How to Develop a Successful Trading Strategy

  • Print Article |
  • Send to a Friend |
  • |
  • Add to Google |

No doubt by now you would heard the term ‘trading strategy.' All that a trading strategy is is just a basically a uncomplicated tool - it's the guidelines that a trader adopts while they are trading in the stock markets.

A trading strategy is regulated by a set of rules that does not change for anything other than market action. A trader who faithfully follows a proven trading strategy discovers that it will provide them with their greatest weapon against their greatest enemy - their emotions. So with a trading strategy in place , you'll know exactly when to buy and when to sell, irregardless of what the market is doing or what your emotions are trying to tell you.

Now to look at some Day Trading Strategies. Almost every successful profitable trader will tell you that the cardinal rule to trading success is to use an effective, reliable,proven trading strategy. You as a trader will need to discover a effective system, apply it, and then to have the necessary discipline to stick to it like glue.

Though it might be conceivable that you might be able to develop a unique trading strategy, it possibly would not be that practical. Speaking from experience I have found that the best way and by far the most effective approach is to adopt an existing strategy that has been used by other successful profitable traders in the market and which has withstood the test of time.

Always keep in mind, that whether the strategy you're employing is your own or someone else's, it is vital that you have a thorough understanding of how it works, particularly its entry and exit signals.

Do not fall victim to the traps of implementing untested so called expert trading "advice," particularly the free advice so readily available in the numerous trading forums and chat rooms that abound on the Internet and elsewhere.

Usually the advice that you encounter in these types of venues is most likely to be some one's opinion rather than actual fact. You will find that in the stock market, opinions are not really worth anything at all. So what you ultimately require is a proven and effective trading strategy, one that will function in any market, under any market conditions that might occur..

Because of the desperate need for effective trading strategies, increasingly traders are searching for trading success through the use of technical approaches to the stock markets.

One of these favorite technical approaches is the popular RSI indicator. The general concept behind using the RSI is to buy when the RSI crosses above 30 and to sell when the RSI crosses below 70. As you can see, these rules are very clearly outlined and therefore they don't leave much room for interpretation.

This is exactly the type of thing you should have in a successful trading strategy. In trading quite often you will need to make big decisions in matter of seconds. There is no time to rethink, or try to understand the many unknown signals and information that will continually come your way. So by following a set of simple, basic easy-to-understand rules, and having a trading strategy in place that will regulate all of your buying or exit signals and indicators efficiently.This is the cardinal rule to your trading success.

Even though the rules of trading are extremely important, they are not the most crucial factor of trading success. The most all important element is you. Having the best trading strategy in the whole world will be utterly useless if you lose your head in the stock market and panic. You need to remain perfectly calm at all times, applying your trading strategy with efficiency, and without any hesitation.

Hopefully by now you are convinced that trading strategies are extremely important and essential. So how will you find one that works best for you? Evidently, trading strategies do not grow on trees. What you will have to do some research and either develop a strategy yourself, or find one that is easy to understand and has been proven to be profitable and successful.

Don't rush just take your time and do your research properly. Because your strategy is a very crucial step on your path to financial success, and it's definitely more than worth the investment of your time and energy. Always be on the lookout for scams. There are numerous "educational companies" out there, each busily selling their own trading systems and strategies, and each one claiming that their system works far better than their competitors' does.

So be very wary of these companies. Don't fall into the trap of believing that you can purchase a profitable trading strategy for $500 and then make thousands in a short period of time. Very recently, some of these "educational companies" mentioned have started offering "free local workshops" in various posh locations. Most of these are merely a sales pitch for the company's actual product, and the learning that takes place at the "workshop" is minimal and very basic. You would be far better off spending that time researching the trading market on your own.

To avoid all these scam artists and their defective systems and strategies, you really need to educate yourself thoroughly. Your trading education should focus on exploring and acquainting yourself with several different strategies; these ought to teach you to take advantage of price direction.

Fortunately, there are many ways to get a good trading education these days, and one your best source of trading education and research is online right here on Asxnewbie. Share trading is a very risky venture if you have very limited knowledge, imperfect discipline, and poor money management habits.

However all is not lost, for if you approach share trading correctly, fortified with extensive knowledge, a sound strategy, and the drive and the ambition to succeed, share trading could become one of the most remunerative business adventures you've ever ventured upon!

Chris Strudwick is a successful share trader on the Australian Stock Market. For more info please visit my blog at www.asxnewbie.com.

Rate this Article:
  • Article Word Count: 973
  • |
  • Total Views: 106
  • |
  • permalink
  • Print Article |
  • Send to a Friend |
  • |
  • Add to Google |
>