Learn Indices Trend Following Strategies
A indices trader must come up with a indices trading strategy that they stick to when trading the online stock indexes market. A indices trader must have the discipline to follow the rules of their indices trading strategy at all times. That is why it is best to come up with trading strategies that are profitable - profitable indices trading systems will be much easier to follow and stick to. This is because a indices trader knows that by following the rules of their indices trading system they will be successful.
A carefully designed trading strategy that has been back tested and proven to produce profitable results is one of the keys to becoming successful when trading the stock indexes trading market. This type of strategy will make it easier for the indices trader to follow the rules of their indices trading strategy because they already know that the trading strategy is profitable, therefore maintaining the discipline to continue following the indices trading system will be much easier.
Successful indices trading strategies will also include:
1. Indices trading money management rules
2.Indices Trading Psychology Mindset
These two will greatly improve the success of any stock indexes trading system.
However, Let us look at stock indexes price action strategy before explaining more about indices trading money management and indices trading psychology.
Indices Trend Following Strategies
Indices Trend following strategies are based on first of all determining the overall market trend, whether the stock indexes trading market is moving upwards or it is moving downwards. After determining the stock indexes trading market indices trend the indices trader will then only open trades in one direction.
Upward indices trend - in an upward indices trend indices prices keep moving up, and here the indices trader will keep opening buy stock indexes trades.
Downward indices trend - in a downward indices trend indices prices keep moving down, and here the indices trader will keep opening sell stock indexes trades.
There are various strategies of determining the stock indexes trading market trends and the two most popular ones are:
Indices Trend lines - traders will draw indices trend line on the stock indexes price chart to determine the current general market movement. Once the indices trend direction is determine a indices trader will then open stock indexes trades once the stock indexes price touches the indices trend line or when stock indexes price is close to the indices trend line. The trader will only open trades in the direction of the trend.
When markets form trends, the indices trend will have a lot of momentum and this momentum will mean that the indices prices will keep moving in that direction for a period of time that lasts for quite some time.
Trading the indices trend is one of the most profitable way to trade the stock indexes trading market if a indices trader catches a indices trend that has already formed they can make a lot profit just by trading in the direction of the indices trend and the longer the indices trend stays the longer a indices trader can continue to make profits. Some major indices trend may last for years and these can prove to be the most profitable trading setups especially when they last for years.
Moving Averages Strategies - Another indices trend identification strategy is the use of the 20 day moving average, and when indices prices are above this moving average the stock indexes trading market is bullish and if indices prices are below this moving average the stock indexes trading market is bearish.
The 50 day moving average is also used for determining the medium term indices trend, while the 200 day moving average is used to determine the long term indices trend of the stock indexes trading market.
Traders can also use two moving averages to form the moving average crossover method, this method will have a shorter period moving average and a longer term moving average and these two will be use to determine the current market trend. For example a indices trader can use the 5 day and 7 day moving averages, and for this strategy the indices trend is upwards if both these moving averages are moving in the upward direction and the indices trend will be down if both these two moving averages are moving downwards.
This system will indicate the indices trend is about to change one these two line cross over each other. This signal will be a god time to close trades if a indices trader has open trades.
Indices Trading Strategies Tips
Once a indices trader has come up with their indices trading strategy, they should also include the following so as to make their indices trading strategy more successful.
1.Indices Trading Money Management Guidelines
2.Indices Trading Psychology
Indices Trading Money Management Guidelines
indices trading money management rules should be part of your indices trading strategy - these rules will help you as a indices trader to manage risk. This means that you will use the two rules of indices trading money management - these are risk reward: ratio and drawdown reducing method when placing your stock indexes trades to determine the lot size that you will open in the stock indexes trading market. The most popular indices trading money management rule use in stock indexes trading and the one that you should also add to your trading plan is the rule that says a indices trader should never risk more than 2 % of their account balance on any one single indices trade.
To learn and know more about these two indices trading money management rules, traders should read the indices trading money management tutorial that is on the learn indices trading lessons section of this website under the indices trading key concepts lessons.
Indices Trading Psychology Mindset
In order to become successful when trading the stock indexes trading market a indices trader has to learn about indices trading psychology. The indices trading psychology or mindset that is required to become successful in indices trading is one that avoids the emotions of fear and greed while trading the stock indexes trading market and is a mindset of total discipline that a indices trader will follow all their trading rules and their indices trading strategy and only trade with signals that are generated by their indices trading strategy. With discipline a indices trader will not trade unless their indices trading strategy gives a trading signal. A indices trader will have the mindset of only following their indices trading system 100 % all the time without second guessing the stock indexes trading system. A disciplined trader will also not place trades in the stock indexes trading market just because the stock indexes trading market has started to move up or down, instead a indices trader will wait for a signal to trade to be generated by their indices trading strategy.
In order to learn more about indices trading psychology and how to manage emotions while trading the online stock indices market a indices trader can read the indices trading psychology tutorials from the learn indices trading lessons section of this website under the indices trading key concepts tutorials.