Pro Trader 2 DAY 2 Flashcards
What is tick size of indexes in Futures?
- 5 dollars for Nasdaq 2. 10 dollars for Dow and Russell 3. 12.50 for SP500
4 index symbols
3 steps to determine position size
- establish max risk amount based on % of account size 2. calculate the stop size by measuring distance from entry to stop loss 3. divide the max risk by stop size to determin position size
list the process for selecting stocks to trade
- scan securities using watch list2. apply top down trend and SD analysisA. apply top down analysis to major marketsB. apply top down analysis to sectorsC. apply top down analysis to stocks associalted with sectors
why is it important to establish specific criteria for selecting a stock?
It allows you to find low risk, high reward and high probability trades
using diagram, say long or short
long
which major market will you use? dow, sp, nasdaq
sp, nasdaq
which sectors will you use?
energies, technology
the bid is full of willing ________
buyers
the ask is full of willing ______
sellers
T/FDepth of Market allows us to see only the Inside bid and Inside Ask.
FThe depth of market measure provides an indication of the liquidity and depth for that security or currency. The higher the number of buy and sell orders at each price, the higher the depth of the market. Depth of market data is also known as the order book, since it shows pending orders for a security or currency.
T/FWe judge a stock’s strength or weakness by comparing it to a broad market and a sector
T
The following criteria are used to filter the market for trading opportunities
- 15-182. 1 million3. ATR > $1 but 4. Beta: 1.5 to 2.5
why do you want to trade stocks that are correlated with the indexes?
want to trade stocks that are in correlation with the indexes because it is easier to tell which way the market will move.
what is oscillator
