Trade Company Money by Day Trade Institute
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The most important consideration in trade profit and wealth accumulation is not so much the size of your winning trades, but management of trade loss.
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Consider the following Company best practices:
Trade Plan – Before placing a trade, have a trade management plan in mind.
Trade Protection – Never leave a trade open without some type of mechanism to address any possible trade losses.
Address Trade Losses – If a trade hedge is used, do not just let them float through time, but address them actively to remove the hedge as soon as practical.
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“Now” and Pending Trade Positions
These trade position are used for trade entry or for trade protection and management.
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Buy Market – Now Buy – Executes a buy entry position at the “right now” market price.
Sell Market – Now Sell – Executes a sell entry position at the “right now” market price.
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Buy Stop – Up-Market / Pending Buy Entry / Up-Market Continuation – This is a pending buy trade used if the market is expected to continue upward.  As in the image below, consider that entry into the market is desired, but only if the market price crosses the resistance line.  Place a pending Buy Stop that will be automatically executed for trade entry if the market price crosses a resistance line and continues upward.
Sell Stop – Down-Market / Pending Sell Entry / Down-Market Continuation – This is a pending sell trade used if the market is expected to continue downward.  As in the image below, consider that entry into the market is desired, but only if the market price crosses the support line.  Place a pending Sell Stop that will be automatically executed for trade entry if the market price crosses a support line and continues downward.
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Buy Limit – Down-Market / Pending Buy Entry / Up-Market Retracement – A pending buy trade to be executed for trade entry if a down-market price reverses off a support line and begins a retracement behavior in the up-market direction.
Sell Limit – Up-Market / Pending Buy Entry / Down-Market Retracement – A pending sell trade to be executed for trade entry if an up-market price reverses off a resistance line and begins a retracement behavior in the down-market direction.
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Stop Loss And Take Profit
The most basic trade protection is a Stop Loss.  It is simply exiting a trade a predetermined price when a trade runs in the opposite direction.
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Buy Stop – Pending Loss Exit – A pending exit market trade position that is automatically executed if the price moves in the opposite direction of the trade to prevent more than a predetermined loss against the buy trade. 
Sell Stop – Pending Loss Exit – A pending exit market trade position that is automatically executed if the price moves in the opposite direction of the trade to prevent more than a predetermined loss against the sell trade.
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Buy Take Profit – Pending Profit Exit – A pending exit position that is automatically executed if the market price moves in the projected up-market direction of the original trade. In the image below, the take profit was not reached before the market turn against the trade to show an example of a stop loss situation. 
Buy Take Profit – Pending Profit Exit – A pending exit position that is automatically executed if the market price moves in the projected up-market direction of the original trade. In the image below, the take profit was not reached before the market turn against the trade to show an example of a stop loss situation.
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A stop loss can be a most effective form of trade management, as it often keeps losses smaller, it removes the complexity of managing a hedge and price averaging strategies to minimize or eliminate the loss, and it releases the day traders attention and psychology from the bad trade and lets them move on to a better trade.
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A take profit can be placed as a pending trade position that will automatically be executed. It is recommended that the pending take profit be used. Another take profit method is to watch the market and manually exit the trade at a desirable market price, but this should be a limited use method.
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Trade Placement
The best trade positions for “right now” and pending trade entry and exit is not just randomly placed. Trade placement is a tactical position that improves the likelihood that what is expected to occur is given the best opportunity to result.
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Consider the following:
——— Buy Entry Outside A Support Line – Enter the market with a buy position above a support line to allow unrestricted up-market movement.
– – – – Sell Entry – Outside A Resistance Line – enter the market with a sell position below a support line to allow unrestricted down-market movement.
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——— Buy Take Profit – Inside A Support Or Resistance Line – The market price is moving down-ward. Set a sell take profit just before or on the inside of a support or resistance line.
– – – – Sell Take Profit – Inside A Support Or Resistance Line – The market price is moving down-ward. Set a sell take profit just before or on the inside of a support or resistance line.
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Support And Resistance
Consider the above graphic again for this discussion.  Support and resistance can have factual basis to cause the market to hesitate at certain prices, change direction or retrace, etc.  However, much of market behavior that creates the appearance of a support and resistance in market price is simply due to the collective choice of those in the market to not buy or sell beyond a certain point. A lot of this is simply driven by the psychology of those in the market and are purely arbitrary, but mean something as so many elect the same behavior at these arbitrary price points. As such, meaning is given to these now appearing support and resistance lines by others and that simply strengthens those lines.
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——— Stronger Trader Drawn Angular or Channel Support Or Resistance Lines – These lines are drawn based upon previous market behavior and patterns.
——— Weaker Emotional Support Or Resistance Lines – Emotional as there is little reason for the line to create support or resistance. In this case it is simply that the line was associated with a more even number of 1.60000.
– – – – Stronger Pivot Point Line Automatically Statistically Drawn – These are automatically drawn lines based upon long historically used market management lines.  Pivot Points are drawn based upon the previous trade day’s average of the high, low, and close price to set the first or central Pivot Point. Other lines follow based upon the same average, average daily range, and other factors.
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Hedge – Opposite Position Strategy
A hedge is a buy and a sell position running at the same time that essentially locks in a loss between the entry price of the buy trade and the entry price of the sell trade.
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It can be seen that the hedge lock in a loss defined by the buy entry position and the sell entry position. That locked in loss or hedge can then move up and down with the market. As one side of the hedge makes a PIP, the other side of the hedge loses a PIP. In other words, the hedge locks in a certain loss.
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Clear A Profitable Hedge – To turn a losing hedge into a profit is discussed below in more detail. Quickly however, one method is to keep the hedge in place until there will be just the right market movement to clear each side of the trade for a profit.  In the above case, let’s say that the market price moves down and puts the Sell Trade in profit at its current position. Close the Sell Trade for a profit at the moment the market is turning up which will then turn the losing Buy Trade into a profit as the market continues to move up.
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—– Buy Trade – This may be the original buy trade position or the second trade position to create a hedge with an original sell trade. This buy position could have been entered manually, with a pending Buy Stop, or pending Buy Limit.
—– Sell Trade – This may be the original buy trade position or the second trade position to create a hedge with an original sell trade. This buy position could have been entered manually, with a pending Buy Stop, or pending Buy Limit.
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Perfect Hedge (or Symmetric Hedge) – 1 to 1 Lot Size – A perfect hedge is when the buy and sell trades are equivalent in their lot size. For example:
♦  0.5 lot size buy trade – to – 0.5 lot size sell trade.
Asymmetric Hedge – This occurs when one side of the hedge is at a different lot size. For example:
♦  0.5 lot size original buy trade – to – 1.0 lot size hedging sell trade to try to make up for the buy losses more quickly, if the market continues downward.
♦  0.5 lot size original sell trade – to – 1.0 lot size hedging buy trade to try to make up for the buy losses more quickly, if the market continues upward.
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Why hedge? It is a way to put your trade on hold and just let it run through the market without concern that it will lose any more, yet it will not usually make any profit either. The hedge can be manually placed, such as a situation arises and one must leave trading.  If the trade is in a losing position, it may be best to put a hedge on it to ensure no further loss. This let’s the trade deal with the situation the later that day or the following day..
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Hedging Best Practice – If a hedge is set, to allow the hedge to run to the following day. This will give time for the trader to clear their mind and emotion around the hedge and let the market develop new market conditions different from what caused the hedge to be needed. With a fresh mind and fresh market conditions, the hedge can be worked to minimize or even eliminate the earlier hedged loss.
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Hedging Details
Discussed is a more detailed description of hedging.
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Buy Original Position / Sell Protective Hedge
Buy Side Exits For A Profit / Sell Side Exits For A Profit = Two Profitable Hedge Trades
♦  Buy Entry Price – An original buy entry was made and then the market turned downward against the upward buy trade.
♦  Pending Sell Stop Hedge – As part of trade placement best practice a pending Sell Stop pending hedge position was placed.
[ 1 ] – Hedge With Sell Side Profitable / Buy Side In Loss – The market priced turned down enough that the hedge was executed.
[ 2 ] – Continued Sell Side Profit / Buy Side Loss – As the market continues downward the locked in loss stays the same, as the sell profits increase as the buy losses increase at the same amount.
[ 3 ] – Let Hedge Run With Buy Profit – The hedge was allowed to run until the next day. It was determined that the market was going to move downward aggressively and the hedge could be cleared for a profit. The buy side of the hedge is now in profit and so it is exited for a profit.
[ 4 ] – Sell Profit – As the market turns downward as the indicators signal, then the sell side of the hedge turns from a loss into a large profit.
[ 5 ] – Loss Lock – Again, throughout this time period the loss of a certain amount was locked in by the hedge.
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It might be asked, why hedge if the market is simply going to come back anyway and the original buy trade would have cleared for a profit anyway. Good point, if we knew the market was going to do that. However, we do not know what the market is going to do, so the hedge allows us to protect against large market movements that may not return or return soon and gives us safety and options to deal with the trade later, often to realize a profit or greatly minimize losses.
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Hedge With Buy Price Average
There is one more addition to the above discussion that can occur with the hedge example above.
♦  2nd Buy – At this point the Company indicator signal that the market will be moving up. Keep the hedge in place, but place a second buy position.
[ A ] – At this point the hedge is in place to protect the original position for a most favorable time to open the hedge at [ 4 ]. Yet here the buy position is now well profitable. It is possible that the sell side of the hedge could be taken out for profit.  
[ B ] – At this point the Company indicators show that the market price has reached a high and the original trade was profitable and exited. As the Company indicator signal that this is a local market high, the second buy is profitable and is also exited. There have now been two profitable buys taken out. As the market price is turning down, the sell side of the hedge is now also profitable and exited as previously described.

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Sell Original Position / Buy Protective Hedge
Buy Side Exits For A Good Profit / Sell Side Exits For A Small Loss = Net Profitable Hedge Exit
♦  Sell Entry Price – An original sell entry was made and then the market turned upward against the downward buy trade.
♦  Pending Buy Stop Hedge – As part of trade placement best practice a pending Buy Stop pending hedge position was placed.
[ 1 ] – Hedge With Buy Side Profitable / Sell Side In Loss – The market priced turned up enough that the hedge was executed.
[ 2 ] – Continued Buy Side Profit / Sell Side Loss – As the market continues upward the locked in loss stays the same, as the buy profits increase as the sell losses increase at the same amount.
[ 3 ] – Let Hedge Run With Sell Profit – The hedge was allowed to run until the next day. It was determined that the market was going to move downward aggressively and the hedge could be cleared for a profit. The buy side of the hedge is now in profit and so it is exited for a profit.
[ 4 ] – Sell Profit – As the market turns downward as the indicators signal, then the sell side of the hedge turns from a large loss into a small loss. The trade is exited for a much more favorable small loss that originally expected.
[ 5 ] – Loss Lock – Again, throughout this time period the loss of a certain amount was locked in by the hedge.
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Hedge With Sell Price Average
There is one more addition to the above discussion that can occur with the hedge example above.
♦  2nd Sell – At this point the Company indicators signal that the market will be moving down. Release the buy side of the hedge for a profit, and then place a second sell position.
[ A ] – The market has moved down as expected and the second sell is profitable.  
[ B ] – The Company indicators signal that this is a local market low, the second sell is profitable and is also exited. There have now been a profitable buy and sell trade exited. As the market price is at a local low and the Company indicators signal an upward turning, the sell side of the hedge is now still not profitable, but the loss has been minimized. Exit the original sell position for a loss, but the net on the total trade is a profitable gain.
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Price Average – Same Position Strategy
This is another popular method for minimizing a trade loss with a second entered position.  In this case the second position will be in the same direction as the first position The hedge method discussed above is a second position in the opposite direction or the original trade.
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The main point about the Price Average method is to place a second and go just far enough in the trade that the loss from the first trade is just zeroed out by the profit of the second trade. Consider:
♦  Loss from the original buy trade + profits from the second buy trade = +1 in this example:
Step 1 – Original trade shows a -15 PIP loss.
Step 2 – A second buy trade is placed when a local market price low is signalled by the Company indicators.
Step 3 – The market moves upward.  The original buy is now -7 PIPs and the second buy is now +8 PIPs = +1 PIP profit.
♦  Loss from a original sell trade + profits from a second sell trade = 0 in this example:
Step 1 – Original trade shows a -26 PIP loss.
Step 2 – A second sell trade is placed when a local market price high is signalled by the Company indicators.
Step 3 – The market moves downward.  The original sell is now -13 PIPs and the second sell is now +13 PIPs = 0 PIP for no loss and no profit.
♦  The second position can be another trade in the same direction as the original trade. That is a buy, followed by another buy, or a sell followed by another sell.
♦  It is possible that a hedge can be managed to act like a price average trade.
♦  it is not necessary that price average zeros out the loss.  It is perfectly acceptable to use Price Average to limit the loss by gaining back part of the loss. For example:
Step 1 – Original trade shows a -35 PIP loss.
Step 2 – A second buy trade is placed when a local market price low is signalled by the Company indicators.
Step 3 – The market moves upward.  The original buy is now -25 PIPs and the second buy is now +8 PIPs = -17 PIP for a smaller loss.
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Buy Price Average
Ultimately Two Profitable Buy Trades
♦  Buy Entry – A buy entry position is place, but the market moves against the trade.
[ 1 ] – Trade losses continue as market price continues downward against the trade.
[ 2 ] – Company indicators signal a local low and that market price will begin retracing to the up-market buy side.
♦  2nd Buy Entry – As the market will be moving upward, take another buy position as Company indicators are signaling a proper buy position.
[ 3 ] – The market is continuing upward. The original buy position losses are less than before.
[ A ] – The 2nd Buy position is profitable as the market moves upward as signaled by the Company indicators.
[ 4 ] – The original buy position is now slightly above the original buy entry level and is profitable. Although the original take profit has not been reached, manually exiting the trade for a profit.
[ B ] – The 2nd Buy position is also profitable. The Company indicators signal that market price will be turning down and that this local high in market price is the best place to take profit on the 2nd Buy.
♦  Overall Profit – A highly profitable 2nd Buy trade + a slight profit with the original buy trade = Good Price Average profit.
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Sell Price Average
Ultimately One Profitable Sell Trade And One Small Sell Loss
  Sell Entry – A sell entry position is place, but the market moves against the trade.
[ 1 ] – Trade losses continue as market price continues upward against the trade.
[ 2 ] – Company indicators signal a local high and that market price will begin retracing to the down-market sell side.
♦  2nd Sell Entry – As the market will be moving downward, take another sell position as Company indicators are signaling a proper sell position.
[ 3 ] – The market is continuing downward. The original sell position losses are expected to be less than before.
[ A ] – The 2nd Sell position is profitable as the market moves downward as signaled by the Company indicators.
[ B ] – The 2nd Sell position continues to be more profitable. The Company indicators signal that market price will be turning up and that this local low in market price is the best place to take profit on the 2nd Sell.
[ 4 ] – The original sell position is now slightly above the original sell entry level and is showing a slight loss. Although the original take profit has not been reached, manually exiting the trade for a slight loss is the best we are going to be able to do for the original sell position
♦  Overall Profit – A highly profitable 2nd Sell trade + a slight loss with the original sell trade = Good Price Average profit.
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Every trade needs to have a trade protection plan before the trade is placed and to be a part of a complete trade position.  It is irresponsible to trade without a trade protection and trade exit strategy for profit and for loss minimization.
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The above hedge, price average, and combination trades are part of coaching. They are introduced here to simply show that there is little reason not to see day trading as viable activity where account profits can be regularly accumulated by regularly closing profitable trades and losing trades minimized or turned for an overall profit.  
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You will learn to master the above trade protection strategies by upgrading into coaching with the Company.
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