Professional Documents
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PRESENT
Building Your E-mini Trading n.com re-collectio Strategy g-softwa www.tradin ii.gonch
kype: i mail.com, S iii.gonch@g
Materials in this presentation are covered under current United States and international copyright laws. NO PORTION OF THIS PRESENTATION MAY BE REPRODUCED WITHOUT THE WRITTEN PERMISSION OF THE AUTHOR.
Daniel Gramza is currently completing two books: Trading in the Eye of the Storm The Handbook of Japanese Candle Trading Strategies
lection oftware-col g-s www.tradin .gonch , Skype: iii Daniel ail.com M. Gramza ii.gonch@gm i President
Gramza Capital Management, Inc. 2227 Forestview Road Evanston, Illinois 60201-2009 Tel. Fax e-mail (847) 475-4760 (847) 475-4780
You can be notified when these .com are available by contacting Daniel Gramza. books All Charts Created on Aspen Graphics Software Contact MIKE BRODROGI 1 800 359 1121
mbodrogi@aspenres.com
dmgramza@worldnet.att.net
CME, the globe logo and E-mini are trademarks of Chicago Mercantile Exchange, Inc. All other marks are the property of their respective owners.
Building Your E-mini Trading Strategy Identify market you're going to trade Determine your trading time frame Select trading approach
ftwar .trading-so www .gonch , Skype: iii ail.com h Establish trading strategy ii.gonc @gm i
parameters
Section 1: IDENTIFY MARKET YOU'RE GOING TO TRADE CME E-mini Futures OPTIONS on CME E-mini Futures CME eFX FUTURES
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i
1,000,000
100,000
200,000
300,000
400,000
600,000
700,000
800,000
900,000
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii 500,000 ail.com ii.gonch@gm i
N o v -9 7 F e b -9 8 M a y -9 8 A u g -9 8 N o v -9 8 F e b -9 9 M a y -9 9 A u g -9 9 N o v -9 9 F e b -0 0 M a y -0 0 A u g -0 0 N o v -0 0 F e b -0 1 M a y -0 1 A u g -0 1 N o v -0 1 F e b -0 2 M a y -0 2 A u g -0 2 N o v -0 2 F e b -0 3 M a y -0 3 A u g -0 3 N o v -0 3 F e b -0 4 M a y -0 4 A u g -0 4 N o v -0 4 F e b -0 5
50,000
100,000
150,000
250,000
300,000
350,000
400,000
0
Aug
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii 200,000 ail.com ii.gonch@gm i
CME E-mini NASDAQ-100 Futures Average Daily Volume Increasing Volume = Increasing Product Acceptance
- 99 Oc t 99 Dec -9 9 Fe b -0 0 A pr -00 Jun -00 Aug - 00 Oc t 00 Dec -0 0 Fe b -0 1 A pr -01 Jun -01 Aug - 01 Oc t 01 Dec -0 1 Fe b -0 2 A pr -02 Jun -02 Aug - 02 Oc t 02 Dec -0 2 Fe b -0 3 A pr -03 Jun -03 Aug - 03 Oc t 03 Dec -0 3 Fe b -0 4 A pr -04 Jun -04 Aug - 04 Oc t 04 Dec -0 4 Fe b -0 5 A pr -05
Aug-03
Aug-04
Apr-03
Feb-03
Jun-03
Feb-04
Apr-04
Jun-04
Feb-05
Oct-03
Oct-04
4/30/2005
7
Dec-03
Dec-04
100000
120000
140000
160000
20000
40000
60000
0 Ja n -0 3 Fe b -0 3 M a r-0 3 Ap r-0 3 M a y-0 3 Ju n -0 3 Ju l-0 3 Au g -0 3 Se p -0 3 Oct-0 3 N o v-0 3 D e c-0 3 Ja n -0 4 Fe b -0 4 M a r-0 4 Ap r-0 4 M a y-0 4 Ju n -0 4 Ju l-0 4 Au g -0 4 Se p -0 4 Oct-0 4 N o v-0 4 D e c-0 4 Ja n -0 5 Fe b -0 5 3 /3 1 /2 0 0 5 4 /3 0 /2 0 0 5
n.com re-collectio g-softwa www.tradin .gonch 80000 , Skype: iii ail.com ii.gonch@gm i
OPTIONS on CME E-mini S&P 500 Futures Month End Open Interest:
n.com re-collectio g-softwa www.tradin 900,000 .gonch , Skype: iii ail.com 800,000 ii.gonch@gm i
700,000 600,000 500,000 400,000 300,000 200,000 100,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Highly liquid
Leverage
No Margin Interest Charged No Inventory Required for Short Position No Short Position Interest Charged
Gramza Capital Management, Inc. 10
CME E-mini NASDAQ-100 NQ $20 x E-mini NASDAQ-100 $30,000 .50 futures index points = $10.00 Nearly 24 hours,
CME E-mini
CME E-mini
CME E-mini Russell 1000 RS1 $100 x E-mini Russell 1000 $64,000 .10 futures index points = $10.00
.gonc , Skype: iii m h@gmail.co with market ii.gonc* Contract value fluctuates daily= June i ** H = March M U = September
Minimum Price Fluctuation (Tick) Trading Hours Contract Months** Last Day of Trading n.com Performance re-collectio -softwa $4,000 $3,750 h Bond Margin*** ww.trading
Russell 2000 S&P MidCap 400 ER2 EMD $100 x E-mini $100 x E-mini Russell 2000 S&P MidCap 400 $56,000 $58,000 .10 futures index .10 futures index points = $10.00 points = $10.00 Sunday afternoon through Friday afternoon H, M, U, Z 8:30 a.m. third Friday of contract month $3,500 $3,500
$3,625
Z = December *** ALL PERFORMANCE BONDS SUBJECT TO CHANGE AND BROKERS MAY REQUIRE HIGHER MARGINS
Expiration Dates
March 18, 2005 June 17, 2005 September 16, 2005 December 16, 2005
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$50.00
13
1401.00
$20.00
$10.00 1400.00
14
(Assume S&P 500 Index value = 1100, CME E-mini S&P 500 multiplier value = $50 Value of 1 E-mini S&P 500 futures contract = 1100 X $50 = $55,000)
SPDRs Current Level $110 per share n.com re-collectio a ading-softw $55,000/$110h per share www.trQuantity pe: iii.gonc om, Sky ch@gmail.c iii.gon = 500 shares
1 contract
Tick Value
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om colle tion.c re-PluscMargin Interest g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i
If Short
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250,000
A V E R A G E D A IL Y V O L U M E
200,000
50,000
0
1 2 0 3 t- 0 1 t- 0 0 t- 0 3 4 t- 0 4 t- 0 2 1 2 3 4 1 5 n -0 0 3 l- 0 2 4 l- 0 n -0 l- 0 l- 0 n -0 n -0 n -0 r- 0 r- 0 r- 0 r- 0 l- 0 r- 0 r- 0
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Oc
Ju
Oc
Oc
Oc
Ap
Oc
Ju
Ju
Ju
Ju
Ap
Ap
Ap
Ap
Ap
Ja
Ja
Ja
Ja
Ja
Highly liquid
CME exchange environment, offers open and transparent FX pricing. CME is largest regulated FX market in the world Segregated accounts
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www.tradin .gonch , Skype: iii m h@gmail.co ii.goncCurrency trading is simultaneous purchase of a currency in terms of i
Currencies are traded in pairs, such as U.S. dollar/Japanese yen (USD/JPY) or Euro/U.S. dollar (EUR/USD), or via currency indexes, suchsastwarCME$INDEX(TM). the e-collection.com g- o f another currency.
EUR/USD = Value of 1 Euro expressed in US Dollar terms. EUR/USD = 1.3300 = 1 Euro = US$1.3300
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$1,250.00
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$625.00
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Position-collection.com trading ng-software www.tradi .gonch , Skype: iii ail.com ii.gonch@gm i Your trading time frame creates demands on: Available Trading approach Trading technology to trade
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Technical llection.com o
reaction to
Direct analysis of price movement Indirect analysis of price movement Combination of direct and indirect
analysis of price movement
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TREND ANALYSIS
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TREND ANALYSIS
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TREND ANALYSIS
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TREND ANALYSIS
swing high
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TREND ANALYSIS
swing low
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TREND ANALYSIS
Close n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i
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TREND ANALYSIS
Failed to Close above previous swing high = Potential Change in trend
Close
Buy
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i Buy
swing low
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TREND ANALYSIS
n.com re-collectio -softwa ww.tlow = ng wswing radiDntrend .gonch , Skype: iii ail.com ii.gonch@gm i
Close below prev
Close
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TREND ANALYSIS
swing high
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TREND ANALYSIS
Close below previous low = continuation of trend = Downtrend
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TREND ANALYSIS
swing high
Sell
Sell
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TREND ANALYSIS
Close
TREND ANALYSIS
Close
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TREND ANALYSIS
Buy
swing low
Gramza Capital Management, Inc. 38
Open
Selling Body
Open
Low
Close
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Open
Close
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45 min Candle
15 min Candle
High
Open Body
High
n.com re-collectio g-softwa Selling h www.tradin pe: iii.gonc , Sky ail.com ii.gonch@gm i
Last
Low
Last
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n.com re-collectio g-softwa www.tradin Last .gonch , Skype: iii ail.com ii.gonch@gm i Buying
Low
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Selling Body n.com re-collectio g-softwa www.tradin iii.gonch , Skype: Buying Shadow ail.com ii.gonch@gm i Low
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Buying Body
Low
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Buying Body
Buying Body
Candle Pattern Development The identification and analysis of the price relationships
that create a reversal pattern
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii 1. Lead m ail.coup ii.gonch@gm i
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Candle Characteristics
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii GREEN =__________ gmail.com ii.gonch@2) Body Color i RED =__________
1) Range
3) Body Size
___________________ ___________________
5) Shadow Size
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the
Overvalued,
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of the trade?
the trend? current bearish or bullish candle
Sell (better) Buy (best option)
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Does it hit you between the eyes and scream at you to the trade? Does current information trade? the come to
n.com re-collectio ftwa g-soBe patient: and onchthe www.tradin .g let , Skype iii ail.com ii.gonch@gm you. i
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Could result in
or
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www.trad iii.gonch , Skype: SIMILARITIES AND DIFFERENCES between 5. Whatm the ail.co are ii.gonch@gmstudies? i
4. What are cSTRENGTHS AND WEAKNESSES of each study? n.com re- ollectio ing-softwa
ADD
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of lead up magnitude (minimum to maximum) The of periods that create the lead up phase.
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3. to
The TRIGGER PRICE is the price level used the trade. For example:
n.com re-collectio g-softwa www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i Buy higher highs
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the price action that verifies the completion of most reversal patterns. should confirmation occur? is typical magnitude of confirmation?
Gramza Capital Management, Inc. 78
n.com re-collectio candle Buygnew twa of Japanese -sof high ch www.tradin rejection .com, Skype: iii.gon pattern mail iii.gonch@g
B. Trade exit Sell first lower low greater than 2 ticks A. Buy higher highs
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Sell 1214.00 llection.com ftware-co .trading-so www .gonch , Skype: iii ail.com ii.gonch@gm i
Buy 1206.00
Profit = 8.00
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4.25 IIIII
4.50 IIIII
4.75 IIIII
5.00 IIIII
5.25..10.00 IIIII I II I I II
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IIIII II IIIII IIII
Possible trading strategy to PRESERVE PROFITS on a profitable trade is to Sell position at 4.00 points of profit and move stop to breakeven incl. brokerage.
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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd) 3. What is the heat index range? The heat index range is used to determine point of trading strategy ,magnitude of and placement of risk management ___ orders.
g-s www.tradin e: iii.gonch , Skypprofitable trade where the market does Type one is a ail.com ii.gonch@gm i
There are two ection.comtypes of profitable trades: different re-coll oftwa trade below the entry price.
Type two is a profitable trade where the market trade below the entry price.
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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Heat Index Range Cont'd)
Type One Trade Type Two Trade
Exit Trade = 1289.00 Profit = 5.00 Enter Trade = 12 84.00 Heat = 1.50 Heat Level = 1282.50
No Heat
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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Heat Index Range Cont'd)
Sell 1214.00
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Sell 1179.50
Profit = 7.25
Buy 1172.75
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Sell 1205.25
Profit = 4.25
Buy 1201.00
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Sell 1188.75
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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Heat Index Range Cont'd)
Type One Trade Type Two Trade
Exit Trade = 1289.00 Profit = 5.00 Enter Trade = 12 84.00 Heat = 1.50
Heat Level = 1282.50 n.com re-collectio g-softwa Stop Loss = 2.00 www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i For example: Lowest value to the highest value of heat is 0.25 to 1.75.
No Heat
What is the frequency Are there distribution .25 IIIII IIIII IIIII .50 IIIII IIIII IIIII IIIII Potential sell stop is 2.00 .75 IIIII IIIII IIIII 1.00 IIIII IIIII IIIII ?
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MEASURE THE PERFORMANCE OF YOUR TRADING STRATEGY (Cont'd) 4. What is the probability of the trade working? The probability of a profitable trade is used in the determination the of having a profitable trade and risk reward relationship of the trading strategy. Divideathe ollection.co trades by the total number of ftw re-c profitable .trading-so www trades = Skype: iii.gonch of a profitable trade. % probability .com,
mail iii.gonch@g m
Profitable Trades
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The essential steps in the trading process Trading in the Eye of the Storm
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? ?
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What market information is candle analysis (Candle Characteristics, Pattern Development and Global Environment) providingtion.com long, intermediate, and -collec for the ng-software www.tradi shortkterm?.gonch iii om, S ype:
ail.c ii.gonch@gm i
Is the market imbalanced to the buy or sell side? What are major support and resistance areas?
Gramza Capital Management, Inc. 93
ftware-co .trading-so www .gonch , Skype: iii ail.com ii.gonch@gm What are the challenges i
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What is your mental state? Is this a full or partial position? positive or negative
m ol ection.co re-cislconsidered g-sofWhat twa ch www.tradin market pe: iii.gon , Sky activity? ail.com ii.gonch@gm i
How, when, and where will the trade be entered, added to, reduced and exited?
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If yes, how and when will you implement this into How do you feel during and after profitable or unn.com
ctio
ww
.gonch , Skype: iii ail.com h ii.gonc @gm your trading time frame match your ability to i Does
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What type of trade were you doing when you felt the
n.com What type -coltrade were you doing when you felt the re of lectio twa
What aspect of trading do you enjoy the most? What aspect of trading do you enjoy the least? What aspect of trading concerns you the most?
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TRADING IN THE EYE OF THE STORM High performance trading occurs in the Eye of
the Storm.
What storm?
Storm = Markets
n.com re-collectio = g-softwa Trading www.tradin .gonch , Skype: iii ail.com ii.gonch@gm i = Others
= Yourself A trader's objective is to stay in the eye of the storm, free from the distractions of the storm's movement
Gramza Capital Management, Inc. 102
The trader must recognize and accept that trading is a physical business that requires a synergy of thoughts and physical response intware-collection.com totally aware state. a relaxed, yet ding-sof
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THOUGHTS Create the traders reality Direct the body Basic elements of the thought process are:
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thought or a negative one, but whichever the choice, it will impact the thoughts that follow.
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Thought Demons are negative thoughts that hold you back and prevent you from accomplishing your life and trading goals.
Whatware-your tion.com typical thoughts when faced are collec first or g-soft nwith challenges in your life? www.tradi e: iii.gonch
kyp mail.com, S iii.gonch@g
How you react to these challenges is usually how you will react to the challenges of trading.
of these thoughts
develop a specific target for your energy and efforts to make a change.
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NEGATIVE THOUGHT DEMONS JOURNAL (Contd) What are these negative thoughts taking away
from you?
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NEGATIVE THOUGHT DEMONS JOURNAL (Contd) Do you accept that you created this negative
thought? If not, why not?
lectio management technique from the Which rthought n.co oftwa e-col rading-s
you going to use to help you de-energize this negative thought and reach your ideal thought reaction?
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.gonc , Skype: iii gmail.com ii.gonch@The key to being a good consultant is asking the i
right questions, so objectively review the questions found in the Negative Thought Demons Journal as if you were questioning another person as a consultant. An objective review of the responses may provide just the point of view needed to implement positive solutions.
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You cannot solve a problem with n.com the asameiomind that created it. re-collect softw w.trading-
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You begin to have negative thoughts relating to a situation over which you have no control.
n.com re-collectio ng-softwa www.tradiYou consciously :recognize that you have done all you can, .gonch , Skype iii gmail.com ii.gonch@and it is now up to the situation to complete itself. i
You choose not to energize the negative thoughts or allow them to overwhelm you.
The situation is not under your control and you are not going to waste your energy on unproductive thoughts.
Gramza Capital Management, Inc. 115
www .gonch , Skype: iii gmail.com ii.gonch@You then allow yourself to become more and more i emotionally involved with each back-and-forth market movement.
The reality is that the market is in control, and you have no control over the market. Recognize this, relax, and let your trade work. You will either make money or lose money, and what you do control is how you react to the outcome.
Gramza Capital Management, Inc. 116
Remember,mit is always within n.co re-collectio g-softwa www.tradin your power to change. .gonch , Skype: iii l.com
mai iii.gonch@g
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PHYSICAL RESPONSE
Effortless action is confident physical response
without hesitation. trading.
The trader's goal is to achieve effortless action when When he trades with effortless action, he stands a
n.com re-collectio ng-softwa www.tradiExamples of pe: iii.gonchaction in your daily life: effortless .com, Sky mail iii.gonch@g
tying your shoe combing your hair raising a fork, spoon or cup to your mouth and driving your car
When trading, executing a properly evaluated trade should feel the same way!
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Having completeoconfidence in the strategy. om collecti n.c Total focus on implementing the trading strategy
when trading and not on issues that should have been resolved during non-trading hours.
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HOW TO BECOME AND STAY CALM AND FOCUSED Choose and energize thoughts that support your
trading objectives.
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IntesaTrade
and
PRESENT
Building Your E-mini Trading n.com re-collectio Strategy g-softwa www.tradin ii.gonch
kype: i mail.com, S iii.gonch@g
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