Several important things at trading
First
Find current existing trend out. Trend is the most important picture at trading activity. Drawing a trend can be done by looking at the chart technically. Without a good knowledge on trend, you will not be success on trading. To draw a trend, you can use big time frame chart (daily, weekly, monthly, or even yearly) or at least middle time frame; 4 hours. The bigger time frame chart you use for the guidance of trend, the more accurate and strong it is. And so if you use smaller time frame, it is easier to get you confused and trapped in. By simpl;e, a trend can be drawn by looking at the chart. When for several weeks or months, the price goes up, down, up, down but the overal movement is upward, it signals the existence of Up trend. In this condition, your trading theme must be bullish with another word you have to BUY and it is very taboo (forbidden) to enter a new sell position.
Second
Study retracement. Retracement is the second most important after mastering trend. A good enough knowledge on trend is not enough when not supported by ability so see and estimate retracement, because both forex and stodex price will never go up or down straight forward, they must make a series of wave. By mastering good retracement analysis, it is not impossible to BUY at real LOW and to SELL at real HIGH. One of tools on measuring retracement is Fibonacci retracement.
Third
Determine your target. It is about how much the profit you love to gain on every single trade. The bigger your target profit on singe trade you want, the bigger stop loss must be provided as well. Eventhough, we still attempt to get the best price so that making big money with relative small stop loss.
You can witness directly the result of conventional trading by using good trend analysis and having good retracement skill.
Prepared by
Professor Trader
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