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Great Tips For Trading Success

Guest post by: Gary Kerkow

Article Overview: The same people continue to make fortunes trading because they share certain important commonalities. In this article, find out some of these secrets to trading success.

Great Tips For Trading Success

A small percentage of traders make most of the money

Why is it that a small percentage of traders and investors, make most of the money in the stock market and futures market? As they say, there is a reason for everything, and this certainly applies in the world of trading. The same people continue to make fortunes trading because they share certain important commonalities. This includes proper trading principles, and winning psychology. In this article, I will cover some of these important aspects, which lead directly to trading success.

Fundamental and technical analysis



The fundamental analyst uses hard numbers, or economic data, to forecast prices. The technical analyst uses internal market data, such as price, volume, and other indicators to forecast prices. Technical analysis is an excellent tool, that can be used for timing purposes. This includes entering into a trade, and also exiting a trade. I have found it quite beneficial to incorporate both technical and fundamental analysis into my overall trading plan. Both of these, combined with solid money management, has allowed me to enjoy excellent trading success for a long time.

Cut down the number of trades you make



You should only trade a market when the odds are firmly in your favor. Have patience and wait for just the right trading opportunity to present itself. The best trades should have three things going for you. They are fundamentals, technicals, and the general market tone. Fundamentals should tell you there is an imbalance of supply and demand. This could result in a major price movement. Technically, you want to trade with the trend, and have the chart show the market is moving in the direction the fundamentals suggest. As far as market tone goes, when there is news, the market should act properly. This means it should reflect the psychological tone you are looking for. All trading is based on probabilities, and putting the odds in your favor is a key to trading success.

A great defense and a potent offense



Money management or risk control, is vital if you want to win in the long run. You can control your potential maximum loss. A very good technique for controlling loss is the implementation of a stop. As an example, a good principle is to never risk more than 10% from your buy-point, when acquiring a stock. If you bought your stock at 30 dollars per share, you would place a sell-stop at 27 dollars per share. This way you would automatically exit a position when your loss is 10%. Many world-class traders will get out after a 4 or 5% loss. The other side of the coin is just as important. If you are to have a potent offense, you must hold on to your winners, until objective evidence tells you to exit a position. You can also add to a position. This is called pyramiding. The key is to only pyramid a position when the market is going in your favor. This done correctly, can yield a fortune, and be a big part of your trading success.

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Article Tags: trading, trading success, trading tips



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