We all need friends to help us out when we’re looking to overcome a huge task.
And learning to trade profitably in the long run is a very huge task indeed.
So let me introduce 3 powerful friends in trading who can help you achieve your goals.
This is going to be the first of our friends in trading.
Trends happen in the market all the time, it’s just a matter of which timeframe the trend is happening on.
Trading with the trend is hugely beneficial for a couple of reasons:
Firstly, the trend tends to be more forgiving if we make mistakes.
New traders will naturally make a lot of mistakes, it’s part of the journey to developing their trading processes.
Even experienced traders will make mistakes as well.
For example, by trading with the trend, even if we made a bad entry, the trend will help keep price generally in our favour so it doesn’t hit our stoploss too easily.
Secondly, by trading with the trend, it becomes more likely that prices will move further in our favour.
So we will not only have better odds to exit with a profit, but we’ll get the occasional big winner a little more often.
This helps skew our trading towards profitability in the long run.
Amongst the most powerful friends in trading, this is possibly your best friend.
It’s unique to your trading.
Nobody else will have the same trading journal as you.
In your trading journal, it’s great to keep the numbers for your individual trades.
But you can make your friend even more powerful by adding a few more things.
I have a previous post which talks about a few ways you can make your trading journal even more powerful.
Click here to see this post about Trading Journals.
You’ll be able to monitor the breakdown of your trading performance more closely and keep refining your methodology as you go along.
As you experience more and more variations of the market’s mood, you’ll gain a better sense for what’s best in each environment.
All this can be tracked in your trading journal just with Excel.
Of course there are other alternatives out there but for a start, excel is going to serve you well for many years.
For those of you who have reached a point where excel isn’t enough to fulfill your tracking criteria, then all you need to do is a quick search online for more sophisticated solutions.
This is another amazing friend which you need to have!
You can do any kind of analysis in the world, be it trading based on fundamentals, technicals, sentiment, the tides, the stars, the moon, coin tosses or throwing darts at the wall.
In the end, you only make money if Price moves if your favour.
So it’s important to learn how to read the price charts to find out what the market is thinking, to see where are the ideal places to enter, to identify defined levels of risk, to find the best places to exit, and much much more.
Chart reading isn’t entirely about technical analysis, there is still more that a trader can infer from the price charts to determine his trading decisions.
There are many sources online to learn the basics, such as Investopedia.
But to learn to be profitable, that’s another story altogether.
Of course to be a profitable trader, you’ll need more than these 3 friends.
But befriending these 3 will give a huge boost in your trading progress.
If you’d like to learn more about trading profitably, then click the banner below.