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Stock Trading: Gap Between Knowledge and Execution



Zeus Lee talks on stock trading entitled Mind the Gap: Gap between knowledge and Execution

Shares 4 types of trader/ Stages of trader progression
Quadrant 1: low win rate, low reward risk ratio
Quadrant 2: High win rate low reward risk ratio
Quadrant 3: Low win rate, high reward risk ratio
Quadrant 4: High win rate, high reward risk ratio

The highly regarded trader is the Photoshopped trader
- deep understanding of his/her technicals
- proper management of risk
- application of winning intangibles

Confidence is when you know you are going to win the war and get out alive whatever the outcome of a thousand battles.

The Knowledge
understanding Trend Structure and the Momentum Line

Dow Theory (limited on what the theory says about price)
When you are on an uptrend, the price structure is you have high, low, higher low, higher high
When you are on a downtrend, the price structure is high, low, higher low, higher high
When the trend is sideways, there is ranged high and low

Price Patterns
Ascending/ Descending triangles
Head and Shoulder Pattern
Cup and Handle Pattern
Double Bottom/ Double Tops

Zeus Lee says: "There's always someone who draws the chart"

The Practice
4 Easy Steps

  • Backtesting and Simulation
    • backtesting: find out the winning probability of a setup by applying a specific set of rules and parameters for buy and sell actions on historical data
    • actually test your skill in trading in order for you to gain experience
    • for simulation, you can try out stock chart games
  • Paper trades
    • same with simulations but with real market data
    • build your Playbook, a standard procedure when dealing with the markets
  • Low volume trades
    • with actual scenario, real risk
    • know your profile
    • analyze your emotions
  • Full blown profitable trader


Stock Chart Games
Chart Mantra: no sign in, play as a guest. has indicators and even a learning module. has stop loss options and has a walkthrough on how to trade stocks
StockChartGuru to familiarize with candlestick patterns; basic and does not require you to log in.
ChartGame is also another form of stock trading game for pattern recognition but this needs log in but has better interface and more options. My recommendation

For more information on stock trading, check out Digital Nomad Here.
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