how to exit a tradeTraders tend to focus too much on fine-tuning their entry rules and choosing between stocks. Picking the right exit can be just as important, if not more important, than picking the right entry. After all, it is the exit that locks in your profit (or loss) and ultimately impacts the equity in your trading account. Read more »

course on stock market trading imageTrading in the financial markets is not an easy thing to do but it is something that I decided I would set out to achieve many years ago when just a young man. Besides, finance is a passion of mine and I like nothing better than fiddling with trading systems and scouring various stock charts. Along with music and travel, it’s one of the things that I’m most interested in and it’s been that way since long before I even got a job in the industry.

It’s because of this passion that I decided to put together my own course on stock market trading but this wasn’t an easy decision at first. You see, at first I worried about giving away my knowledge. I worried that if I gave away all my trading systems (and code included) that it would be harmful to me and that people would get all this knowledge for just a tiny cost.

Most courses are not worth a penny

You see, in the past, traders have been extremely secretive about giving away their systems but what I have found is actually the opposite. In fact, I’ve found by giving back to the community I’ve become a much better trader myself. I now have a responsibility to provide students with the right information and that gives me the motivation to learn even more about trading.

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Small cap stocks, or stocks with low volume, can be attractive for some traders who are looking for companies that the rest of the market might be ignoring. If a stock has low volume, it can often be near a reversal point as buying or selling peters out.

Similarly, small cap, micro-cap, and penny stocks are attractive because they’re not followed by most investors. Banks and funds focus on large cap stocks as these are more able to absorb large investments. As a result, it can take very little to push a smaller stock up to new highs, or down to new lows.

Of course, this also means that smaller cap stocks are more illiquid and therefore dangerous. High spreads mean that you’ll need a bigger percentage move in order to break even while it’s also harder to exit trades.

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Designing a trading system is about following the right processes and being conservative in your assumptions. I have already talked about the pitfalls of selection bias and I’ve spoken of the importance of stress-testing a trading system thoroughly. Now I shall answer the question ‘what is slippage’ and how does slippage affect trading system performance.

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