5 Trading Secrets To Get You Started
Some secrets are hard to keep. Day Trading refers to market positions which are held only a short time, typically the trader buys and sells the same day. The concept got a bad reputation in the 1990’s when many beginner traders jumped in with both feet before they were prepared. They read headline on how much traders can make and jumped in before they knew what to do. This proved destructive to them, their bankroll and the reputation intra-day trading has received since.
Yet, intra-trading is not as difficult as many suggest, once you have taken the time to learn the necessary skills.
Trading Secrets: Look for setups, where supply and demand are drastically imbalanced and begin to use this information to identify your entry price points.
The financial markets are like the free enterprise system: If supply is low and there are still willing buyers, prices go up. If there is excess supply and no willing buyers, prices will go down. Does this sound like a trading secret or common sense?
Have price targets in mind before you enter a trade.
If you’re going long, decide in advance how much profit is acceptable as well as a stop-loss level if the trade turns against you. Ask yourself ” What’s my payday in this trade” Then, stick by your decisions. This defines both you risk and reward. You need to do this with every trade.
Insist on a risk-reward ratio of at least 3:1 when setting your targets.
Trading Secret: Major league baseball players who fail 70% of the time are in the hall of fame. Same with risk ratios. Example: If I bought 1000 shares of AAPL and lost $1, I am down $1000 plus commissions. I then do it again and lose another $1. I am now down $2000 plus commissions correct? Here is the beauty in the 3:1 risk/reward ratio. On my 3rd AAPL trade I make my anticipated goal of $3. I am now wrong 67% on my AAPL trades and have a gross profit of $1000. You never want to trade for a 1:1 or 2:1 risk/reward.
3:1 allows you to be wrong almost 70% of the time and still profit. Welcome to the trader hall of fame. Does this now sound more like a trading secret?
We must wait for the markets, they aren’t going to wait for us. STOP FORCING TRADES in a market that is screaming “Stay Away” We as trader never act, we are always reacting to something that has happened. Therefore we must remain patient and allow the opportunities to come to us. Plan your trades, then trade your plan.
Be disciplined or Lose Your Money.
Trading Secret? I think not.
Here are the 4 skills you need to be successful:
Control of Emotions
If you have these qualities and skills, you can be very successful as a trader. Without them you do not stand a chance, so stop the excuses, take this serious and join some of us who have been doing it for more then 25 years with success.