In part 2 of The Trader's Mind, Doug Hirschhorn discusses entry and exit levels with Mark Moskowitz, a professional trader with 18 years experience.
Video: Part 2 of market coach Doug Hirschhorn's discussion with trader and former hedge fund manager Mark Moskowitz.
Moskowitz says he uses pivot points and simple moving averages to figure out his entry levels. For example, he'll use the previous day's open, high, low and close to calculate the pivot point. That gives him a reward to risk ratio of two to one. And that, says Moskowitz, is a good starting point.
Moving averages, on the other hand, are used to confirm the pivot point crosses. “We also use the moving averages to find extra levels of support and resistance.” Moskowitz uses simple moving averages—the 20, the 50, and the 200, and runs through the Fibonacci sequences.
How did Moskowitz figure this out? Through trial and error, he says. But Moskowitz, who considers himself a technician, knows that when pivot points and moving averages work in conjunction with one another, they can be very powerful.
Another important part of Moskowitz's day is tape reading. “You're going to see some buyers and sellers that might not show up on the charts,” he adds.
And when it comes to managing risk, Moskowitz says his stop loss is one percent of total capital allocation. On the upside, “I look for about two percent as my first target.” Target number two, he says, “is three percent.”
Moskowitz has no problem trying to extend his upside targets. But once he gives back 25 percent of his day, that's it. It's time to “pull the plug.”
Doug Hirschhorn is the chief executive officer of Edge Consulting, a firm specializing in “Peak Performance Coaching.” He holds a Ph.D. in Psychology with a specialization in sport psychology, and has offices in New York and South Florida. His client list includes elite athletes as well as many of the largest banks, hedge funds and financial institutions in the world. Doug is presently at work on his new book, Street Smarts (Putnam, 2010).
Have a question for Doug? You can reach him through his Web site, DrDoug.com
Disclaimer: Doug Hirschhorn's expertise is in the psychology of achieving peak performance. He is not a financial advisor and does not make trading or investment recommendations or provide trading or investment advice. He is an expert on the mental game. Although Doug Hirschhorn has a Ph.D. in Psychology with a specialization in sport psychology, he is not a licensed psychologist and does not provide therapeutic, clinical or counseling services.