|
The trend can be divided into two distinct parts: The
impulse and the correction. The impulses are the smaller moves in the
direction of the larger trend and are what we should be trading. The
corrections are the pauses in the trend and may move sideways or
opposite of the trend. These corrections allow traders the opportunity
to re-enter into the dominant trend direction before the new impulse.
Impulses demonstrate several characteristics: They have fast moving
prices, they tend to have larger candles and they may have gaps in the
trend direction. Overall, they are violent moves that cover large
price advancements in a short time period. Kind of sounds like you
would want to trade with them.
It should be noted that while there really is no one single
leading indicator of what's to come in trading, using simple deductive
analysis can always help the disciplined trader if they use the
information in the right way. It was obvious that taking a short
against the Yen was probably not the best play due to the half year
strength of the Yen, but that we also had better odds by instead
shorting the Kiwi Dollar due to its apparent weakness over the last 6
month period. As a rule-based trader, Traders should always look for
specific entries and targets in any of my trades, Individual stocks
have risks from the company's operations. Missing earnings, accounting
irregularities, and corporate member changes are all issues we face.
If you trade or invest in individual stocks, you are exposed
to the highest levels of risk. Even if you try to reduce risk by
buying many stocks in different industries or sectors, you still have
the asset class and company risk. When it comes to minimizing our
risk, we want to be as high up the risk levels as possible while still
maximizing our potential profit. When we increase our risk, we do also
increase our potential for profit. You will usually see larger price
movements on individual stocks than you do in ETFs, but the ETF can
hold up much better than an individual stock if there is an issue with
a company.
To really be diversified, you should invest or trade in
multiple asset classes such as Futures or Forex to spread your
exposure out over different asset classes. Even if you own a tech
stock and a financial company, you will lose when the stock market
collapses. Know your risks and manage them when trading. Success comes
from protecting your capital as much as it comes from making winning
trades.
How to learn to be a successful stock, forex , futures trader with a solid
trading plan. Learning to trade the investment markets you need to
have skill and knowledge. The successful traders have learned how to
trade and cut their trading losses. Here are some ideas on how to
learn to trade the stock, futures, forex markets.
You need to learn from the ground up. You need to educate
yourself about what stock market you want to invest in. You need to
learn that in trading you will have losses, trading is risky that's
why you need to educate yourself. The more you learn about investing
the more confidence you will have when you place a trade. To make
money trading you need have your own trading strategy and have your
own profit and loss objectives. You must developed this yourself from
trial and error.
You need to learn to be flexible in your stock trading style, not
everything in a trade is cut and dried. When you place a forex or
futures trade from your own research you will be more successful. Take
your time this is one of the secrets to profitable trading, don't be
in a hurry just to place a trade out of boredom. Make sure to study
the markets futures, forex or stocks. Try paper trading first to get
confidence in an investment trading strategy. This will make you
confidant when you start to use real money to trade with.
You need to developed a money management system that works for
you. A plan of how much to put back into your account and how much to
take out. This should be in percentages not dollar amounts. Most
experienced traders try and profit 2% a day on the amount at risk in a
trade. Make sure you set your targets and stops for each trade. Do not
let your losses effect your confidence its part of any trading
learning experience.
If you have a loss do not try to force another trade hoping to
make up the loss this is a big mistake. If you decide to trade from
home you need to have a quiet business type area to work in. Good
computer equipment and high speed internet access. Try and keep
distractions to a minimum this is a serious job if you want to make
money. This is a job that you need continuing education on what the
different markets are doing news, politics ,weather can effect your
trades especially in the futures markets.
Work on sticking with the task at hand. Keep notes on your day to day
activity keeping losses small and let the profitable trades run.
Learning to be a profitable trader takes time and effort in believing
in yourself and your trading system. Charts can be set at 3 hour up to
a day. This will allow you to find better entry points. You can look
for the support and resistance areas and make your trades from these.
On longer time periods it is much easier to see what trend is
in place. Most forex brokers will allow you to have several different
charts running at the same time. Set up a couple charts with a long
term time and one short term. You can lower the risk of loss and set
your stop losses by using this plan.
Another advantage of swing trading is that it gives you time to
plan your trades. This will keep emotions out and let you set your
trades according to your trading plan. You will be able to see where
the markets are heading and avoid taking large losses that can happen
when day trading. You will be able to see where the volume of trades
and at what time they occur. Normally higher trading volumes happen
around news times then the markets will settle back down. Unless the
news is extremely good or bad the forex markets will return to the
original trend they were in before the news.
|
