The title of this article is an industry standard, the kind of article designed to catch the eye of Google’s search engine ranking system and push the website hosting the article further up the rankings.
Newbie and novice traders would search for just this type of article and with a bit of luck be swept into the sales funnel and onwards to opening an account with the hosting broker.
What we can't know is how much attention the readers actually paid to the article and what they took away from its judging by the win-loss ratio in retail CFD trading the answer would seem to be not enough. So let’s try to change that.
Trading is tough and to make progress you will need all the help you can get so why is it that so many newbie traders think they know best and ignore the advice and tips offered by their peers?
Trading really boils down to doing three things well these are keeping your emotions in check
Emotional biases and the heuristics or decision-making process hard-wired by evolution into our subconscious are the successful traders' enemies we need to learn to recognise these traits and nip them in the bud.
Learning to think critically and rationally and then applying that thought process to picking trades that have a positive risk-reward ratio where the odds are slanted in your favour, and not against you.
Picking the trades that have the best chance of success won't become second nature overnight but if you have a process and stick to it you will start to recognise good opportunities when they present themselves
Lastly managing your money and your risk is key to long-term success which comes about through being in the game for as long as possible a long tenure will put you in front of a larger number of trading opportunities market moves etc.
Trading capital is built up over years not days or weeks. Having the ability and the discipline to calculate trading risk, trade size, stop losses take profits levels etc is what separates traders from gamblers.
The best way to get into the habits outlined above is to take a systematic approach or if you prefer have a process that you go through each time you trade. That can start when you look for trading opportunities - you should have a checklist of criteria you are looking for this coud be driven by indicators fundamental data, chart patterns or other factors.
For example, you might look for stocks which have posted reversal signals in their daily chart or which have had an MA cross over be it bullish or bearish. If you find a set-up with a shooting star and dead cross then you likely have a selling opportunity.
Or you might look at those stocks that have been left behind by a rally and which coud now play catch up with it.
The point is to be disciplined in your approach.
One of my favourite watchlists is a table of S&P 500 stocks that are priced at less than $150. All told there are around 60 stocks in that list though if I am honest one or two of those have crept over the $150 mark.
It's a big enough list for something to be going on within the group on most trading days but not so big that it becomes unwieldy to manage and monitor
They are a pretty active bunch and they represent many of the S&P 500 sectors, which means that the list is exposed to many market memes and narratives.
Here’s a chart of chip maker Intel (INTC) which had been left behind by the AI rally but is now starting to play catch up the most recent break above the 50 D MA line drawn in red, is a textbook long entry point.
Exactly the sort of thing we are talking about when we mention the idea of slanting the odds of trading success in your favour.
We touched on the AI rally a moment ago and here it is for all to see in this chart of the year-to-date percentage change in Nvdia in black versus the Nasdaq 100 in green.
Nvidia has massively outperformed and has become a trillion-dollar company in the process but it has also dragged the Nasdaq 100 index higher with it. Nvidia has posted 32 new highs over the last six months the Nasdaq 100 has posted 37.
So why are the vast majority of retail traders opposing that rally by being short of the index when there is nothing on the chart to suggest that the uptrend is over?
Why would a retail trader think that they know better than the market just over $1.4 billion has flowed into QQQ, the ETF that tracks the Nasdaq 100 index over the last month alone
Why would a retail trader think that they know better than the market just over $1.4 billion has flowed into QQQ, the ETF that tracks the Nasdaq 100 index, over the last month alone how can you hope to oppose that wall of money why would you even try?
The trend is your friend they say and it's true, of course, trends don't last forever but neither does your account balance, so let the market tell you when a trend is over and follow it while it lasts.
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