Trade Stock Indices

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 stick to the trading system at all times. That's why it's best to come up with strategies that are simple - profitable trading systems will be much easier to follow and stick to. This is because a-trader knows that by following the rules of their trading strategy they will be successful.

A carefully designed strategy which has been back-tested and proven to produce profitable trading results is one of the keys to becoming successful when trading the market. This type of strategy will make it easier for trader to follow the system rules of their trading system because already they know that the trading strategy is profitable, therefore maintaining the discipline required to continue following the strategy will be much easier.

Successful trading strategies also will include:

1. Indices funds management rules

2.Stock Indices Psychology Mindset

These 2 will improve greatly the success of any system.

However, Let us look at price action strategy before explaining more about money management guidelines and principles & indices trading psychology.

Trend Following Trading Strategies

Trend following strategies are based on first of all figuring out the overall market trend, whether the trading market is moving upwards or it's heading downward. After determining the market trend the trader will then only open trades in one direction.

Upwards 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 heading down, and here the trader will keep opening sell stock trades.

The various strategies of determining the trading market trends & the 2 most popular ones are:

Trend lines - traders will draw trend line on the price chart to identify the current general market movement. Once the trend direction is determine a trader will then open stock trades once the price touches/tests the trend-line or when price is close to the trend-line. The trader will only open trade transactions in direction of the trend.

When markets form trends, the trend will have a lot of strength and this force will mean that the trading prices will keep moving in that direction for a time period that lasts for quite some time.

Trading the trend is one of the most lucrative 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 market trend and the longer the trend stays the longer a indices trader can continue to earn profits. Some major trend may last for years & these can prove to be the most lucrative setups especially when they last for years.

MAs Methods - Another trend identification strategy is the use of the 20 day moving average, and when prices are above this moving average MA the trading market is bullish and if prices are below this moving average the trading market is bearish.

The 50 day MA is also used for determining the medium term trend, while the 200 day MA(Moving Average) is used to identify the longterm trend of the market.

Traders can also use 2 MAs to form the moving average cross over trading technique, this technique will have a shorter period moving average & a longer-term moving average & these 2 will be use to identify the prevailing 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 and the trend will be down if both these 2 moving averages are heading downwards.

This system will indicate the trend is about to change once these 2 lines crossover each other. This trade signal will be a good time to close out trade positions if a stock index trader has open trades.

Trading Strategies Tips

Once one has create their strategy, they should include also the following so that to make their strategy more successful.

1.Stock Index Equity Management Guidelines Course.

2.Indices Psychology

Indices Funds Management Tutorials and Lessons

Index money management guidelines/rules should be part of your strategy - the trading rules will help you as a trader as a trader to manage risk. This means that you will use 2 rules of money management - these are risk : reward ratio and drawdown reducing technique when placing your stock trades to identify contract/lot size which you will open in the trading market. Most popular funds management rule used in stock indices trading & the one that you should also add to your plan is rule which says a indices 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 course that's on the learn tutorials section of this site under the trading key concepts lessons.

Indices Psychology Mindset

In order for a trader to become successful when trading the trading market a trader has to learn about indexes psychology. The psychology or mindset that's required to become successful in indices trading is one that avoids the emotions of fear and greed while trading the trading market & is a mindset of total discipline that one will follow all their rules & their trading strategy & only trade with signals that are generated by their strategy. With discipline one will not trade unless their trading strategy gives and generates a signal. One will have the mindset of only following their trading system 100 Percent all the time without second guessing the system. A disciplined trader also will not place trades in trading market just because the market has begun to move upwards or downwards, instead a index trader will wait for a trading signal to trade to be derived and generated by their 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.

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