TIPS: MAXIMIZING PROFITS OF Stock Index SYSTEMS
Tips for Systems for Beginner Traders - How to Improve Your Trading System When Trading Stock Index Online
1. Define Simple Stock Indices Rules and Follow the Trend
The simpler the system is the better. If the trading system is too complicated, it will be very difficult to stick to the rules. Complicated Indices systems are also very confusing. A simple system makes it easy to follow the rules.
2. Eliminate Risk Quickly and Let Profits Run
Minimizing risk is far more important than making money. Our first objective in Indices trading is to make the trade less risky. We do this by entering only high probability trade setups, setting stop losses, cutting losses quick and never average down, & letting the profitable trades run for a while, just long enough but not too long so as increase the profits. Profitable Stock Index trades are only kept open as long as the system shows the market trend is in place, these trade transactions should be closed immediately once your exit signal criteria is generated by the system.
3. Select the Right Indices
Once you as a trader have your system, you'll want to begin testing it on a practice trade account. Stock Index have their own characteristics different from others. A system will give different results for each Indices.
- EURO STOXX 50 Index
- DAX 30 Stock Index
- Dow Jones Industrial Average 30 Index
- FTSE 100 Index
- Nikkei 225 Index
- S&P ASX 200 Index
- FTSE MIB 40 Stock Index
- S and P 500 Index
- NASDAQ 100 Stock Index
- CAC 40 Index
- SMI 20 Index
- AEX 25 INDEX
- Hang Seng 50 Index
- IBEX 35 Stock Index
To maximize the profitability of your system find the most active market hours for a chosen stock index and trade during that market session only.
4. Use Stock Index Money Management Rules
Always risk less than 2% per transaction. With compounding, you will be surprised to see how quickly your account grows once you start to trade with a profitable system.
5. Keep a Stock Index Journal
Keeping a log of all your trades will help you to become a better & better & will help you follow the rules of your system. A trading journal will also keep track of your profitable trades and losses and you can analyze why a stock indices trade setup was profitable and why it was not.
6. Set take Profit Targets
Establish a daily, weekly or monthly profit targets when trading the market. Once you hit this target. This will stop you from over-trading and also will stop you giving back your profits the market. Keep your risk : reward ratio high, a 3:1 risk : reward ratio is best. This means opening index trades only when you have the probability of making three times than what you are risking.
Example of signals generated by our trading system
Example 1: Buy Signal and Sell Signal Generated By Trading System
Buy signal is generated by the indicator based system, then an exit signal is generated before another reverse sell signal is generated on this trading chart
Example 2: Two buy signals generated by System
Two buy signals are generated during the upward trending market
Example 3: Exit Signal Generated by System
Examples of Indices Trade Signals Generated by a Stock Indices System
