Stock market strategies are what you should be looking for? Ten strategies would be given to you so that you can be able to guide you to building a winning strategy. You will require one or more useful stock market strategies if you are focused on making money on the stock exchange. Following are ten steps will enable you to develop an effective strategy.
All stock market strategies should include the following
1. Assess your skills
– Are you confident, do you have necessary skills needed and have you practiced them by paper trading. This approach would enable you to be equipped with the best knowledge on how to save money, in case you haven’t assess your skills. It will allow you to know how to manage your money instead of ending up giving away your money to the pros.
2. Be mentally prepared
– in case you are not mentally prepared to do fights in the market, please don’t start the trade. Otherwise, you will be in the position of losing it all. Most likely this is bound to happen if you are tired, hung over or preoccupied. It is important to make sure you are in better position before you start.
3. Set a limit that you are comfortable with how far are you willing to risk before you start trading? You are supposed to decide what percentage of your portfolio you are willing to risk, just in case you lose a certain amount at any particular point it is good for you to get out and stay out.
4. Set goals
– you should set realistic profits targets and risk or reward ratio just before you venture into a trade. You are required to set weekly, monthly and annually profit goals and re-assess them regularly.
5. Finish your homework
– you should be aware of what’s is going around the world before the markets open. You should know if the markets are up or down, what is happening on the NASDAQ, what economic data is out and in.This strategy would enable you to learn everything you need to know before you make a trade.
6. Prepare well before you trade
– it is best if you remove distractions, reboot your computer, set alerts for entry and exit signals, and also ensure that all signals can be easily detected necessary. Ensure everything are properly prepared before you start to avoid any distraction which can be costly.
7. Set exit rules
– this rules is being ignored mostly by traders by concentrating their efforts on looking for busy signals and paying tiny attention on when to exit. Also, many traders cannot bring themselves to sell when they are down; it is safe for you not to make the same mistake again. You should be able to have knowledge of getting over your losses, or you will never make it as a trader.
Professional traders still manage to a profit in spite of them making more losing trades than winning one, but by managing money and limiting losses they still make a profit.
8. Set entry rules
– the entry system that you have set, requires being complicated enough to be effective but simple enough to facilitate snap decisions. More than half of all traders are now more computer generated because computers often make better decisions than humans. The advantage of Computers is that they don’t think or feel, when conditions of the trade are met. They dont opt to enter or exit when trade is unfavorable, and they don’t get angry or feel invincible after a few good trades, each decision is based on probabilities, and you need to be the same.
9. Keep detailed records
– all of the good traders are good in keeping accurate records making them good record takers. However, they know exactly how and why they have won and if they lose they tend not to make a mistake twice. You should write down details such as targets, entry and exit points, the time, support and resistance points, daily opening range and any other thoughts you may have. Through this strategy, you can also save your trading records so that you can go back and analyze the profit/loss of a particular system.
10. Perform a postmortem
– this strategy goes hand in hand with number nine.
At the end of each day, you should be able to list down your conclusions in your trading journal so that you can use them for future reference such as studying them and learn from what you have done.