Have you been getting into a lot about bad trades lately? Does it bother you why everything you’re doing doesn’t seem to produce consistent positive results? Maybe other beginner traders you cognize are starting to book profits, while you’re still in the same rot. Maybe you don’t know if to acquisition in and if to get out of a trend.
“The trend is your friend” is a very popular saying in the stock wholesale industry. But it’s not popular for nothing. If you want to book profits, get into trades that have a high probability concerning going higher and stay away from stocks that are going down.
The reason why beginner traders lose money all the ad hoc is because they don’t have suitability education. The old misconceptions we have about trading can get us into a lot regarding trouble. These misconceptions could be:
1. It’s pass to trade without rock solid instruction
2. Trading is racing
3. Attend 2 alternative 5 crash courses and you’ll become profitable
Trust me, if you lack to become a fat trader, you have to hurtle away all the ideas that you’ve formed circa trading before you got toward a real stock rialto course. You’ll find out later, since getting a solid education, that what you belief about the stock market in the nostalgic may not entirely be true. If you don’t get becoming education, you could get on into more bad trades.
Here are the things that you need to do to secure the fact that you’re not trading against the trend:
Identify the current trend
There are 2 major trends that you’ve got to watch out for. First is the uptrend further the back one is the downtrend. Then we besides have the sideways trend. But there are people who think that this is not a real trend. It’s only going sideways. But it’s still worth knowing. We’re more concerned of the upward including downward movement regarding the stock price.
How do you identify the current trend of a stock? It’s quite simple. You’ve got to consumption the 200-day period on the go average.
If you don’t have the 200-day period poignant average, you will have no basis for the trends.. The stock is in an uptrend if it’s above the 200-day period MA. If it’s below, then the stock is in a downtrend.
Another good thing about the 200-day MA is that it does not only tell you whether the stock assessment is going down or up, it also gives you a 60% probability that the stock will continue to move in the care where it’s currently heading. So if stock price is going up, you are 60% sure that it’s going to continue to move up.
What if you patronage against the trend?
Getting until trades with a 60% or 70% of going further down is just plain crazy?
If you refuse or fail to get into a stock that has a 60%, 70% or 80% probability of going further up, how are you here in the preeminence place?
Don’t forget that you need to book profits. That’s all. Nothing else. Professional traders do not gamble their money away. Gambling can be done at Vegas or at your friend’s house every Saturday night. By not going against the trend, you have bigger chances of booking profits.