well
thought out swing trading opportunity
which was only possible because
conditions and trading rules worked
hand in hand. Both must be present in
order to set yourself up with viable
trading opportunities and to put your
money at risk.

27.
I will also make a case to not take a
trade but that will rely on the chart. I
will use what I know about how price
moves and what things can mean to
not involve myself in a possible trade.

28.
Too many listen to the news, read the
forums, or use methods that don't
take into account the actual mechanics
behind the market. Every reason that
you come up with to trade or not to
trade must come from you.

29.
Much like a lawyer in court, every
piece of evidence is weighted and
stacked upon previous declared
evidence. They build their case to the
best of their ability, rest their case, and
then let the results play out as they
will.

30.
As traders, that is what we must do.