Only one trading principle can solve two issues.The principle in question is buying best-performing stocks but selling worst-performing ones at the time!
Why is it useful？ Have you also conducted transactions based on this principle？ You are advised to contemplate the reasons as the detailed explanation isnt presented herein. In a nutshell, this principle can maximize your returns to a large extent and minimize risks!
The first issue is identifying trends!
As we all know, forex trading should follow the trend. The winning rate of trend trading is over 50%. The thing is, what trend should we follow？
How can we identify trends and reversals？ A trend to follow should be chosen in time amid your decision on your trading methods. It is useless to discuss trends when you have decided your operating periods because differences to this end may vary the direction of trends. Therefore, the judging standards for your trend are enough to help you understand your trading periods well, making rises and falls discussed by others insignificant.
Equipped with a better understanding, you only place orders in the direction of the trend, thus solving the issue above-mentioned! There exist judging standards of identifying reversals that aim to follow trends. In this regard, you can adopt whatever you want when making a decision!Moving averages (MA) are a good choice, clear and concise, immune to subjective judging!
The second issue is the structure of trends!
The basic structure of trends provides you with a clear picture of trends. So, what is it？
Is the basic structure a doji, hammer, hanging man, inverted hummer, or shooting star？ It is the real body of candlestick patterns that counts the most. When you understand that an excellent level for making trading decisions is located at the upper or lower shadow of the real body, will you blindly conduct transactions？
It is the unchangeable nature instead of a secret that will be useless once divulged.
A comprehensive transaction consists of principles constituting its structure, rules linking itself to the market, and tactics.
Make short positions patiently and wait for the opportunity to follow a trend.
Wait for a really perfect trend on the market patiently. Avoid entering the market based on predictions as timing is everything. Therefore, the purchase and sale, or transactions, should be conducted at the appropriate time rather than on a daily basis. Traders believing that trading should be conducted at any time are ignorant to a condition, i.e., a transaction operated on objective and reasonable ground.
If you can avoid the considerable hazard of the big wipeout, you can enjoy handsome profits.
You cannot enter the market until it performs a strong trend or a trend taking shape based on your analysis.
My understanding of the above theories concluded by senior traders is summarized in two reasons for entering the market.
1. There is an extremely certain trend (which you can understand) that can be identified by your analysis.
2. There are signals for the timing of market entry that have been sufficiently tested and verified.
The short position is a panacea for uncertain trends, a technique easy to carry out that is equivalent to the cessation of transactions.
Patience is necessary for holding positions to wait for the end of trends.
Trends feature sustainability. It is my persistence instead of ideas that help me with fortunes. Persistence is of paramount importance! Keeping purchasing and your holds is the only thing you need to conduct in face of an uptrend till you predict that it is going to an end.
In my opinion, making correct decisions and persevering to the end are the hardest to learn. Few investors can achieve this.
Positions for trend trading are most likely to be lucrative. Therefore, please dont give them up.
Control losses and maximize profits. The latter is the aim of patiently keeping holds, the key for which is how to close positions. Solutions to this issue are the precondition for responses to patiently holding positions. An approach is concluded at present after the one-year practice and exploration in a repeated manner..
It is ceasing to think about buying or selling to the peak or trough but leaving the market when the trend of prices reverses or stops by shortening the time period. Although some profits are lost, the holds can remain till the end of the trend in a bid to keep the consistency of closing.
Knacks for increasing the probability of profits:
Capricious as it is, the market can bring traders tremendous wealth, but most of the time, it gives rise to vicissitude and liquidations. Knacks learned from senior investors are introduced herein.
Solutions to the following questions lay the foundation for earning stable profits.
1. What plays a decisive role in traders continuing to make money？
2. How to improve the profit-loss ratio in investment？
3. What are tips for doubling positions with small capital？
Establishing developed trading systems is the only way to solve these problems. The success rate of the systems should be increased to over 70%, thus controlling consecutive losses within five times. Traders can achieve the goal of steady triumphs in every ten transactions through specific fund management methods by setting the profit-loss ratio of systems to 3:1 or even greater.
Traders are required to have an in-depth understanding of and a belief in their trading systems if they crave fortunes in trading. Correct mentalities and good trading attitudes are preconditions for successful investments.
Speaking of the investment market, the rule is 80% of traders suffering losses, which is permanent that no one can change. It is indicative of the majority who are suspicious of their trading systems, an irresistible nature, rather than the mystery or misery of the stock market. The suspicion is so devastating that it can lead investments to failure. However, faith in systems is the most crucial link in trading, conducive to gaining profits.
The magic bullet to successful transactions is fully located at the insistence on trading systems.
The success of investments is reliant on making the most of trading tools instead of flexing their muscles. The most effective tactic for being wealthy is concentrating on and persisting with a good trading system, two characteristics that can create miracles beyond your imagination.
Successful traders harbor a strong belief that adherence to an excellent trading system is a silver bullet for them to win, whereas the suspicion of this is a curtain-raiser to the collapse of investments. They equip themselves with correct mindsets, prudent trading attitudes, strong confidence, decisiveness, and persistence. They can conduct transactions fully based on trading systems even if the system experiences hardships as they are aware that success lies in long-term visions, patience, and confidence in persevering with a fixed profitable mode.
Patience is required in the operation of short positions and the wait for trends and opportunities.
It is time to constitute a brand new trading life and embark on the design of winners rules when you contemplate that you are liable for losses.
If you are excited about or afraid of trading, you will be hindered from leveraging your competence and intelligence as these emotions can lead you to irrational transactions or the loss of lucrative chances. Professional traders will remain cool-headed based on their wisdom other than emotionally respond to transactions as their unskilled counterparts do. Emotional responses can cause you to pay the unaffordable price in the market.
Greedy inexpert traders operate transactions too frequently as they just want to trade regardless of trading opportunities. A host of losses can destroy their career before they understand what is going on.
A set of approaches to analyze the market should be formed, i.e., the occurrence of A bolsters the likelihood of Bs appearance. Multiple ways of analysis should be adopted to verify trading decisions because of the market featuring myriads of aspects. Trading tools vary according to different markets such as bull market, bear market, and volatile market under the climate of an ever-changing market, while methods should be employed to distinguish differences among them at the same time.
The mentalities, feelings, and behavior of a winner are different from those of a loser. Traders have to conduct introspection and abandon illusions to change their existing ways of thinking and behaving. It is hard to change personalities, but you have to work hard to this end if you plan to be a professional investor.
Three qualities for a trader:
1. Enthusiasm. You must be passionate about the market as you will feel difficult to persist in trading if you conduct transactions nor for fondness but fortunes only.
2. Courage. This term isnt tied with opening positions but with confessing faults. It refers to a resolution to carry out stops in response to mistakes.
3. Discipline. Plans should be prepared for every transaction. Stops should be set up and operated without hesitation if they reach the level of risk management.
These three points are of paramount importance, influencing the psychology, concentration, and personal mindset of a trader that play a decisive role in making successful investments come true.
Principles as follows should be conformed to for a professional investor wannabe:
1. Make up your mind to stay in the market for the long term. It indicates that you determine to be a trader for at least 20 years from now on.
2. Equip yourself with critical thinking and effort to learn. Paying attention to experts posts with skepticism requires questioning instead of blindly accepting.
3. Dont be greedy or trading in a hurry but spend time on learning. The upcoming market is rife with numerous good opportunities.
4. A set of approaches to analyze the market should be formed, verifying trading decisions via centralized analysis methods. Trading tools vary according to different markets such as bull market, bear market, and volatile market under the climate of an ever-changing market, while methods should be employed to distinguish differences among them at the same time..
5. A set of fund management plans should be formed. The primary goal must be long-term survival in the market, followed by the steady growth of assets and handsome returns.
6. Traders are the weakest link in any trading system.
7. Mentalities, feelings, and behavior of a winner and those of a loser are worlds apart.
Trends and oscillation zones:
1. Techniques of trend trading are different from those of operation in the oscillation zone. The difference lies in coping with the relationship between strengths and weaknesses. When the trend remains, traders must follow the strong side, buying based on the uptrend and selling according to the downtrend. On the contrary, trading in the oscillation zone requires the purchase when the trend drops to the support level and the sale as it rises to the resistance level.
2. If you are waiting for breakouts when the market is turbulent, you must decide whether the purchase should be carried out at a prospective breakout, during the breakout, or after an effective breakout. As for compartment, a third of positions can be respectively bought at a prospective breakout, a present one, and a rally. The principle of fund management is necessary for risk avoidance at any time. The distance between the point of purchase and a protective stop on trading charts should not exceed 2% of total capital.
3. Techniques for fund management in trend trading are different from those in the oscillation zone. Speaking of a trend, positions should be lowered while stops should be widened. When it comes to an oscillation zone, positions could be elevated while stops could be narrowed.
Please use rules to solve stops and opening, adopt trends to cope with operating stop-profit and explaining probability, and fuel confidence with profits. In this way, you are bound to be a successful trader!