30 Point Trader Test: how much you Can Score?
Dear readers, Flawless execution of trading system is possible only with confidence in the very system and we get confidence from the competence we have earned with education and learning. Henceforth, the need of education is imperative in order to be successful in our trading. I strongly believe you have already read the past articles of this pipping recipe series:
If you haven't read them through, kindly do so before answering the questions presented herein.
While this article series educated us a lot, it will be of little use if we do not rehearse and revise the important facts learnt during the series of articles presented here for Dukascopy community by the contributor. Thus, on this occasion of new year, I'd like all of us to review what learning we have got from the article series presented in recent past months and test the same based on a set of questions.
This will enable us to take the learning forward without forgetting the lessons we have learnt.
After you're done reading the past articles, start reviewing the set of questions asked below and note down your answers on a piece of paper. Then calculate your score afterwards.
Part-1 (from article on Divergence)
1) Divergence represents a trend is weak and may fade shortly. True or False?
2) In the system described in article, the Stop Loss is kept at X pips beyond day's highs and lows, where x is __?
3) The system confirms the divergence on which time frame?
4) A 50 day moving average represents on a weekly time the x MA, where x is __?
Part-2 (from article on Supply-Demand mismatch)
5) A long wick on a price chart represents supply-demand mismatch. True or False?
6) Demand zone is where we sell the currency pair. True or False?
7) Supply zone is where we sell the currency pair. True or False?
8) Buying based on demand zone on one hour time frame, where a higher time frame (say daily chart) represents supply zone is considered a safe and high probability trading strategy. True or False?
Part-3 (from the article on Fibonacci)
9) Fibonacci is subject to interpretation, i.e. my Fibonacci A and B levels may be different from your. So how we make sure we're choosing the correct levels in our system in order to rule out any confusion?
10) AB=CD, Expansion and Retracement: There are the names of patterns which emerge based on Fibonacci ratios. True or False?
11) Which two Fibonacci ratios are seen the most on price charts?
12) Continuing question 11, what is the price target of these two Fibonacci ratios?
Part-4 (from the article on Money Management)
13) How many orders are used in the Money Management system described in this article?
14) What is maximum leverage statistically discovered, which if used beyond the level in every trade we take, the profits start to diminish in the long run?
15) Trade mantra prescribes risk reward of __1:X__ and above only as the norm, while risk reward of __1:Y__ can be used only as an exception.
16) Correct entry is the only way to cut losses and ride the profits. True or False?
17) Correct exit is the only way to cut losses and ride the profits. True or False?
Part-5 (from the article on OPM, Other People's Money)
18) Which fee-profit sharing rule is common for Assets under Management?
19) What is LPOA and how does it makes you stress free while managing client's money?
20) What is PAMM and does Dukascopy provides such facility for Money Managers?
Part-6 (from the article on Harmonic Trading)
21) When a harmonic pattern is formed, the price is likely to retrace from a zone known as __?
22) The crab pattern has a win-loss ratio of __%?
23) If there is a bullish pattern on daily time frame, while bearish pattern is formed on a lower time frame, will you trade the bearish pattern appearing on lower time frame?
24) Price bounces from __% level of CD move, back into the PRZ?
Part-7 (from the article on Pivot Points and Missed Pivots)
25) Pivots are fractal in nature. True or False?
26) A confluence of pivot point and Bollinger Band or Envelope creates a strong attraction for price to move towards the level and test it as Support or Resistance. True or False?
27) Why does the above system works? One reason will do.
28) Pivot points work on charts of all time zones, still we prefer to use __ GMT for our charts to mark the pivots?
29) A price move that starts from a pivot level, generally ends at ______ pivot level. Fill the blank and also give an example.
30) A daily or weekly pivot is missed by the price. In how many days or weeks, price is likely to test the missed pivot levels?
Now let's figure out how we performed in the test!
Add a score of 1 point for every correct answer, while remove a score of 0.5 when answer is incorrect. No cheating :D)
2) 35 pips beyond the daily high/lows is considered a stop loss in the system.
3) Daily time frame was used to confirm divergence.
4) 50 SMA on daily is 10 SMA on weekly
5) True, mis-match occurs when we see price moving away rapidly from a given price level.
6) False, demand zone means availability is less and hence demand is huge, we buy at such levels.
8) False. Higher time frame supply and demand mismatch zones play important role on lower time frames, we must trade in confluence of higher time frame and not against it.
9) We must choose the most recent price movement, which has no retracements, in order to find the exact A and B levels for calculating Fibonacci ratio levels. This makes the system free from individual interpretation and thus removing the confusion. If retracement is already made, we can pin point correct price levels precisely by making sure the retracements are adhering to our A and B levels of Fibonacci price movement.
11) 61.8% and 78.6%
12) 161.8% is the price target of price moves from above listed fibonacci retracement levels.
13) Three orders are placed at the same price level. 1/3 profit is taken at TP-1, while trailing the stops for other two active orders within the trade, to ride the profit wave.
14) 4 times the account size, beyond which the profits started to decline on a statistically significant basis for clients of the given currency trading broker.
15) Risk reward ratio of 1:3 and above be the norm, while 1:2 may be used only on one or two trades as an exception. Exception being highly accurate trade and not "gut feeling", etc.
17) True. Correct exit are the only way to make fortunes.
18) Two-20 rule is common in the industry. Where 2% of capital is kept as management fee or administration fee for the fund manager, while 20% of profit is also shared with the asset management company.
19) Limited Power of Attorney makes it easier for fund manager to manage the client money without much legal and regulatory issues.
20) Yes, the most common OPM model: PAMM model is available with Dukascopy.
21) PRZ, Price Reversal Zone
22) Crab pattern gives more than 90% win loss ratio
23) We do not trade based on top-down analysis. Avoid trading against higher time frame patterns.
24) 23% of CD move generally comes as a temporary reversal level and price enters PRZ again to give entry to pending orders before moving to B level.
26) True. Price generally reverses from such level and this level becomes a profit taking spot for the banks.
27) It works more than it doesn't because we have combined horizontal price levels (pivots) with diagonal price levels (bollinger bands, etc).
28) We prefer 0 GMT (midnight gmt) for our price charts to show pivots.
29) "another" price level. An example is: price move which starts from weekly S2 level, does reaches R2 level in same week or R2 level of upcoming weeks.
30) Within 60 Period.
Presenting the questions in this article now enable us to advance this article series with new learning in upcoming weeks, while making me contented about giving this community the best of the knowledge I've gained till date, about currency trading.
All your comments and suggestions are highly welcomed. Let us know how much you scored?
Happy trading and a prosperous year for you and your family. God bless you!