Understanding Trading Systems & The Stocksmarket
By Ultimate Trading
Is The Stocksmarket The Right Market For You?
There are no right or wrong trading systems or
stocksmarket to trade in. Trading in any stocksmarket, with a
system that fits you, can be extremely profitable. There are no
best markets or systems, only the one that you are the most
successful in. Most people trade in the stocksmarket theyre most
familiar with or that they enjoy following, and develop a trading
system that fits their personal strengths and weakness.
I cant stress enough that you should pick one stocksmarket to focus
on, and find one system to stick to. You need to consistently follow
your trading system for maximum success, and the best way to hone a
trading system is to apply it consistently to one stocksmarket. This
also allows you to master your stocksmarket, your system, and
increase your profits.
To be a successful trader you need to have your trading psychology
right, and practice sound money management. You also need to develop
or choose a trading system that works for you, one that meets your
goals and objectives. The stocksmarket you trade in is much less
important than these pillars of trading success you can make money
in any stocksmarket if youre focused, disciplined, and rational.
Here are a few of the types of traders and markets that are out
Day traders trade aggressively in the stocksmarket and have high
activity levels, focussing on extremely short-term price movements.
They make huge numbers of quick trades, tending to take small
profits on each winning trade, and maintain tight stop-loss levels
to protect their capital. Day traders are almost always professional
traders, because they need to concentrate on minute-to-minute
stocksmarket changes. Most day traders make their money through a
huge volume of profitable trades, so they need to be dedicated and
highly disciplined. Day trading also requires a lot of energy and
commitment, and is best suited for people who like constant activity
Position traders have a slightly longer trading time in the
stocksmarket. They generally focus on short-term and
intermediate-term price movements, tending to trade positions they
feel are likely to move over a one to six week period. Their level
of commitment is still substantial, but its certainly less than the
commitment required from a day trader. Its possible to be a
part-time position trader, but youll need to be willing to spend
several hours a day studying the stocksmarket in order to stay in
close contact with trends.
Equity traders focus on longer-term price movements in the
stocksmarket. Because of that, the goal of most equity traders
is to increase their capital rather than increase cash flow, since
oftentimes they will hold a position for weeks and months their
profits can stay as paper profits for a long period of time.
You wont be able to trade profitably unless your stocksmarket
system matches your criteria, so it is important to start with
well-defined trading objectives. If youre interested in cash flow,
but you choose a stocksmarket trading system that is focused on
equity appreciation, youll never be successful. Youll grow
impatient, make mistakes
and your stocksmarket system will fail. On
the other hand, if youre trading part-time, but you want short-term
profits, you may struggle as a day trader because you wont have the
time available to make high-volume, extremely short-term trades.
Once youve found a stocksmarket system that works for you, choose
the market that interests you the most to trade in. You will be
spending a great deal of time with this stocksmarket, so it makes
sense to pick something you will like learning about.
Perhaps the best known market is the stocksmarket. The stocksmarket
exists around the world. Most investors focus on one or two markets,
but it is possible to make money trading in any of the worldwide
stock exchanges. Where the stocksmarket can be found world wide, the
FOREX market is world wide. FOREX stands for foreign exchange and
the commodity traded is currency. FOREX trading is open 24 hours a
day, and there is no central exchange. The FOREX market is the
largest and most liquid in the world.
Futures arent found on a specific exchange. Futures contracts are
an obligation to buy or sell a commodity at a specified time in the
future, at a price agreed upon at the time of purchase or sale.
While major raw material consumers use commodity futures as a hedge
against major price swings, individual traders take futures
positions simply for profit. Stocksmarket, FOREX, and the
commodities exchanges worldwide offer futures contracts.
Options and commodities can also be traded. Buying options gives the
buyer the right to buy or sell an asset at a specific price on or
before a certain date. Commodities trading involves the buying or
selling of raw material contracts. Raw materials can include grains,
livestock, precious metals, energy, etc.
How do you determine which
stocksmarket to focus on? Most people already have a particular
market theyve invested in; if you do, start there. Just remember to
pick a stocksmarket that youre interested in and youll enjoy
following. To be successful, youll have to be focused and stay in
constant touch with trends and conditions, and if you dont enjoy
the process, you wont be successful.
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