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Tuesday, July 16, 2024

Effective Stock Trading

What is effective stock trading? First, let’s take a look at the dictionary definition of “effective”. Effective – 1) Producing or capable of producing a result, 2) Producing a decided, decisive, or desired result. So effective stock trading is stock trading which produces a desired result. The desired result is to produce a profit.

The objective of effective stock trading is to share with you trading systems, techniques, and information to help you trade stocks to make a profit.

I am often asked the question, “What will the stock market going to do?” My answer is either, “fluctuate” or “The market is going to move up, down, or sideways”. It is the fluctuation of the stock market that creates numerous opportunities to profit. I simply try to position myself so that I can take advantage of the market movements.

I primarily use technical analysis in my trading. With technical analysis I can analyze a stock or group of stocks and create a stock trading system which will increase the likelihood that I will make a profit. I like using a trading system because it help to keep me focused and disciplined. I prefer to know rather than guess about my trades. That does not mean that I know which trades will absolutely make a profit. If that were the case there would be no reason to take the losing trades if I knew they would be losers ahead of time. What I mean by “know” is to know the elements of my trade ahead of time. Here are some of the elements I’m speaking of:

1) What stock(s) to trade
2) How much capital to risk
3) When to enter a trade
4) When to exit a trade

Once my trading system give me a signal I then know exactly what to do to take action and place the trade. This gives me a high level of confidence and that high level of confidence translates into a high level of discipline. Being disciplined is absolutely essential to being a successful stock trader.