Trading is difficult - or is it?

Trading is difficult - or is it?

The reason most trade is to make a profit. Rarely do we do so for sport of it. There are some, however, who do not treat their trading as a game in the tables of Las Vegas. Those who do, unfortunately, will soon be sent packing to their day jobs, so they could return with another stake to try again. But if you're one of those who think that trading should be taken seriously, keep reading.

Trading is hard, then again, it's really simple. Maybe I should say that trading is just a state of mind. What may seem daunting task to some can still seem like a catwalk to another. The glass is half full, glass is half empty, that sort of thing.

How does trading appear to you? Are you overwhelmed with all the news? Or it is all the technical indicators are tossed into your trading programs that move your eyes cross? Maybe it's different trading programs themselves, who are looking dumbfounded by your office window, staring into space and making weird sounds from between your lips drooping.

Well, maybe some choice words here might help clarify this situation for you. A little perspective can go a long way in getting you to watch the market a whole new light.

If the markets moved haphazardly with no rhyme or reason, I would suggest not to run for the hills and not look back. Fortunately, this is not the case. With all the persuasion in the world, I know for a fact that markets are governed by natural laws that make it predictable to varying degrees. What extent they are predictable are more dependent on who makes a prediction as well.

The fact that markets tend to trend says a lot about how much randomness in it ... very little. Instead of acting like a scratched record, it moves with such a harmony that shows obvious mathematical relationship between its peaks and bottoms. You only have to spend hours upon hours studying these lists at the end to see it to be true.

But the point is that markets tend to trend. And because this is the case, it is to your advantage to concentrate your trades with the trend in mind. A market move higher is likely to keep working, then move lower. And market trending down is likely to continue doing more to move up. At some point in time the trend will eventually end. But if you just look at your charts you will see that it takes a long time to happen.

Knowing this can only put the odds in your favor. However, unless you have money to sustain this trend corrections (which moves opposite trend is usually temporary), it may take one or two of these corrections. The issue here is that time. In other words, if you want to buy to do it as close to the bottom trend or correction at the bottom as possible. That way you will not have to withstand any major reason to trade equity and will have a "guest" capability. "Ah, the feeling of being able to stay in a trend and watch your account swell as a tick on your dog. better able to time your trades for less money you need. It is a given.

So you know you want to trade with trend. And you know that you can better time the market will have less to risk more to gain (because you can stick longer in the trade, going your way). So how do you go about watching the market in a way that is less intimidating, without resorting to the use of rose-colored glasses lend a 3-year-old?

One way is to start from the top and work your way down. The lists are available in different time frames. There are yearly, monthly, weekly, daily and intraday charts that you can use to view your market from top to bottom (no pun intended). Start from a higher time frame than would be trading. If you're looking to day trade, see daily chart to get an idea of ​​the dominant trend of your market. If you plan to be in trade for more than one day (trading position), then make sure to look at the monthly and weekly chart before you make your trading plan out the daily chart.

When you look at the table in a large period of time, you get to see the big picture. Moving lower prices overall on the monthly chart, forming a lower monthly swing tops and bottoms? If so, then the major trend is down. And it should suggest to you? That is likely to continue downward. Because you have seen this on a monthly card, how do you think this will look on your daily or weekly chart? That downtrend major monthly pass would be a big, big trend down on your weekly chart. And your daily scheme would have to go down for a long, long time.

So if you happen to be planning your trades off the daily chart, the best sold off some corrective swing top and you get the idea of ​​buying out of your head. If your long-term trend is your weekly and an upward swing as well, then you better think just buying the dips and anything else for your daily pattern.

This will start to see the market in a reasonable light. You will see the big picture and all the little noise will have less impact on your psyche. Once the direction is known and is determined that you are going to focus exclusively on buying or selling based on this trend, then we can look at ways to improve your timing on.



Previous Article
- Currency trading is not the monopoly of the Nerds and geeks