|
If you want to be a profitable trader, you must follow 4 simple rules:
1. Trade with the Trend
2. Cut losses Short
3. Let profits Run
4. Manage Risk
That's it! If you can follow those 4 rules it's almost impossible to lose money trading.
So, why do most traders lose money with their trading?
I could write a book on that question alone... but after 22 years of working with traders I have some answers.
Most traders complicate trading because they are perfectionist. They want everything to be PERFECT before they pull the trigger. In reality, most profitable traders look for look for setups that follow the trend.
While almost everyone pays lip service to the above 4 rules, almost no one actually implements them correctly in their trading.
Ask any professional trader (by professional I mean someone who is profitable)... if it is better trade WITH the trend or AGAINST the trend.
I'll be willing to bet All of these professionals will tell you the same answer: Trading with the trend.
Let's start with cardinal rule #1: Trade with the Trend
If you look at your chart and you can't tell if you are in a uptrend or downtrend in 30 seconds or less... then you are in trouble!
Set up your charts to show you EXACTLY if the market is moving UP or DOWN!
Think about it... Trading is a river in which water flows to the path of least resistance. When you go with the flow - you remove resistance.
Money also flows, when it moves up and down each day, the market moves it moves in the direction of LEAST RESISTANCE... that's how trends work.
How can you possible expect to make profits if you are flowing upstream in RESISTANCE? Well, this is exactly what most people do when they place their trades!
A perfect example is the trader who uses overbought/oversold oscillators. The trader might have and oversold oscillator with divergence and it looks PERFECT, but the trend might still be going DOWN.
So, what happens?
He buys at the market and it starts to move his way - then it reverses into a loss. The trader says: "WHAT THE HELL HAPPENED, IT LOOKED PERFECT".
I'll tell you what happened... He was fighting the trend (going against the trend or flow of the market) and was stopped out of his position.
I see this happen every day... ALL DAY!
Trading against the trend is like driving a car and NOT looking at ANY of the stop lights, eventually you are going to crash the car... and the trader will lose money.
STOP - LOOK - And LISTEN to what the market is telling you.
Indicator Warehouse enables day traders to choose from a wide variety of NinjaTrader technical analysis tools, at very reasonable prices. Indicator Warehouse represents the best and brightest NinjaTrader programmer/consultants in the industry. Every day, we help day traders put together customized sets of technical analysis tools to enhance their charting capabilities and make their trading experience easier and more profitable.
Related Articles -
day trading, free indicators, indicator downloads, Ninja Trader,
|
