"Ask most NEW traders, and they will tell you about some moving average or combination of indicators or a chart pattern that they use. This is, as the more experienced trader knows, an entry point and NOT a strategy.
Any trader who is more experienced will say a strategy should also include money management, risk control, perhaps stop losses and of course, an exit point. They might also say that you must let your profits run and cut your losses short. A well-read trader will also tell you that your strategy should fit with your trading personality.
BUT there is one other vital ingredient that many traders forget - and that is to fully understand the “personality” of the shares you trade.
Some traders specialise in say, gold or Brent crude or currencies or they might specialise in a particular index such as the FTSE 100 or the Dow but many traders choose to trade shares.
Indeed some traders dabble in a bit of everything. I think this is the area that causes many traders to fail or at least not reach their full potential.
In my view: You absolutely MUST specialise.
I am sure that on the surface most people would say that sounds sensible but here is why it is a MUST!
Superficially, many charts look the same. I bet if you had not seen the charts for some time and someone where to show you a chart of Brent Crude over 6 months and then a chart of Barclays PLC over the same 6 months you would be hard pushed to say which was which purely on the look of the chart.
However, I bet that if you found a trader who trades ONLY Barclays day in and day out and also found someone who trades ONLY Brent Crude day in and day out, both of them would easily identify which was which.
WHY?
Because every share, index or commodity has it’s own “personality”.
Some will be volatile intra-day, some will follow their sector or main index (market followers), some will do their own thing, some will spike up and down regularly, some will stop at key moving averages and some will just plough through. Some will move by 5% on average before they retrace and some by 2%. Some will gap up or down regularly, some will not. You get the idea!
Therefore, no matter how good you are at analysing indicators, moving averages, trends and patterns, the same strategy WILL NOT work for everything. A strategy that works well for Bovis Homes, for example, might NOT to work for BT Group – they have very different “personalities”.
So let’s return to our question: What makes a good trading strategy?
It is a combination of:
1. Your trading personality including attitude to risk and whether your trading decisions are based on strategy or emotion (fear & greed).
2. The "personality" of the index or share must be profiled.
3. You must identify the most reliable method of determining entry point, initial stop loss position, trailing stop and exit point for that trade or index "personality".
Then comes the most important bit.
ALL of those things must fit together perfectly. Imagine if you had a Rolls Royce and the garage up the road said, "You need a new set of pistons mate but don't worry, we'll fit a set of Toyota ones, they're cheaper." One component wrong and the whole thing is useless!
A good strategy MUST have EVERY ingredient working perfectly in harmony to:
** Work in all market conditions. ** Make money whether the market is going up or down. ** Fit comfortably with you so that you don't override it.
Trading a strategy and sticking to it religiously is the ONLY reliable way to make money consistently in the markets and with the volatility in recent times you MUST look at smaller but more reliable and consistent profits.
Developing a strategy like this very tough believe me. It has taken me over three years of design, testing, re-design and re-testing to get there. Add to that a great deal of anguish and pain (even tears at times) as well as a lot of money and it's not difficult to see why most traders make an overall loss and even give up before getting it right.
But if it were easy, everyone would be doing it right?
Fortunately I got there and now trade full time for a living - AND LOVE EVERY MINUTE OF IT
The strategy I trade is actually quite simple (most good things are) and all I have is just 6 trading rules to follow but it earns me:
** An AVERAGE of 11% per MONTH - that's about 150% pa compound.
If you want to shortcut the process of developing a reliable strategy for yourself and save the time, pain and expense that I went through, I would be delighted to let you trade my strategy. I will even provide one month of email support for you.
Every detail including the shares I trade is in my book "Short Swing Trading". Naturally I expect people who benefit from it to pay - after all it represents three years of my life -- and can save you three years of yours and a whole lot of losses -- but that's your choice.
The book is instantly downloadable so you could be learning my strategy in 20 minutes. You never know, your first trade could more than pay for the book.
Click the link above to join others making good money.
P.S. I am so confident that you will find the strategy will work for you that I give a 90 day, no questions, money back offer. I can't be fairer than that.
