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