Not Having of a Trading Strategy Can be Fatal.
Of course once you have learnt the pitfalls of trading, usually by bitter experience you can then easily avoid them before they occur. Making small mistakes are a foregone conclusion, for instance entering the wrong stock symbol or incorrectly setting a buy level.
The mistakes that you will need most to avoid are the ones due more to bad judgment rather than just plain simple errors. These are the type of mistakes which can ruin your trading career instead of just one or two trades. To avoid these pitfalls, you will have to watch yourself very closely and stay alert.
Trading in the stock market will always involve a certain amount of risk .But you must never treat it as you would gambling in a casino or a race track.
Once you have acquired a solid trading strategy,this is one which you plan, test, and revise repeatedly. Then you will need to stick like glue to this strategy and never act on spur-of-the-moment decisions. For once you act upon any gut feelings, this will jeopardize any and all of the sensible preparation you have done previously.
Never ever evaluate your trading performance on the basis of individual trades. Always judge yourself by the consistency and profitability of your overall strategy and performance. This is the only accurate way to stay completely in control of your trading success and profitability..
So how do you go about building a solid trading strategy?
All this basically means is for you to go about acquiring a set of pre-defined rules that you follow and trade by consistently. You ought to set goals for each week, or even each month (but never for a single day, as there are too many things you won’t be able to control over such a short period of time).
The next step is then to decide on what are your realistic profits and losses will be for each individual trade. Then according to these targets that you have then set for yourself, you then you can carry out your trading plan without any deviations or distractions.
For instance if you have set profit for a trade say $200, you then sell when you have reached that target even though you have a feeling the stock will continue to rise upwards.This is where discipline comes in.
So in conclusion, by keeping to a trading strategy which allows you to revise what you’re doing continually, plus this will also teach you which goals and limits will work and which ones won’t. Once you have put this into practise, this will then enable you to have a trading strategy that will minimise your mistakes and risk, while at the same time will maximise your profits.
I wish you profitable trading.