Did you ever wonder why the same 5-10% of successful traders end out making most of the money in the long run? This includes the stock market, the commodities market, or any market that is traded. The reasons are many, and we will explore two of the key reasons in this article. If you properly implement these trading keys into your own trading, you will dramatically improve your overall results.
One of the main reasons traders or investors fail is they do not have a successful trading plan. Following a successful plan will give you an edge, each and every time you trade the markets. You want to have the odds in your favor each time you initiate a trade. As an example, this is what I do before taking a position in the futures market. I analyze trends, implement pattern recognition techniques, analyze seasonal tendencies, conduct historical price level analysis, check the current cash basis, and most importantly, I use sound money management. This means keeping all losses small. Preservation of your trading capital is a traders top priority.
Probably the number one reason, traders or investors are not successful,is because they do not understand proper trading psychology. Human nature plays a very important role in shaping all the markets that are traded. Its human psychology that causes the various patterns you see on a chart. It does not matter if the chart is a one minute chart or a monthly one. These patterns are created because of human nature, and human nature has never, and will never change. That is why the same patterns on a chart occur over and over again. Once you learn technical analysis, and can interpret these patterns correctly, you can make a fortune trading the markets. Many traders rely on hope or let fear and greed take over their trading. Once this happens, it is a certain recipe for disaster in your trading account.
You want to have as many factors as possible in your favor. That is your edge which you get from following a successful trading plan. I will never trade any market unless the odds are strongly in my favor. Then, if the market goes against me, I will get out with only a small loss. That is how fortunes are made trading the markets. Learn from great trading legends, past and present. This includes traders such as William J. O'Neil, Bernard Baruch, Gerald Loeb, Richard Dennis, Jesse Livermore and others. Read their books, study their methods and techniques. Once you can follow a successful trading plan, and implement proper trading psychology, you are well on your way to making a fortune.
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