Long-term trading strategies involve analyzing a company’s key financial ratios to determine its financial health and estimate the company’s value.
“We want to see ourselves as winners, but successful traders always focus on their losses” -Peter Borish, Chief Strategist, Quad Group.
Trading is a profession that dates back to the days of barter. Two parties came together to make a deal for goods that each party needed and the other had. That formed the basis of the trading system.
A stock market is simply a meeting place of buyers and sellers of shares, who represent the ownership claims on companies. These companies may include securities that are listed on a public stock exchange and securities that are privately traded.
The first modern shares were traded for the Dutch East India Company in 1602 on the Nieuwe Brug in Amsterdam. The first derivatives were traded in 1607 for that one company, with the dividend being paid after a few years. Futures trading and short selling were also invented in Amsterdam after a few years.
As of May 2021, the National Stock Exchange’s market cap is US$3.1 trillion, listing 1952 companies.
Trading is a noble profession in India and is a subject of interest for thousands of traders. Although there are many success stories, the market remains a place where people have lost a lot of money. It comes down to? Acting on emotions, by chance and not following certain fundamental rules. Let’s discover some trading strategies to always make a profit:
Presenting here 10 proven trading strategies
Always have your trading plan ready: Without a plan, this is a surefire way to expose yourself to danger. A trading plan is a bridge made up of one or more strategies that will take you to a successful future.
A common trading plan is to set a target price based on a particular trend while also setting the maximum loss you can bear. It is extremely important to have a rules-based trading system that prevents you from trading on emotions.
Approach trading like a business to maximize your business’s potential: trading is no different from a business. The job of a company is to cut costs and increase profits. Likewise, a trader’s job is to reduce the losses and maximize profits. If you notice continuous losses in your trades, there must be something wrong with your methodology.
Make the most of the latest technology: today traders have many more indicators at their disposal compared to traders in the 1970s, for example. As a trader, it is your job to keep yourself updated with the latest developments in price movements, charts, tables. Another crucial aspect of trading is to keep abreast of the latest news around the world.
Installing the latest technology is a must. You don’t want to get stuck in situations where some orders didn’t go through due to a delay in your tooling!
Follow a conservative investment strategy: it is always better to be skeptical of the stock market. Conservative investing prioritizes preserving capital overgrowth or market returns. Create a trading system where you can bear some losses, but only occasionally. This should always be an exceptional scenario.
Focus on learning the markets as a student: Here’s a fact about successful investors: they never stop learning. Whether your trades are successful or not, knowledge is something that should always be a priority. Writing down your mistakes is a good habit that traders often undertake. Try not to repeat your past mistakes. Take advantage of the various tools available in the stock market. If you try to go against the grain in the market, it will eventually humble you.
Don’t bite off more than you can chew: There’s a reason trading is risky and fixed deposits are not. Once you have embarked on your trading journey, you should know the risks associated with this business. Try to follow the famous “2% capital” rule that minimizes the extra risk.
If you are new to the world of stocks, STOP TRADING WITH HIGH LEVERAGE. Unless you are confident in the price movements, leverage can cost you huge amounts of money. Set your position sizes in advance and never act impulsively.
Build a solid trading system worth all the effort: the art of trading takes a lot of practice. It’s all about rules, methods, discipline and patience. Professional traders never let emotions cloud their decision making. Emotional trading may be worth a few times, but in the long run you need a trading system that follows rules and not emotions. All the effort you put into building that strategy will be worth it.
Do NOT ignore stop loss: it is almost impossible not to lose losses every now and then. all your technical analysis may fail during this time. Sometimes you just have to book losses to survive in the long run. This is exactly what stop loss does. A golden rule of trading is that while looking for profit, you should always protect your disadvantage. Stop loss takes care of that.
Identify situations where you should stop trading: What most traders fail to realize is that not trading is also a form of trading. Whenever we let emotions take over the numbers, there is a problem. During a turbulent market situation, it is better to stay away for a while. Always remember: the market doesn’t care about your ego and emotions.
Stay focused while trading: Complacency and ignorance do more harm than good in the trading world. Making money by trading is already a difficult task.
By devoting your full attention to understanding the market trends better.
“We just try to be afraid when others are greedy, and only greedy when others are afraid” -Warren Buffett
There is no doubt that making money trading is for everyone. It’s REALLY, REALLY DIFFICULT, but with the right guidance and knowledge base, it’s possible. Browse the web. To attend webinars, subscribe courses and learn from leading market experts. Your efforts will pay off.
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