'Am I fit enough to do this business?'
'Can I manage my money here in this business?'
etc.etc.
Not only for Trading,to do any business one should have to do a deep self analysis which helps the person a lot while running appropriate businesses.
O.K. Lets come to
our knowledge bank
Trading Methods for Profit
If you want to make big profits, then you should know that the best way is do it for yourself - and not rely on others.
Any trader can build and implement a successful trading method.
This article shows you how to build a profitable trading method in five simple steps.
There are of course many other methods that will work but here we are going to focus on one that all traders can understand, implement with discipline and trade with confidence - Which are the essential ingredients of any successful trading method.
What are the specific components of a Successful Trading method?
Successful trading methods may be different but they all have three core principles.
1. They are Simple
Forget complicated systems with lots of rules and complicated equations - it's a proven fact that simple systems work better and are more successful.
As they are simple they tend to be more robust and are less likely to fail, in the brutal world of trading.
2. They Run Profits and Cut Losses
You need to have a longer term FOREX trading system that milks the big trends for profit, and cuts losses quickly.
3. Follow Long Term Trends
There is no point in trading for small profits, as you will never cover your inevitable loses with small profits - You need to catch the big profitable trends that last for months or years and milk them.
Now let's look at the 5 simple steps you need to follow to get your trading method off the ground:
1. Your Method
We have said to keep it simple, and this is exactly what you need to do - just a few rules, that you understand and a robust money management system to cover you through your inevitable losing periods.
2. Spotting Trends
Look for the long-term weekly trends, and then move to daily charts to time your entry and get in on the action.
By long-term trends, we mean months, or years - NOT just a week or two.
3. The Best Way is via a Breakout Method.
Breakouts occur in all financial markets - so base your system on a trend following breakout system.
There isn't space here to describe exactly what a breakout system is, but you can download a handy PDF on this site that will give you all the basics you need to build a system based around this proven method of trading.
It's a fact that most of the world's most successful traders use breakout systems in their trading - and if it's good enough for them it's good enough for you.
4. Timing Entry Levels
The best way to time an entry is to watch for a break on the chart, confirmed by stochastics crossing with bullish or bearish divergence
This is the ultimate entry tool.
When a market trends you can also use Bollinger bands, to time your entry - and also lock in profits.
The Bollinger band is a fantastic indicator, and all traders should consider using it as part of their trading strategy.
5. Money Management
If you are following a breakout method, either the trade runs quickly in your favor - or the break is "false" and the break does not follow through.
Don't put your stop just below the breakout point.
If the trade does not follow through within a day, simply exit the trade, and use a monetary stop on the day of entry.
A Simple trading method for Profit
With the above method, you will focus on the longer-term trends only and trade in frequently, but that won't stop you making a lot of money over the longer term.
You will also liquidate losers quickly and therefore preserve your equity
Trading is all about cutting losses and running profits.
With a bit of research and testing the above indicators you will see why a trading method built on the above principles, will work, and will continue to work.
No comments:
Post a Comment