HOMEWORK ALERT – Complete your homework before starting Class 3

Chapter 2 - Risk Management: Homework #2

Completing your homework is for your own benefit.  Answers should be in Paragraph form.  If you want to succeed as a trader, you have to show motivation & discipline.

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Welcome to your ACTIVE - DTC: #2 Quiz

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1. What is float?
2. How long does a circuit breaker halt last?
3. What can cause a trading halt?
4. What is the leading cause of failure as a Day Trader?
5. Trader A says we can greatly improve our odds of success by selecting the right stocks and chart patterns.  Trader B says we can greatly improve our odds of success by applying the fundamentals of risk management.  Who is correct?
6. Trader A says if you have a high profit loss ratio you can’t be wrong a lot and make money.  Trader B says that the profit loss ratio you trade with directly relates to the percentage of success required to be profitable.  Who is correct?
7. ____ think about profit, Traders think of about risk.
8. Is it possible to gamble with your day trading account?
9. What is the min profit loss ratio before trading with real money?
10. If you trade with 33% accuracy, what profit loss ratio is required to be breakeven?
11. Ross is wrong more than 30% of the time but is still profitable.  How is this possible?
12.  As a breakout trader, the best trades work almost immediately.  If you aren't in the profit within 2min of entering a trade what should you consider doing?
13. What is averaging down?
14. Why is averaging down generally a bad idea for beginner day traders?
15. How can you prevent revenge trading (aggressively trading to bounce back from a loss)?
16. Why should a beginner trader trade in a Simulator for a min of 30 days?
17. When you graduate from trading in a simulator, how much size should you trade when you start for the first time with real money?
18.  What is your goal of the day?
19.  As a beginner trader, how many trades should you be taking each day?
20. What does it mean to balance your risk?