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Stock trading: Trading Styles

Trading stock for a living and making consistent monthly income requires knowing what type of trader you are. It is very common for me to see a newer trader come in with a little experience and want to trade actively all market conditions. This can lead to a very frustrating start to a trading career.

Any trader who is earning his or her money from the markets (not someone who is doing it as a hobby while they hold down another job) will tell you that trading consistency comes from following your plan flawlessly NOT from predicting what is going to happen next. That is of course if you have a plan in the first place, most trades who commit capital to the market do not.

A plan could be a simple as how much you are going to risk per trade and what the trade needs to look like for you took book a profit or take a loss. Once these parameters are in place you will know before hand how the trade must look in order for you to make a decision. This will help you clearly determine what your trading style is.

For example if you don’t like to take let the market fluctuate that will translate into smaller losses but it will also mean smaller profits per trade. You would identify trades on a shorter time frame and make many trades with a risk reward of one to one.

If you are better at analyzing more pieces of the stock, the market and the sector and feel the smaller time frames are nothing more than noise in relation to the bigger trend, then your trades will be longer in nature and you will lets your trades breath a little longer.

Neither style is right for everyone and it is very hard to be both. Pick which one suits your personality and develop a system around it. Your trading will flow much more stress free because you will only get invloved in YOUR particular scenarios.

http://keystonetradinggroup.com/

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Categories: Beginner education
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