|
Author: David Jenyns Article source: http://www.systemtradingblog.com/. Used with author's permission.
Every successful trader has a winning system. There are of course, as many systems out there, as there are traders. Some systems get you to buy on strength and sell on weakness others do the opposite.
Some investors succeed as value investors , a la Warren Buffet ; others make their millions in momentum trading . I have even heard of an astrologist who uses the stars to trade profitably. Although, there are a variety of methods, the point I am trying to illustrate here is this: there are many ways to profit from the markets, but you ultimately must devise a system that is your own, because the personalization will act as a motivational discipline to stick with the plan.
There is however, one common element amongst all successful traders...they have a systematic way they approach the market. This approach is unique. In reality, no two people have exactly the same amount of money, tolerance for risk, personality, time or experience. Therefore, the key to success is to design a system that is suited for you.
Many traders fail because they do not assess how well a trading system matches their temperament. Instead, they chase fads, searching for the "Holy Grail" of trading success; or they waste their money on the latest investing software or buying up the tapes of the latest self-proclaimed stock market guru.
The fact is there is no perfect system. Successful investors succeed because they choose a system that they feel comfortable with, not one that claims to be the current trend. A cool, disciplined trader will make money with an "average" system, while a nervous, arbitrary trader will wreck a "brilliant" system.
The key is to develop a methodology that maximizes your strengths and minimizes your weaknesses. Nevertheless, how do you do that? First, define your objectives.
Ask yourself these questions:
1. Am I designing a trading plan for cash flow or capital growth?
2. Do I want to trade part time or full time?
3. How much money can I work with?
4. What annual rate of return do I want? (Note: the higher the return, usually the higher the risk).
Decisions such as these will have the largest impact on the style of your trading system.
For example, if your goal is cash flow and low risk, buying or selling at extreme levels (overbought/oversold) is an unlikely style. If your goals center on quick capital growth, high returns and high risk, then bottom picking strategies and gap trading may be your style.
I had one client that was a wiz at buying and selling on eBay. This person was a beginner so I suggested buying the trade closer to the 52-week low, then selling the trade when it foresaw a profit.
Entries and exits must be precise and must follow a strict set of rules.
Styles range from aggressive day traders looking to scalp few point gains to investors looking to capitalize on long-term macro economic trends. In between, there are a whole host of possible combinations including swing traders, position traders, aggressive growth investors, value investors and contrarians.
Moreover, your style will depend on your level of commitment and experience. Day traders are likely to pursue an aggressive style with high activity levels. The goals would focus on quick trades, small profits and very tight stop-loss levels. For this, the trader uses intraday charts to provide timely entry and exit points. A high level of commitment, focus and energy would be required.
On the other hand, position traders are likely to use intraday charts and pursue 1-8 week price movements. Focused goals on short to intermediate price movements and the level of commitment, while still substantial, would be less than a day trader.
With this in mind, be sure to define your trading objectives as best as you can. Unless your system matches your own criteria, you will never make big profits. You need to ask yourself the simple question: "I am trading in the market because I want to __________"...
Answer this and you are well on your way to setting your portfolio objectives. -=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
David Jenyns is recognized as the leading expert when it
comes to designing profitable trading systems.
His most recent course Ultimate Trading Systems is a step-
by-step trading roadmap to designing profitable trading
systems. Learn how *you* can become one of his students.
Click Here ==> http://www.ultimate-trading-systems.com
Receive David's free trading tips by sending a blank email to:
==> ultimate-trading-systems@getresponse.com
-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
Looking for a Web Design Company? Use a Web Design Directory
Have you been trying to find a Web Design Company you can trust? Using a Web Design directory can make that search easier.
Anti-Spam Software Case Study: Pacesetter Claims Service
When catastrophe strikes, many insurance companies tend to get flooded with new claims and spam in the email inbox is the last thing they want to deal with...
How To Teach Your Children Self-Reliance and Potential
Help your children acquire the value of self-reliance and potential. They will feel the growth of individuality, self-esteem and become leaders to others
Who are you?
Who are you?
Time Management - Keeping a Clean Desk
Lack of organisation is the key culprit of not completing projects on time and on budget, working overtime, seeing that promotion being given to someone else, e...
Body Fat Distribution Factors
Most men and women put on weight differently. But on what makes fat settle in a preferential way, there is little evidence. Scientists ascertained that the spec...
He Still Hasnt Popped the Question - Should You Give Him an Ultimatum?
You've been dating the man forever, and he has yet to cough up a ring. You spend every single weekend with him. You endure his flatulent buddies from college. ...
Tips on Breaking the Creative Block
Creating anything is hard to do. Here are some tips that really work if you find yourself creatively blocked.
The Benefits of Coenzyme Q10
Coenzyme Q10 has exploded onto the health scene. This powerful
mineral has many health saving properties. It is responsible for
essential chemical reactions in ...
Crystals: How To Cleanse Them
Crystals have been used for healing and divination for thousands of years. But just as they give off energy, they take in energy, too. Learn how to rid them of ...
The One Single Trick To Online Marketing Success Revealed!
Learn this one simple trick that can boost your online marketing revenues.
Ideal Clients - Who are They and Where Do You Find Them?
Explores the concept of the ideal client: How to describe them, how to identify them, and how to find them...
Planning the Music for Your Wedding Ceremony
Music will play a vital role in your wedding, particularly during the ceremony. Presented in a clear and simple way, this article will get you started on pickin...
Debt Management Plans – Suggesting Ways to Survive the Quagmire of Debts
For most of us, debt consolidation loan is the only debt settlement technique available to people. The article has classified debt management plans into defensi...
3 Website Positioning Tactics Guaranteed to Boost Your Traffic
3 Website Positioning Tactics Guaranteed to Boost Your Traffic - Learn Exactly How to Increase Your Website Traffic Using 3 Power Tools.
7 Strategies To Stop Eating Junk Food!
The obesity statistics are horrendous, this at least in part is due to the temptation that junk food poses to each and everyone of us. It is an addiction that ...
Beds In A Bag Make You An Instant Designing Pro!
If your bedroom needs revamping but you're design-challenged, then read on!
Gambling Income and Expenses - Tax Requirements
Hit a big one? With more and more gambling establishments, keep in mind the IRS requires people to report all gambling winnings as income on their tax return.
Building a Strong Business Relationship
When it comes to business and sales, building a strong relationship is critical. The stronger your relationship is with your customer, the more likely they will...
Aquarium Supplies Part 2 -- My First Experience With Goldfish
If you are seriously considering keeping fish as pets or are just starting out, I would like to stress again the importance of having some basic knowledge about...
Time for A Marketing Tune-up
If you have been in business any length of time, I can assure you that habits, not conscious thought, are guiding your marketing actions. STOP! It's time to get...
What are business loans?
When starting a business, many individuals turn to a business loan for funding. Here is what you need to know about them.
Article Writing: 10 Easy Ways To Generate Highly Read Article Ideas
If you're writer, I am sure sometimes you may have run out
of topics to write about.
Every Obstacle Always Presents an Opportunity
In ancient times, a King had a boulder placed on a roadway. Then he hid himself and watched to see if anyone would remove the huge rock.
|
Print this page