The Ruff Guide to Trading

Make money in the markets

Steve Ruffley

• Publisher: Harriman House
• Year: 2015
• ISBN:
  9780857194985
• Edition: 1
• Topic: Business
• Subtopic: Stocks
• Index: Business

If it's trading, then Steve Ruffley has seen it and done it!Steve Ruffley has been involved in the finance industry for 15 years and is currently chief market strategist and head of education at InterTrader. In his Ruff Guide to Trading, he shows you the markets through his eyes. He reveals how he sees trading as a whole, how he assesses and exploits trading opportunities, and how he thinks about risk. He also describes three of his winning strategies.The focus of the Ruff Guide is intraday trading; everything covered relates to finding and making money from short-term trading opportunities that arise as part of everyday market moves.At the heart of Steve Ruffley's approach is a very simple 80-20 rule for understanding market movement. This is that market moves are 80% technical and 20% fundamental. He explains the fundamental and technical aspects you need to use to get the right balance in your market analysis and shows how to put these into practice with examples from real-life market action.Steve also explains why success at trading first requires you to understand yourself and your fellow traders, and provides guidance to help you gain this understanding.The Ruff Guide is the result of Steve Ruffley's thousands of hours of trading, charting and teaching experience. Pick it up to follow the simple and accessible guidance of someone who has seen and done it all before.

Introduction

My name is Steve Ruffley. I am a professional trader, risk manager and mentor. I’m not out to prove that I am the world’s best trader. What I am trying to prove is that I can help any level of trader gain that essential trading edge.

The trading landscape has changed over the years, with more and more people gaining access to the financial markets. What has not changed is the type of people who trade the markets professionally and also the way the markets essentially function.

Over the last 15 years, I have learnt a lot about all aspects of trading. From trading my own account, risk managing and mentoring traders, to creating software and signals. If you have ever thought about gaining an edge in trading, believe me so have others. The chances are I’ve tried it with varying degrees of success.

So my advice is to save yourself the time, money and stress it’s taken me to learn the lessons I have. Instead, follow the simple and accessible steps in this book.

Your aim as a developing trader should be to achieve a high-level understanding of people. People control every aspect of what happens in the world of trading to some degree. Understand people and you will understand the markets.

Everything you read here is taken from my own experience. If it is in the book it is because it has either made me money or lost me money. The Ruff Guide to Trading is an accumulation of thousands of hours of trading, charting and teaching.

My methods of teaching traders are to give them the building blocks to establish their own opinions, strategies and confidence. There is no shortcut to learning the art of trading, but the process can be sped up by a good guide and the right approach to learning.

Let’s get started.

Part 1.
Theory and Understanding

Chapter 1.
Trading FAQs

Introduction

One of the ways I teach trading is via interactive webinars. I have presented around 1000 over the last five years. This generates a lot of questions, as people are able to put these to me directly. I always state that there are no bad questions regarding trading – if you need to ask something, do so, as what’s the worst that can happen?

So, here are the most common questions I am asked by ordinary people on the subject of trading. Depending on your level of experience some questions will be relevant now and some will become more relevant to you later.

We all see the markets in our own way and there is never one definitive answer to most questions. The point of these commonly asked questions is for you to get an idea of what you know, what you think you know and what you may have never considered.

Understanding your actions by continually asking yourself questions is one of the most important routines you can get into as a trader. If you have never asked yourself or an experienced trader some or all of these questions, the chances are that you have not been trading to your full potential.

1. Why do people trade the markets?

This is an easy starter for 10. People trade to make money! Or at least that is the general consensus.

The markets exist to facilitate trade. People seek to find the most efficient way to achieve their goals. These goals to a large extent do not always start out being solely related to money, but invariably money becomes a factor in facilitating them.

People invented money, the markets and everything in-between. Understand people and you will begin to understand how and why the markets function the way they do.

2. How do you, Steve Ruffley, trade the markets?

My 80/20 rule of trading really explains a lot about how I believe the markets function.

In my experience, the market will move 80% due to traders making calls on technical analysis and 20% of the time due to fundamental reasons.

Here’s a summary of my process:

1. I understand what has happened in the past to predict future movement – 80% technical analysis.
2. I study the underlying opinions on data, news and sentiment to find out what traders may be basing their calls on – 20% fundamental analysis.
3. I understand how to identify value in a market and how long it will be available on an intraday basis.
4. I set a risk amount (in money) that I am willing to lose against a reward amount to prove my opinion is correct or incorrect.

3. What are your sources for new information that is not on the charts?

Fundamental analysis is very important. It not only gives you a sense of the bigger picture relating to underlying sentiment but also an opportunity to trade scheduled market moving data events. These scheduled key data events take place every week. Some are more important than others. Economic calendars providing details of scheduled data releases are readily available online.

Aside from the scheduled economic data releases, there is also unexpected news and information which occurs as a result of spontaneous events.

You should look at certain news sources for breaking news, as credibility is key. Here are the sources I use:

Scheduled data ev...