Online Guru Trader Trade To Win Workbook€¦ · Workbook By Mr Thomas Yin OnlineGuruTrader.com . Page | 2 Contents Disclaimer 3 Your Transformation 4 Professionals Vs Amateurs 5

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Online Guru Trader

Trade To Win

Workbook By Mr Thomas Yin

OnlineGuruTrader.com

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Contents

Disclaimer 3

Your Transformation 4

Professionals Vs Amateurs 5

Trading as a Business 6

Account Size 7

Analysis and Trading 8

Psychology 9

Types Of Orders 10

Various Financial Vehicles 12

Technical Analysis 13

OGT Analysis Checklist 32

8 Criteria flowchart 33

Money management (managing your risk) 34

Trading Plan 35

Record keeping 36

10 Commandments of Trading 37

Champion Trader 38

Annex 39

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Disclaimer

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Your Transformation

The Ultimate Success Formula

(1)

(2)

(3)

(4)

(5)

(6)

Now that you know the Ultimate Success Formula. Here is the ritual you must do every day and that is to

consciously remind yourself about the Ultimate Why. They will give you the unlimited drive to overcome

anything.

Timeframe to trade – timeframe to trade depends on each individual’s character, risk appetite and

available time allocated for trading. This is the part to determine what type of trader you are depending on

the timeframe that is suitable for you based on your available time to trade and not based on the timeframe

you choose.

Day trading – getting in and out within the day, no overnight positions, very short timeframe, lots of time and

effort needed

Timeframe used – 4 hours or less

Data needed – live data

Time & effort needed to be invested – 6 hours minimum a day

Swing trading – getting in and out within a few days to a few weeks, positions are hold overnight

Timeframe used – 4h hour to 1 day

Data needed – live data for less than 1 day timeframe and end of day data for 1 day

Time & effort needed to be invested – 1 hour minimum per day

Position trading – getting in and out within a few weeks to a few months(even a few years), positions are hold

overnight

Timeframe used – 1 day to 1 month

Data needed – end of day data

Time & effort needed to be invested – 6 hour minimum per month

Getting winning trades depend mostly on matching (1) the timeframe settings for the charts and (2) the time

allocated by you for trading and monitoring the markets. You will miss some trades by not putting in enough

time to monitor the markets because when trades are trigger, you’re not around to trade them. Those trades

that you miss will have winning trades in them. By missing winning trades, you will have a difficult time trying

to be profitable. And it doesn’t matter whether you miss losing trades or not because the main aim here is not

to miss winning trades. The key aspect of becoming consistently profitable and successful in trading is about

consistently getting in on the winning trades and not miss any of them.

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Professionals Vs Amateurs

Here’s your assignment/exercise. Read through the statements and circle the statements which hold true to you at this very moment now. And set in your calendar to remind you to come back to this exercise again 3 months from now, 6 months from now and 1 year from now. If you are reading these 3 months, 6 months or even 1 year from now, read through the statements and ask yourself which statements hold true for you now. Is it different from the first time you did this exercise? The purpose of this is self-awareness and self-discovery and discovering what elite professional traders do and think. So that you can model from them and come back after months or years to review these to see for yourself whether you’ve grown.

Professionals

Find reasons not to go into a

trade

Knows there is no secret to

successful trading

Knows there is a chance to lose in

every trade

Knows trading and gambling is a

big difference

Follow rules strictly knowing it’s

their only chance for survival

Amateurs

Find reasons to go into a

trade

Thinks a perfect system will

help them

Expects to win every time

and don’t expect to lose

Thinks trading and gambling

are slight/no difference

Thinks they can bend the

rules a bit for many reasons

which is valid for them only

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Trading as a Business

Trading is/isn’t a zero-sum game. Why?

Commission Example 1 Joe has an account size of $5000 and Jane has an account size of $20000. Both place the same trades buying XYZ and their commission cost is $10 for the trade. What is the commission cost in terms of percentage of their account size for Joe and Jane?

Example 2 Joe has an account size of $5000 and every time he makes a trade, the commission charge is $10. If every week Joe only makes one trade, how much commission would he had paid by the end of the year?

Slippage

Expenses

The above are the major barriers to your trading business success and you got to have a high awareness of

this. Most traders are not successful because either (1) they thought that commissions and slippage are low,

or (2) they know commissions and slippage are high yet they are certain how high they are and cannot

visualize how bad it can affect their trading success. Now that you know the major barriers and know for a fact

that you are already in a slight loss whenever you make a trade due to the above mentioned, subconsciously

from now, you will naturally take each trade that comes along your way with much higher importance,

awareness and seriousness. That’s the goal of this section which is to unlock your subconscious mind to have

clarity on what hinders your success in trading.

Accounting for expenses and income is a must. The only way to achieve it is through record keeping of your

profits and losses.

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Account Size

Your account size is your business capital.

If your account is too small, it’ll not be motivating enough for you to pursue trading success. Imagine making a

dollar or two a day from trading spending 1 to 2 hours a day on trading (example just to illustrate the

importance of not having an account too small).

Most people do not follow through to trading success because they just make too little every month

compared with the effort they put in that they just feel it is not worth carry on doing it. This is due to their

trading capital being too small. Most ended up taking too much risk in a single trade which also lead to more

stress when taking more risk. When stress is up, ability to reason goes down.

You should not start with a big account as well. Because if you cannot make a small account grow bigger then

a big account would not grow bigger too. Another reason is because having too big an account will increase

your stress level as you tend to get more attached emotionally to your trades.

Start with an account size that is just right where there is minimum stress and build your capital from there

like a snowball rolling to become bigger. Start with an amount that you are comfortable with, and you are

willing and able to do without.

Everyone’s financial status and income level is different but as a generally rule of thumb, the capital amount to

start with should not be less than 1 month of your gross salary/income. Typically, a person should be setting

aside minimum 1 to 3 months of his monthly gross income as a starting point for trading capital.

The only reason to trade/invest is for income. I’ll start with a capital that I can afford to lose and this capital

amount is $ . I must make at least % returns on capital a month and that’ll be at least a total

income of $ at the end of one year. (This amount must be motivating for me). I’ll not withdraw

all my income from the above and will re-invest them into my trading account for compounding results. The

purpose is to ensure my account size is big enough to achieve a sizable amount of income per month that I

desire.

In order for me to achieve the goals above, I MUST put in TIME and EFFORT EVERY SINGLE DAY.

I MUST put in of effort a day in pursuing and achieving the goals above.

To be comfortably trading full-time or part time, write down how much income you need per month from

trading that will enable you to lead a comfortable lifestyle. That amount is 2% of your capital amount.

Conservatively, a full-time trader at least makes 2% of his capital per month. Typical performance of a full-time

trader is between 2% to 8% on average per month. But in order to calculate comfortably to convert into full

time trading, we use 2%. Calculate and write down the amount of capital you need to become a full-time

trader.

Do what you have to do until you can do what you want to do (Oprah Winfrey)

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Analysis and Trading

Institutions separate analysts and traders. Analysts are paid to be right. Traders are paid to be profitable.

Analysis is never ending and you can never be totally complete on your analysis. Therefore, the key is not to

analysis more data, information or be complete but to analysis enough so as to reach a decision. And you back

up that decision with money management plan.

There are two objectives whenever we trade. One is to make money and another is to learn and improve.

Most only focus on the first objectives and that’s why they never become successful traders.

More than 90% of traders lose money. The top ten financial traders in the history of the world are not even

half the time right, not even 50%. But they are the most successful the world has seen. That is mainly because

they mastered the 3 pillars of trading success. I called it the 3 Ms. And that is Mind (psychology), Method

(analysis method) and Money (money management). And successful traders keep their winners and cut their

losers. Successful traders know the edge (advantage) they need and they wait for the edge to come.

The edge we are talking about is not winning rate. You can have very high winning rate and still lose money.

The edge you will have is positive expectation. Most have negative expectation and they do not even know.

Understanding and having positive expectation is important if you are going to have an edge. Formula for

expectation is

e=(wr X aw)+(-lr X al)

e = expectation (edge) wr = winning rate (winning probability) aw = average winnings lr = losing rate (losing probability) al = average losses

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Psychology

We lead boring lives and trading is one of the most exciting activities on earth. You cannot feel excited and

make money at the same time. Either you make money and feel bored or you lose money and feel excited.

Reason to trade is for income, not excitement.

We all have self-sabotage traits (aggression, frustration, unhappiness and stress within ourselves) inherent in

us waiting to be let go. We will vent our aggression on ourselves through trading since no one cares and it’s

one way to let go without any interference.

The most effective way that can eliminate all negative emotions and set your psychology right for trading is

the feeling of gratitude.

Try feeling stressed and grateful at the same time. You can’t do it and nobody can. This is a fact because it’s

biology. When we experience stress, our body will produce a hormone called cortisol. And cortisol has the

ability to reduce our IQ by half. Imagine when your IQ is halved, will you be making good decisions or bad

decisions? By experiencing gratitude, our body will produce another hormone called DHEA which has the

ability to reduce the cortisol levels. This will allow us to regain our IQ back and make good decisions. And

that’s why intense feeling of gratitude heals all negative emotions. This is also why when people are grateful,

they tend to get more in their lives. The reason is simple. We all know when someone has negative emotions,

he/she will make bad decisions most of the time. When they do not have negative emotions, they naturally

make good decision. And good decisions normally result in good results. This is especially important to your

trading because the better your trading decisions, the better your trading results will be. This is true in life and

in trading as well.

So do this 10 minute priming exercise by Tony Robbins whenever you want to get into a better state of mind

to trade. https://www.youtube.com/watch?v=faTGTgid8Uc

You cannot go for your PhD if you haven’t even passed your primary school. You cannot even be a F1 racer if

you don’t even know how to drive. If you cannot trade a small account and make money, you will not be able

to trade a big account and make money. So keep practicing on your craft of trading for improvement and to

get better.

When is the practicing enough?

If you are a driver and drives every day, driving will be second nature to you. It’s almost automatic for you.

Trade till trading is second nature to you and you’ll know whether it is enough. And every trade is a test. Take

each test seriously and keep records so that you can review your results and learn from it.

https://www.youtube.com/watch?v=faTGTgid8Uc

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Types Of Orders

Understanding the different types of orders you can send to your broker. The most common order types are

limit, market and stop orders. All three order types can be used for entries and exits. In trading, when putting

in an order for entry, following up with contingency orders are a MUST. Meaning you must have your exits

planned out before or at least at the point of entry into a position. Your exits in the form of contingency orders

(for profit target level and cut loss level) must be put through to your broker latest at the point of trade entry.

No entry must be made if there are no contingency orders for exits. An OCO order is a One Cancels Other

order which comprises of two orders (one for stop loss and one for profit target). It is a form of contingency

order whereby if one order is filled, the other is cancelled.

Limit order is an order placed at a certain price to either buy below the market or sell above the market. For

example, EUR/USD is currently trading at 1.2250. You want to go long (buy) if the price reaches 1.2200.

Instead of monitoring the market yourself and wait for it to hit 1.2200, you can set a buy limit order at 1.2200.

If price goes down to 1.2200, your trading platform will automatically execute a buy order at 1.2200 or a price

better than 1.2200. You use this type of order if you want to get a better price than what the market is

offering right now.

However, by using this type of order, you may not get your order filled or executed. In the above example,

price of EUR/USD can keep going up from 1.2250 and you will not get your order filled. Or price of EUR/USD

can drop a bit to 1.2220 then move up from 1.2220, and not touch the price of 1.2200. In any case, as long

price does not go to 1.2200 and below, you will not get your order filled (executed) at all. Limit order is

commonly used for two different purposes. One purpose for this order type is for trade entry you set to open

your trade. For example, let’s say you have the prognosis that EUR/USD will reach 1.2300 and start to move

down from that price level. You may set a sell limit order (limit order to sell) at 1.2300 to open your trade.

Another purpose for this type of order is to close off your trade at the target profit price level that you set. For

example, let’s say you have sold EUR/USD at 1.2300 to open your position earlier and currently the price is at

1.2250, you may set a buy limit order (limit order to buy) at 1.2200 if you have the prognosis that EUR/USD

will reached 1.2200 before moving back up again. You use this type of order when you believe price will

reverse upon hitting the price you indicated. A limit order guarantees you get the price level you set but may

not get the order filled.

Market order is an order to buy or sell at the best available (nearest) price. For example, the bid price for

EUR/USD is currently at 1.2250 and the ask price is at 1.2252. If you want to buy EUR/USD at market price,

then it would be sold to you at the ask price of 1.2252. This is achieved with you clicking buy on your trading

platform and it would instantly execute a market order to buy (buy market order) at the best available (or

nearest) ask price.

It is the same for selling. For example, the bid price for EUR/USD is currently at 1.2250 and the ask price is at

1.2252. If you want to sell EUR/USD at market price, then it would be bought from you at the bid price of

1.2250. This is achieved with you clicking sell on your trading platform and it would instantly execute a market

order to sell (sell market order) at the best available (or nearest) bid price.

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A market order guarantees you get your order filled but not the price level as you won’t know what the exact

price is that you get though it is roughly around the current market price you see on your trading platform. A

market order, like a limit order, can be used to open your trade or close off your trade by using sell or buy

market orders.

One difference between a market order and a limit order is that a limit order allows you to set the price level

you want and a market order does not allow you to set the price level you want. Another difference between

a market order and a limit order is that a limit order may not get executed (filled) while a market order makes

sure your order is executed.

Stop order is an order placed to buy at a certain price above market or sell at a certain price below market.

Stop order once triggered, becomes a market order. Stop order is commonly used as a stop loss order. Stop

loss order is a type of order usually linked to an existing trade used for the purpose of preventing additional

losses if the price goes against you. If you are in a long (buy) position, it is a sell stop order. If you are in a short

(sell) position, it is a buy stop order.

For example, you went long (buy) on EUR/USD at 1.2250. To limit your maximum loss, you set a stop loss

order at 1.2200. This means if you were wrong and EUR/USD drops to 1.2200 instead of moving up, your

trading platform would automatically trigger your stop loss order to sell at 1.2200 (becomes a market order to

sell at 1.2200) and close out your position for a 50 pips loss. You can and must always set a stop loss order on

any open positions that you have.

And because it is linked to your existing trade, a stop loss order remains in effect until the position is closed or

you manually cancel the stop loss order. Stop order can be use when in profit to protect profits. For example,

let’s say that you have went long (buy) on EUR/USD at 1.2250 and EUR/USD has moved to 1.2350 (which

means you are in 100 pips profit), you can put a stop order to sell at 1.2300. This would protect your profits of

50 pips (from 1.2250 to 1.2300), and allow you to risk your other 50 pips profits (from 1.2300 to 1.2350) to go

for more profits. In the event that EUR/USD drop from 1.2350 to 1.2300 and below, your stop order to sell at

1.2300 is executed and you close your position by selling at 1.2300. In the event that EUR/USD continues to

move up, you will continue to ride on the profits as it moves up. This way, by putting a stop order, you locked

in your profits of 50 pips if price turns against you while you are in profit.

Stop order is also used for trade entry. For example, EUR/USD is currently trading at 1.2250 and is moving up.

You may have the prognosis that price will continue in this direction if it goes at or above 1.2300 because of

the strong momentum move. To play out this prognosis, you can sit in front of your computer all day to

monitor price movement and buy at market when price reaches 1.2300 or you can put a stop order to buy at

1.2300.

You use stop orders when you feel price will move in one direction.

Let’s take a look at how each of the above order types works by going through the platforms that we are going

to be using.

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Various Financial Vehicles

*DO NOT TRADE ANY MARKETS THAT ARE NOT LIQUID AND VOLATILE

Stocks The minimum price fluctuation of a stock normally is $0.01 which is considered as one tick. Amount required to trade the stock depends on the amount of the stock since you will need the full amount to buy it. Stocks traditionally are for buy and hold strategy and that is why most stock markets are often bullish biased. Typically, you can only go one direction and it’s to buy first and sell later for profit or loss. Options Options have expiry just like futures. The most commonly used options are stock options. Options are derivatives like futures. They are derived from the parent asset. In the terms of stocks options, the option is derived from the stock. Meaning if the stock moves, the options moves accordingly in the same direction. Options are considered the hardest to understand. Please go through the trading essentials training on options to fully understand how options work and how to trade options.

Forex The base currency is the one to your left or the first one. i.e. USD/JPY, here USD is the base currency. If you think USD is going to be weakened, JPY will strengthen. If JPY will strengthen, then less JPY will be needed to be exchange for USD. Therefore, you will sell USD/JPY. An easy way to trade by selling or buying forex pairs is by looking at the base currency alone. If you are trading for the base currency to weaken, you will sell. If you are trading for the base currency to strengthen then you will buy. Knowing how to read the values of the different forex pairs is important. All forex pairs except for those paired with JPY can be read by going to the fourth decimal point. Minimum margin requirements (minimum amount of capital needed) must be met in your trading account before you can trade it. Margin requirements can be checked with the broker that you open a trading account with. The forex markets are open from 5 days a week, 24 hours a day. Please go through the trading essentials training on forex to fully understand how to trade forex.

Futures There are different types of futures and some of them are equity index, interest rates, dividend index and commodities futures. Futures contracts have expiry so it is important to know when will be the last trading day of a particular futures contract. Make sure you DO NOT hold any futures contract at the end of the last trading day of that futures contract. Remember to roll over your futures positions before expiry if you intend to hold onto your position. Knowing the minimum price fluctuation of the futures contract and how much it represents is important for money management for trading futures. The minimum price fluctuation is one tick. And one tick can mean different amounts. Minimum margin requirements (minimum amount of capital needed) must be met in your trading account before you can trade it. Margin requirements can be checked with the broker that you open account with.

CFDs Contract for differences (CFDs) are often offer on stocks, indexes, futures, commodities and forex pairs. The biggest disadvantage of trading CFDs is that it charges daily interest. That’s why CFDs are more for short term trading. The advantages of trading CFDs include smaller size lot trading, low commission rate and it covers most markets locally and internationally and you can trade bi-directional by selling first or buying first. And due to the leverage given, you do not need to have a huge capital to trade them.

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Technical Analysis

Concept of all charts is that they all go zigzag regardless of their time frame, whether they are short term or

long term.

Commonly used charts are line chart, bar chart, candlestick chart. The following are important before you are

to be taught OGT trading system. Understanding how to read a bar chart, moving averages, perception of

value for indication of overvalued and undervalued compared with price, MACD histogram, determining

support and resistance so that you know where your stop loss can be placed for money management, price

action for current mood of the market and average true range.

Tactical analysis involves knowing what timeframe of a chart you are going to trade in. However, you will not

be successful if you only look at one timeframe of a chart for your tactical move. You have to look further by

expanding your timeframe by around 5 times (or more) for your strategic analysis. Whatever your tactical

analysis is, if it goes against your strategic analysis, you do not trade.

A typical line chart

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A typical bar chart

A typical candlestick chart

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Understanding Open, High, Low and Close of a bar (OHLC bar)

The high and low are the highest and lowest prices of a bar. The open is the opening price level of a bar and is

always marked on the left of the bar. The close is the closing price level of a bar and is always marked on the

right of the bar.

A bullish bar is a bar where the close is higher than the open and is usually blue or green in color.

A bearish bar is a bar where the close is lower than the open and is usually red in color.

Understanding Candlesticks

Similar with OHLC bar, candlesticks show information (data) like the open, high, low and close. Depending on

the timeframe that you set on your chart, each bar will represent the information during that time period

(session) you set in your timeframe. Example, if you set your chart timeframe to “D” (which means 1 day or

sometimes called as daily), each candlestick bar will show information (data) on one day of trading. The next

candlestick bar that appears will show information on the next day of trading and so on.

Open

Open

High

Close

Low Low

High

Close

Open

Open

High

Close

Low Low

High

Close

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Understanding the High Low Band

The high low band consists of two moving averages – an average of the high of each bar for one, an average of

the low of each bar for another one.

Set the moving averages to simple. Set the period to 100.

This band acts as a basic support and resistance overview. We look for selling opportunity when support is

broken (this happens when the 21 moving average crosses below the low band or is below the low band which

is the 100 moving averages of the lows) and look for buying opportunity when resistance is broken (this

happens when the 21 moving average crosses above the high band or is above the high band which is the 100

moving averages of the highs). Adding in a simple 21 day moving average will determine which band or 100

moving averages is being crossed.

Moving Average of Lows

Moving Average of Highs

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Logging into TOS and changing background color and font size

Launch thinkorswim platform

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Setting up your charting

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Repeat step 5 & 6 for options, futures and forex by unchecking “show volume subgraph” box as we do not use

volume for our analysis.

Whenever you want to add a new indicator onto your chart, always start from step 9 onwards.

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You will see that you have just plotted your first indicator, “Simple Moving Average” on the chart. Repeat step

9 to 18 two times to plot another two Simple Moving Average with the one Simple Moving Average with the

settings as (100, LOW) and the other Simple Moving Average with the settings as (21, CLOSE).

From here onwards, MA stands for moving average.

Uptrend is established when the value of the 21 MA is higher than the value of the high band (100 high MA).

Once uptrend is established, trend will stay as uptrend as long as the value of the 21 MA is higher than the

value of the low band (100 low MA). Trend from uptrend is changed to downtrend only when the value of the

21 MA is lower than the value of the low band.

Downtrend is established when the value of the 21 MA is lower than the value of the low band (100 low MA).

Once downtrend is established, trend will stay as downtrend as long as the value of the 21 MA is lower than

the value of the high band (100 high MA). Trend from downtrend is changed to uptrend only when the value

of the 21 MA is higher than the value of the high band.

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Understanding Value Indication

The 21 moving average also has a second role which is to determine the mass crowd perception of value

against current price. Price bars that are below the 21 moving average are considered undervalued and price

bars that are above the 21 moving average are considered overvalued.

21 day MA

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Understanding MACD Histogram

If the current bar value is a negative value, it means the sellers (bears) are in control. If the current bar value is

a positive value, it means the buyers (bulls) are in control.

If the current bar value is higher than the immediate previous bar, the buyers (bulls) are getting stronger. If

the current bar value is lower than the immediate previous bar, the sellers (bears) are getting stronger.

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If you are looking for buying opportunity, you must wait for the sellers (bears) to be in control yet the buyers

(bulls) are getting stronger. If you are looking for selling opportunity, you must wait for the buyers (bulls) to be

in control yet the sellers (bears) are getting stronger.

Set the exponential MACD to 12, 26, 9

Understanding OGT buy alert bar

Bullish bar (green bar) + Buyer stronger = Buy alert bar

An OGT buy alert bar is a bar when a bullish bar appears with MACD Histogram showing the buyers (bulls) are

getting stronger. It does not matter whether MACD Histogram shows sellers (bears) in control or buyers (bulls)

in control. It also does not matter whether it is undervalue or overvalue.

Understanding OGT sell alert bar

Bearish bar (red bar) + Seller stronger = Sell alert bar

An OGT sell alert bar is a bar when a bearish bar appears with MACD histogram showing the sellers (bears) are

getting stronger. It does not matter whether MACD Histogram shows sellers (bears) in control or buyers (bulls)

in control. It also does not matter whether it is undervalue or overvalue.

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Understanding OGT price action

Bullish (buy) price action happens when a price is transacted above the high of the previous OGT buy alert bar.

It does not matter whether MACD Histogram shows sellers (bears) in control or buyers (bulls) in control. It also

does not matter whether it is undervalue or overvalue.

Bearish (sell) price action happens when a price is transacted below the low of the previous OGT sell alert bar.

It does not matter whether MACD Histogram shows sellers (bears) in control or buyers (bulls) in control. It also

does not matter whether it is undervalue or overvalue.

Determining support and resistance level

During the period that sellers (bears) are in control, projecting upwards to the chart, the lowest price

level/point will be the support.

During the period that buyers (bulls) are in control, projecting upwards to the chart, the highest price

level/point will be the resistance.

We set our stop loss above our resistance level if we are going into a short position and below our support

level if we are going into a long position. In terms of forex, it’s 1 pip and in terms of stocks, its 1 cent, above or

below depending on the previous sentence.

Page | 26

OGT trading system has 8 criteria for a bullish entry.

The first criterion is liquidity. Without liquidity, you will encounter big slippage loss during entry and exit and

you will have difficulty exiting your positions. Most futures and forex do not have liquidity problems so this

criterion mostly applies to stocks and options.

The second to fifth criterion are all based on the strategic analysis chart. Strategic analysis enables us to

determine the overall view of the market.

The second criterion is looking at the moving average of the strategic analysis chart and determine if it is in the

bullish trend (direction).

The third criterion is looking at the value indication for undervalued indication.

The fourth criterion is looking at MACD Histogram for sellers in control.

The fifth criterion is to look for OGT buy alert bar to appear. Once it appears, the trader just have to wait for

the next immediate bar to trade above the OGT buy alert bar to confirm a buy (long) trade. This is called price

action. From here, you MUST take note of the stop loss level which is your support level on the strategic

analysis chart. Once this level is broken, you must start again from 2nd criterion onwards. This is because your

intial analysis would have been invalidated. As this is the strategic analysis chart which is an overall view of the

market, we have to go further into the tactical analysis chart for exact entry point.

The sixth criterion to eighth criterion are all based on tactical analysis chart.

The sixth criterion is same as the third criterion and it is to look at the value indication for undervalued

indication.

The seventh criterion is the same as the fourth criterion and it is to look at MACD Histogram for sellers in

control.

The eighth and last criterion is the same as the fifth criterion and it is to look for OGT buy alert bar to appear.

Once it appears, the trader just have to wait for the next immediate bar to trade above the OGT buy alert bar

to execute a buy (long) trade entry. This is called price action. *VERY IMPORTANT TO NOTE – before you enter

the trade, ensure you go through and check whether strategic stop loss level is ever reached before. If it is

reached before you enter which will invalidate your analysis, you have to restart with 2nd criterion onwards.

You should also always ensure that criterias 2, 3, 4, 6 and 7 are all still valid before proceeding to execute a

trade.

Analysis restart/reset happens when (1) stop loss is reached, or (2) strategic control for criterion 4 has

changed, or (3) trend for criterion 2 has changed. Whenever analysis is restarted, you will have to start back

on criterion 2 at the bar of the chart that triggered the analysis restart scenario.

Page | 27

Page | 28

Page | 29

OGT trading system has 8 criteria for a bearish entry.

The first criterion is liquidity. Without liquidity, you will encounter big slippage loss during entry and exit and

you will have difficulty exiting your positions. Most futures and forex do not have liquidity problems so this

criterion mostly applies to stocks and options.

The second to fifth criterion are all based on the strategic analysis chart.

The second criterion is looking at the moving average of the strategic analysis chart and determine if it is in the

bearish direction.

The third criterion is looking at the value indication for overvalued indication.

The fourth criterion is looking at MACD Histogram for buyers in control.

The fifth criterion is to look for OGT sell alert bar to appear. Once it appears, the trader just have to wait for

the next immediate bar to trade below the OGT sell alert bar to confirm a sell (short) trade. This is called price

action. You MUST take note of the stop loss level which is your resistance level on the strategic analysis chart.

Once this level is broken, you must start again from 2nd criterion onwards. This is because your intial analysis

would have been invalidated. As this is the strategic analysis chart which is an overall view of the market, we

have to go further into the tactical analysis chart for exact entry point.

The sixth criterion to eighth criterion are all based on tactical analysis chart.

The sixth criterion is same as the third criterion and it is to look at the value indication for overvalued

indication.

The seventh criterion is the same as the fourth criterion and it is to look at MACD Histogram for buyers in

control.

The eighth and last criterion is the same as the fifth criterion and it is to look for OGT sell alert bar to appear.

Once it appears, the trader just have to wait for the next immediate bar to trade below the OGT sell alert bar

to execute a sell (short) trade entry. This is called price action. *VERY IMPORTANT TO NOTE – before you

enter the trade, ensure you go through and check whether strategic stop loss level is ever reached before. If it

is reached before you enter which will invalidate your analysis, you have to restart with 2nd criterion onwards.

You should also always ensure that criterias 2, 3, 4, 6 and 7 are all still valid before proceeding to execute a

trade.

Analysis restart/reset happens when (1) stop loss is reached, or (2) strategic control for criterion 4 has

changed, or (3) trend for criterion 2 has changed. Whenever analysis is restarted, you will have to start back

on criterion 2 at the bar of the chart that triggered the analysis restart scenario.

Page | 30

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Page | 32

OGT Analysis Checklist

1) Volume for liquidity

Strategic analysis timeframe W1 / D1 / H4 / H1 / M30 / M10

2) MA

3) Value indication

4) MACD histogram

5) Price action

Note down stop loss level here:

Tactical analysis timeframe D1 / H4 / H1 / M30 / M10 / M5 / M2

6) Value indication

7) MACD histogram

8) Price action

Check if stop loss level is reached and check if criterion 2, 3, 4, 6, 7 is still valid

Before you start trading, after the security has passed OGT analysis checklist, make sure you have written

down your trading plan with money management before you go into the trade. You must make sure criterion

2, 3, 4, 6 and 7 are still valid at the point/time of trade entry. Take note that (1) stop loss is NOT reached, or (2)

strategic control for criterion 4 has NOT changed, or (3) trend for criterion 2 has NOT changed at the point of

trade entry. If it is reached then you reset your analysis and start from criterion 2 again.

Below is the table for the combination of timeframes you should be using. For example, you are trading stocks

and using weekly (W1) chart as your strategic chart timeframe then your tactical chart timeframe will be daily

(D1) chart.

Stocks Forex / Indices / Commodities / Futures

Strategic W1 D1 H1 M30 W1 D1 H4 H1 M30 M10

Tactical D1 H1 M10 M5 D1 H4 M30 M10 M5 M2

Page | 33

Page | 34

Money management (managing your risk)

A calculated risk is a risk which exposes you to normal depreciation of your equity. A loss threatens your

survival as a trader. Therefore, in trading, a calculated risk is acceptable but a loss MUST never happen. The

main difference between a calculated risk and a loss is the size relative to the size of your account. Relate this

to the story of the florist.

Whenever you take a percentage loss, you have to make a higher percentage gain in order to get back to your

original equity. If you lose 33% of your original equity then you will have to make 50% to return back to your

original equity.

Always follow the rules at all times. Follow the percentage rules of 2% and 8% (for bigger accounts, follow

1.5% and 6%).

Limit your loss in any trade to 2% of capital and stop trading for the rest of the month when your capital drops

by 8%. Stop trading for the rest of the month when there are 3 consecutive losing trades. Position size is

important and must be maintain as a constant to a maximum of 2% of capital in every trade.

Compound your equity by using profits maintaining the 2% and 8% rule. If your account size increases,

increase your position size accordingly based 2% of account size. If your account size decreases, decrease your

position size accordingly based on 2% of account size.

If the entry level to the stop loss level is greater than the value of the (period 24) 1.2 average true range (ATR),

it is a trade that you cannot take. The maximum range/distance entry level to the stop loss level CANNOT be

higher than 1.2 times ATR.

The 5 Exits

Once in a trade, there are 5 exits you must follow. Any one of the exit once triggered, you need to close your

trade. (1) Exit when stop loss is reached, or (2) exit when target profit level reached, or (3) exit when trend for

criterion 2 has changed, or (4) exit when time stop has reached. Time stop being the time period of 9 strategic

bars or 45 tactical bars (whichever is later) counting from the time your trade entry. Take note that strategic

control change (criterion 4) does not require you to exit your trade.

(5) You can choose to exit your trade totally anytime when you are in profit of more than 200% risk to reward.

If you are in profit of more than 200% risk to reward and do not want to exit your trade, you must do 1 of the

2 below. (A) take a partial profit of 30% to 50% of whatever amount you traded, or (B) shift your stop loss to

your entry price (provided the difference between current price level and your initial entry price level is at

least 1 ATR distance away). If (B) is not able to be achieved due to distance between current price level and

your initial entry price is less than 1 ATR, then you must do (A) which is to take partial profit.

Page | 35

Trading Plan

A. Date of analysis:

B. Security name:

C. Entry level:

D. Stop loss level:

E. ATR:

F. Maximum entry = Stop loss level +/- 1.2ATR(e) =

(Plus for long, minus for short)

(Continue with trading plan only if maximum entry(f) > Entry level(c) for long)

(Continue with trading plan only if maximum entry(f) < Entry level(c) for short)

G. Profit target = Entry level(c) +/- [2 X ATR(e)]:


H. Difference between Entry level(c) and Stop loss level(d):

[Entry level(c) - Stop loss level(d) if long]

[Stop loss level(d) - Entry level(c) if short]

I. $ Amount to risk (2% of your capital):

J. Commission, Slippage, Other expenses:

K. Amount of shares/contracts to enter:

I − J

H

L. $ Amount of profit if profit target hit = 2 X ATR X k =

M. Risk to reward ratio (minimum 2):

L

K×H

Page | 36

Record keeping

How successful you will be in trading depends on how often you review your trades and learn from them. You

should keep records for the following so that you can come back to them whenever you wanted to.

Recommended to review your trades once immediately after closing the trade and review it again half a year

later.

1) Keep records of every trade with a trading plan indicating entry level, exit level which includes stop loss

level and profit target level and lastly risk to reward ratio. Trading plan has to include amount at risk,

commissions, slippage, and other expenses if any. It has to also show you clearly if it’s a trade you can

take or not.

2) Keep an overall daily account record to clearly show if you are within the 8% rule.

3) Keep an overall monthly account record to see for yourself if your equity is growing steadily.

Download the files from the link given for keeping records. It MUST be used whenever there is a trade.

Write down the steps on keeping records using the file.

Page | 37

10 Commandments of Trading

I follow the rules because successful traders follow rules

I will not fear losing as losing trades are part and parcel of trading

I play the trading game to win, not to enjoy the excitement

I go with the trend as the trend is my friend

I win the trading game as long as I have the overall edge

I manage my money well as I’m an excellent money manager

I follow the percentage rules as if my life depended on it

I go into a trade only if my trading plan is clearly written down

I follow strictly to my trading plan after I enter the trade

I keep records of every single trade and review them

Page | 38

Champion Trader

I’LL BE LASER FOCUS IN WHAT I WANT

I DESIGN MY OWN DESTINY

I’ll DO WHATEVER IT TAKES

FEAR DOES NOT STOP ME

I TAKE ACTION EVEN IF I DON’T WANT TO

NOTHING CAN GET IN MY WAY

I CREATE MY OWN LUCK

I GET THINGS DONE

I GET COMFORTABLE WITH THE UNCOMFORTABLE

Page | 39

Annex A

Bear – An investor who believes that a particular security or market is headed downward

Bull – An investor who believes that a particular security or market is headed upward

Tick – The minimum upward or downward movement in the price of a security

Open – The price that a security starts trading for the day

Close – The price that a security ends trading for the day

High – The highest price that a security trades for the day

Low – The lowest price that a security trades for the day

Open position – Any trade that has been established, or filled, that has yet to be closed with an opposing

trade

Close position – Executing a security transaction that is the exact opposite of an open position

Long – A long position in a security, such as a stock, means the holder of the position owns the security and

will profit if the price of the security goes up.

Short – short selling (also known as shorting or going short) is the practice of selling securities or

other financial vehicles that are not currently owned, with the intention of subsequently repurchasing them

("covering") at a lower price.

Support – The price level which a security has had difficulty falling below

Resistance – The price level which a security has had difficulty rising above

Moving average – An indicator showing the average value of a security's price over a set period

MACD histogram – A trend following indicator showing the balance of bears and bulls

Stock – A type of security that signifies ownership in a corporation

Futures – A standardized contract between two parties to buy or sell a specified asset of standardized quantity

and quality for a price agreed upon today (the futures price) with delivery and payment occurring at a

specified future date, the delivery date.

Forex – The foreign exchange market is a form of exchange for global trading of international currencies

Commodity – A basic good used in commerce

Contract for differences (CFDs) – An arrangement made in a futures contract whereby differences in

settlement are made through cash payments, rather than the delivery of physical goods or securities

Page | 40

Index – A portfolio of securities representing a particular market

Bid – The price a buyer is willing to buy for a security

Ask – The price a seller is willing to sell for a security

Limit order – An order to buy or sell a security at a specified price or better

Market order – An order to buy or sell a security immediately at the best available current price

Stop order – An order to buy or sell a security when its price surpasses a particular point

Spread – The difference between the bid and the ask price of a security or investment vehicle

Hedge – An investment strategy or position intended to offset potential losses/gains that may be incurred by a

companion investment.

Derivative – A financial vehicle whose price is dependent upon or derived from one or more underlying assets

Open interest – The total number of options and/or futures contracts that are not closed

Counter – Any stock, forex pair, futures contract, security can be termed as a counter.

Page | 41




2) MA

3) Value indication

4) MACD histogram

5) Price action



6) Value indication

7) MACD histogram

8) Price action




2, 3, 4, 6 and 7 are still valid at the point/time of trade entry. Before you start trading, after the security has

passed OGT analysis checklist, make sure you have written down your trading plan with money management

before you go into the trade. You must make sure criterion 2, 3, 4, 6 and 7 are still valid at the point/time of

trade entry. Take note that (1) stop loss is NOT reached, or (2) strategic control for criterion 4 has NOT

changed, or (3) trend for criterion 2 has NOT changed at the point of trade entry. If it is reached then you reset

your analysis and start from criterion 2 again.



(D1) chart.




Page | 42

Trading Plan


B. Security name:

C. Entry level:

D. Stop loss level:

E. ATR:

F. Maximum entry = Stop loss level +/- ATR(e) =












I − J

H



L

K×H

Page | 43




2) MA

3) Value indication

4) MACD histogram

5) Price action



6) Value indication

7) MACD histogram

8) Price action












(D1) chart.




Page | 44

Trading Plan


B. Security name:

C. Entry level:

D. Stop loss level:

E. ATR:













I − J

H



L

K×H

Page | 45




2) MA

3) Value indication

4) MACD histogram

5) Price action



6) Value indication

7) MACD histogram

8) Price action












(D1) chart.




Page | 46

Trading Plan


B. Security name:

C. Entry level:

D. Stop loss level:

E. ATR:













I − J

H



L

K×H

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