The glory of trading is that there is always a million dollar return lingering right around the corner. Think back 15 years to the start of the 1990’s bubble and how many millionaires were made in just a few years, and then look at all the wealth that was wiped away in 2001 and handed to the shorters. Just a few thousand dollars in the 90’s hottest internet stocks would have made you a millionaire in less than 5 years. We’re talking life-changing results here.
How to uncover winners
Winning trades are right in front of our faces. With proven strategies on how to generate profits, even the most casual investor can strike it rich in a volatile market. Much of the technique to uncovering winners varies from strategy to strategy. Short-term traders favor technical analysis, while long-term investors look for solid growth and earnings prospects.
For the short-term investor, technical analysis should be the most important part of a balanced trading plan. Technical analysis favors the short-term trader in that the study is based solely on price rather than outside factors. Rather than buying future profitability or the new factory, you’re buying for the express purpose of selling later for a much higher price. Advanced trading techniques, tools, and strategies favor the short term far more than long term because of their complexity and the inability to correct for fundamental changes.
Patience is the key
No strategy is more perfect than the strategy of patience. Traders looking for winning trades need be patient to wade out the false signals and unprofitable trades, while acting on just a few, more profitable trades. Impatient traders are quick to lose because they take a greater percentage of poor trades to good trades, thereby subsidizing their losses with minute profits. Even proven strategies cannot avoid the perils of an impatient investor ready to pull the trigger at virtually every signal.
Basic trading fundamentals
Uncovering winners requires that traders stick to the basic trading fundamentals: no return chasing, patient positions, and monitoring their own trading capital. A conservative approach works to uncover profitable trades while avoiding those that are simply a money hole. The best investors are able to limit their exposure to bad trades while increasing exposure to winners. This is a win-win position when losses are limited and gains are plentiful. Look back to the fundamentals when a complex trading system has you on tilt. A quick check back to the basics is a great way to take yourself out of the market, while perfecting any possible problems in an incomplete trading system.
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Leroy Rushing is an active, professional day trader; trading coach; and author. He is the Founder and CEO of Trading EveryDay, a provider of educational trading products and services that are available worldwide. Trading EveryDay has complimentary/FREE products, a Tools of the Trade eBook and a Trading Room Report, that are downloadable for your convenience.
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