SIFI E-book notion doc.

Chapter 1: Introduction to Day Trading

Day trading is a form of trading where positions are opened and closed within the same trading day. This method is mainly applied in stocks, currencies (forex), cryptocurrencies, commodities, and futures.

The goal is to profit from small price movements throughout the day. Unlike long-term investors, who wait for significant price increases, day traders focus on short, quick trades. Often, they use leverage to ensure bigger rewards on small price movements. Combined with various trading strategies based on technical & fundamental analysis to maximize profits.

However, beginners should be aware of the risks involved in day trading. The technical knowledge alone will not do the job. You need a strong mindset, emotional capacity, patience, and risk management to really win in the trading space! With the help of advanced tools like AI, traders can automate parts of the analysis process, making it easier to make well-informed decisions at the right time.

For beginners trading can feel exciting and rewarding, but it's essential to start with a solid foundation, eliminate as much emotion as possible and follow a clear strategy. This short e-book will guide you through the essential aspects of day trading and help you get started on the path to successful trading.

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Chapter 2: Basics of Financial Markets

The financial markets are the foundation of any trading activity. This is the place where buyers and sellers come together to trade financial assets such as stocks, currencies, crypto, bonds, and commodities. Buyers and sellers should take various factors into consideration, including economic reports, interest rates, geopolitical events, company performance, and more

What are the key financial Markets:

Stock Market: Where company shares are traded. Traders buy and sell stocks based on company performance, news, and market sentiment.
Fiat Currency Market (Forex): Where currencies are traded. Forex is the largest and most liquid market in the world, with a daily trading volume of over $7.5 trillion. It operates 24 hours a day, 5 days a week.
Cryptocurrency Market: The market for trading digital currencies like Bitcoin, Ethereum, and many others. The cryptocurrency market has grown rapidly, with a daily trading volume of over $100 billion. It operates 24/7, offering continuous trading opportunities without the restrictions of traditional market hours.
Commodities Market: Raw materials like oil, gold, and agricultural products are traded.
Bond Market: Bonds are debt instruments issued by governments or companies. The bond market is often driven by interest rate changes and economic stability. </aside>

Chapter 3: Technical and Fundamental Analysis

Traders use two primary methods to analyze the markets and make well-informed decisions. These two methods are technical analysis and fundamental analysis.

Technical Analysis:

Technical analysis focuses on studying past price movements, trading volumes, and recognizing patterns to predict future price trends. This can be done using candlestick patterns, market structure, indicators, and other sources of information.

Technical analysis suggests that certain patterns and information from the past will repeat themselves in the future.

Fundamental Analysis:

Fundamental analysis focuses on understanding the true value of a financial asset. For currencies, it includes analyzing the economic health of a country, interest rate trends, and inflation levels. Many traders will track major news events and include this in their daily analysis and decision-making.

How These Analyses Work Together:

Many successful traders combine both methods. While technical analysis can help determine the right time to enter a trade, fundamental analysis provides insight into the underlying value of the asset.

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Chapter 4: Risk Management

Risk management is the key of successful trading. Without proper risk management, even the best strategies can lead to losses. It’s not just about making profits; it’s mainly about protecting your capital.

Key Risk Management Principles:

Maximum Risk per Trade: A common rule is to never risk more than 1-2% per trade. For example: when you have a trading account with $1000 to trade with. You never want to lose more than $10-20 per trade.
Stop-Loss Orders: A stop-loss order is a pre-set instruction to exit a trade if the market moves against you. For example, if you expect the market to rise but it drops instead, your stop-loss ensures that you only lose the initial 1-2% that you’re willing to risk, rather than your entire account.
Take-Profit Orders: A take-profit order automatically closes your trade once it reaches the profit target based on your analysis, securing your gains without you having to monitor the trade constantly.
Risk-Reward Ratio: This ratio compares the risk you take to the potential reward. A good risk-reward ratio can be, 1:3, meaning for every 1% you risk, you aim for a 3% potential profit. For example: when you risk $20 on a trade, that same trade will make you $60 once you hit your take-profit order.
Diversification: Don’t put all your capital into one market or asset. Spread your risk across different assets to minimize the impact of individual losses.

Risk management is crucial for maintaining consistency in your profits. Without a proper risk management plan, you risk losing everything, even if your strategy is profitable in the long run.

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Chapter 5: Trading Plan

Having a clear trading plan is probably the most important aspect of trading. This is where your trading strategy meets your risk management. To eliminate all emotional decision-making while trading the markets, you want to have certain pre-set rules that help you to stick to your strategy. Once you've established a strategy with these pre-set rules, and it’s backed by data, you can confidently say you are trading with a “proven, objective trading system.”

Some of the key elements when it comes down to a trading plan:

1. Clear Rules and Strategy:

Your trading plan should contain well-defined rules for entering and exiting trades, as well as criteria for managing risk and position sizing.
Your success lies in sticking to these rules to avoid emotional decision-making.

2. Probabilistic Mindset:

Successful traders think in probabilities. A trading plan helps you detach from the outcome of individual trades and focus on long-term results.
Accept that every trade has an uncertain outcome; your plan should be focused on strategies that work over a series of trades, rather than being swayed by individual wins or losses.

3. Risk Management:

A trading plan must include strict risk management rules. It’s highly advised to risk only a small percentage of your account on any single trade, ensuring that no single loss can significantly impact your overall capital.

4. Emotional Discipline:

One of the central pillars in trading is controlling emotions. A trading plan acts as a roadmap to prevent impulsive or emotional decisions, which can often lead to trading errors.
Stick to your plan even when the market behaves unpredictably, avoiding trades based on fear or greed.

5. Self-Analysis and Improvement:

Successful traders regularly review their performance and make necessary adjustments to their plans. The goal is to learn from mistakes and continuously improve. To do this effectively, make sure you journal all your trades in a trading journal. Key elements to include in your journal are: your analysis, the confirmations of your trading plan, your risk management, and most importantly, the emotions you experience before and during the trade, along with how you react to these emotions.

In essence, a trading plan is as much about psychological discipline as it is about market analysis. By following a structured plan, traders can avoid emotional pitfalls and trade consistently over time.

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Chapter 6: The SIFI Strategy

SIFI → Set It & Forget It

The SIFI strategy is a continuation strategy based on 4-hour trends, designed to trade with the trend. The goal is to maximize potential rewards by entering trades after a clear pullback. SIFI is an AI-powered tool that scans the market and notifies traders when there is an optimal opportunity to enter a trade.

The system uses color-coded backgrounds, this feature gives us a clear visual of what direction we’re looking to trade in. When the 4-hour trend is upwards, the background color turns green, signaling a buying opportunity. When the 4 hour trend is downwards, the background color turns red, signaling a selling opportunity.

It’s important to note that SIFI trades are not placed on Mondays. Statistically, Monday is known as "trap day," as it offers fewer high-quality setups compared to the rest of the week.

Why an A.I. tool

The SIFI scanner is designed to save time by automatically scanning the markets based on a set of pre-defined metrics. When all the metrics align in our favor, the scanner shows an arrow. This automation saves traders time and effort, reducing the need for manual research. All that’s required is to confirm the trade opportunity using the simple 3-step trading system.

The 3 simple steps

Dark Shade Arrow
- Look for a dark shade arrow on the chart, indicating a valid setup.
2 Day Pullback
W or M Reversal pattern

Protection and Target

Protecting your capital is essential in trading. For this reason, traders use a stop-loss, which is based on market structure.

In an uptrend, where we look to buy, the stop-loss is placed just below the previous low.
In a downtrend, where we look to sell, the stop-loss is placed just above the previous high.

To give the trade some breathing room, it's recommended to add 3 times the spread to the stop-loss.

For example: If your broker has a spread of 0.3 pips for the pair you’re trading, the stop-loss should be placed 0.9 pips (0.3 pips * 3) above or below the previous high or low.

Trade Management

Risk to Reward 1:1: Once the trade reaches a 1:1 risk-to-reward ratio, move the stop-loss to breakeven.
1 Hour Before News: Close out the trade 1 hour before a red-folder news event to avoid volatility.
News Trades: Avoid taking trades within 1 hour before or after red-folder news events, as these signals are not valid.

No Trade Pairs

Certain currency pairs are excluded from the SIFI strategy due to lower-quality setups or market behavior. These pairs are:

NZDCAD </aside>

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Table of Contents

Chapter 1: Introduction to Day Trading

Chapter 2: Basics of Financial Markets

What are the key financial Markets:

Chapter 3: Technical and Fundamental Analysis

Technical Analysis:

Fundamental Analysis:

How These Analyses Work Together:

Chapter 4: Risk Management

Key Risk Management Principles:

Chapter 5: Trading Plan

1. Clear Rules and Strategy:

2. Probabilistic Mindset:

3. Risk Management:

4. Emotional Discipline:

5. Self-Analysis and Improvement:

Chapter 6: The SIFI Strategy

SIFI → Set It & Forget It

Why an A.I. tool

The 3 simple steps

Protection and Target

Trade Management

No Trade Pairs