Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
Coinbase vs Binance for Bitcoin, Ethereum Crypto Trading & Investing During Bear Market 2021 - 11th Jun 21
Gold Price $4000 – Insurance, A Hedge, An Investment - 11th Jun 21
What Drives Gold Prices? (Don't Say "the Fed!") - 11th Jun 21
Why You Need to Buy and Hold Gold Now - 11th Jun 21
Big Pharma Is Back! Biotech Skyrockets On Biogen’s New Alzheimer Drug Approval - 11th Jun 21
Top 5 AI Tech Stocks Trend Analysis, Buying Levels, Ratings and Valuations - 10th Jun 21
Gold’s Inflation Utility - 10th Jun 21
The Fuel Of The Future That’s 9 Times More Efficient Than Lithium - 10th Jun 21
Challenges facing the law industry in 2021 - 10th Jun 21
SELL USDT Tether Before Ponzi Scheme Implodes Triggering 90% Bitcoin CRASH in Cryptos Lehman Bros - 9th Jun 21
Stock Market Sentiment Speaks: Prepare For Volatility - 9th Jun 21
Gold Mining Stocks: Which Door Will Investors Choose? - 9th Jun 21
Fed ‘Taper’ Talk Is Back: Will a Tantrum Follow? - 9th Jun 21
Scientists Discover New Renewable Fuel 3 Times More Powerful Than Gasoline - 9th Jun 21
How do I Choose an Online Trading Broker? - 9th Jun 21
Fed’s Tools are Broken - 8th Jun 21
Stock Market Approaching an Intermediate peak! - 8th Jun 21
Could This Household Chemical Become The Superfuel Of The Future? - 8th Jun 21
The Return of Inflation. Can Gold Withstand the Dark Side? - 7th Jun 21
Why "Trouble is Brewing" for the U.S. Housing Market - 7th Jun 21
Stock Market Volatility Crash Course (VIX vs VVIX) – Learn How to Profit From Volatility - 7th Jun 21
Computer Vision Is Like Investing in the Internet in the ‘90s - 7th Jun 21
MAPLINS - Sheffield Down Memory Lane, Before the Shop Closed its Doors for the Last Time - 7th Jun 21
Wire Brush vs Block Paving Driveway Weeds - How Much Work, Nest Way to Kill Weeds? - 7th Jun 21
When Markets Get Scared and Reverse - 7th Jun 21
Is A New Superfuel About To Take Over Energy Markets? - 7th Jun 21
Why Tether USDT, Stable Scam Coins Could COLLAPSE the Crypto Markets - Black Swan 2021 - 6th Jun 21
Stock Market: 4 Tips for Investing in Gold - 6th Jun 21
Apple (AAPL) Summer Correction Stock Trend Analysis - 5th Jun 21
Stock Market Sentiment Speaks: I 'Believe' We Rally Into A June Swoon - 5th Jun 21
Stock Market Russell 2000 After Reaching A Trend Channel High Flags Out - 5th Jun 21
Money Is Cheap, Own Gold - 5th Jun 21
Bitcoin and Ravencoin Cryptos CRASH Bear Market Buying Levels Price Targets - 4th Jun 21
Scan Computers - How to Test New Systems CPU, GPU and Hard Drive Stability With Free Software - 4th Jun 21
Hedge Funds Getting Bullish on Gold - 4th Jun 21
THERE ARE NO SOLUTIONS When the Media is the VIRUS - 4th Jun 21
Investors Who Blindly Trust the ‘Experts’ Will Get Left Behind - 4th Jun 21
US Stock Market Indexes Consolidate Into Flagging Pattern – Watch For Aggressive Trending Soon - 4th Jun 21
Microsoft (MSFT) Stock Trend Analysis - 3rd Jun 21
No More Market Bloodbath – Beyond Cryptos - 3rd Jun 21
Bank run, or run from the banks? - 3rd Jun 21
This Chart Shows When Gold Stocks Will Explode - 3rd Jun 21
The Meaning Behind Gold’s Triple Top - 2nd Jun 21
Stock Market Breakout Or Breakdown – What Does The Next Big Trend Look Like? - 2nd Jun 21
Biden’s Alternate Inflation Universe - 2nd Jun 21
What You Should Know Before Buying Car Insurance - 2nd Jun 21
Amazon (AMZN) Stock Summer Prime Day Discount Sale - 1st Jun 21
Gold Investor's Survival Guide - 1st Jun 21
Silver and Copper to Benefit from Global Electrification Push - 1st Jun 21
Will Gold Shine Under Bidenomics? - 1st Jun 21
Stock Market Buy the Dip, Again?! - 1st Jun 21
Stock Market Consolidation Ahead - 1st Jun 21
Stock Market Summer Correction Review, Crypto CRASH, Bitcoin Bear Market Initial Targets - 31st May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

How to develop your stock trading strategy

InvestorEducation / Learn to Trade Aug 06, 2020 - 12:56 PM GMT

By: Submissions

InvestorEducation

Developing a trading strategy from scratch might seem an impossible task for the rookies. But if they know the common terms at trading, they can do so like a pro trader. The successful traders love to use their trading method as it syncs perfectly with their personality. You can buy the most expensive trading method in the marketplace, still, you won’t feel comfortable since the strategy is designed based on someone else personality. The developers design the system in such a way that it syncs with the personality of the developer.

We all know no one shares the same personality. So, those who are looking to become a profitable stock trader must learn to analyze the stock markets with their trading method. Let’s see how we can create a trading system like a pro.


Open a paper trading account

You might be wondering what the heck the paper trading account is. The paper trading account is nothing but a demo account. The reason you should open a paper trading account is to test your trading skills. Most traders don’t have any idea about how this market works. So, if they open a real account, they will be always under heavy pressure and this will create an unnecessary threat that will limit the profit factors to a great extent. For the betterment of your trading, you must eliminate the unnecessary stress. Open the paper trading account so that you don’t have to worry about the losses. Try to sync with the market so that you feel comfortable with this profession.

Start taking the trades

Before you intend to develop the trading method, you should start taking the trades without having any knowledge. Explore the features of the trading platform so that you can learn the use of root tools. It might seem tough at the initial stage but once you learn to use the tools professionally, you will feel more comfortable with your trading approach and this will allow you to make better decisions at trading. You might think trading is a very complicated task but it’s not. It is the easiest thing once you know the use of the premium tools available on the platform.

Developing a simple edge

To buy the shares, you must develop a simple edge. Instead of focusing on the indicators, focus on the raw price data. The elite traders always suggest the rookies trade the market with the help price action trading method. The price action method can be incorporated into any form of system and it can significantly improve the win rate for the traders. After you learn to take trades at the trend line, channel, Fibonacci retracement level, it’s time to incorporate the price action signals. With the help of the price action signals, the traders will be able to improve the skills to a great extent. Most importantly, they will know when to close the trade when things go wrong.

Developing the recovery plan

Everyone thinks about the trade execution plan. Very few traders are smart enough to emphasize on the exit trading method. Even if they do, they think about the potential stop loss. It turns out closing the trades’ plays an important role to maximize the profit potential. You might think you know a lot about this market but try to ride the trend to its very end. You will notice, you will need a lot more new techniques. For instance, you have to know about the significant highs and lows of the market. These are the points where the price can reverse or even change the trend. You have to very cautious while the price is heading to this zone or else a good profitable trade can turn into a big loss. And the exit plan needs to be designed in such a way so that you are not taking the trades with a negative risk to reward ratio. The minimum risk to reward ratio for the trades should be 1:3 or else you don’t have a robust trading edge.

Testing your draft trading plan

After creating the draft plan, it’s time to test the system in real trading accounts. This is the most important part of creating a trading method. Many traders jump to the real market without backtesting their trading methods. Unless you backtest the trading method, you won’t be able to fine-tune the system. Most of the time, this will lead to catastrophic loss and you won’t be able to earn money. For the betterment of your future, you should test by executing 30-40 trades. You might be thinking it will take years but do have the option to trade multiple stocks. And the benefits of trading multiple stocks in the testing phase is enormous.

You will learn how your system reacts to different assets. Eventually, you will be able to pick favorite assets that have the potential to give maximum returns. If necessary, you can use simulation software to fasten the process of trading. Once the backtesting is done, it’s time to trade the real market.

Trading the real market

Taking trades in the real market is a whole new experience. You should be cautious about your emotions as emotional stress can force you to break the rules at trading. And if you break the rules, you are no longer trading with the backtested trading model. So, learn to control the emotions in the real market.

By Russell Fenton

© 2020 Copyright Russell Fenton - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in