We live in a refined world of small quotes which describes a bigger action. They’re parables which are found everywhere everyday, all pointing towards one key message, which without fail is to “keep it simple.” The principle of simplicity is an extremely workable one under most situations, especially trading the markets.
Although to refine one’s trading skills isn’t easy to master, what they involve are simple principles. Mastery of learning in most areas of life includes conserving extraneous movement and effort. Once it’s perfected and done right, it looks easy to execute, as most will say, “I can do that.”
The observer quickly finds that it’s not as easy as it appears. Trading can be extremely frustrating and discouraging, the first sign being the trading funds dissolving. Once the market disappoints, it may feel that you’ll never grasp it, realizing it appears impossible, yet doable.
The Emotional Turmoil Of Trading
Too often, traders will take to heart the swinging highs and lows. Although the give and take is normal as well as expected, big swings going the wrong way are usually the result of inappropriate technique.
Finding your niche or stride can make the trading process more consistent, and therefore more profitable. Analyzing and studying the best stocks, this rather than collecting recommendations, can become too overwhelming.
The Ups And Downs Of Movement
There can be periods of time such as a week of trading where things will go great, confirming the value of following a few select stocks, while getting to learn their nuances and their behaviors.
Certain favorites will emerge, this by building up a stable of reliable stocks to trade, and then aligning with them. What’s recommended is picking a group of 6 to10 favorites, and then constantly back trade them.
Learn to recognize all the patterns of their behavior, such as if the stock behaves in a similar way around earnings. Does the stock make clean or sloppy turns when reversing. Does it have a tendency to follow certain chart patterns.
When doing so, what you’ll begin to feel is the vibe of the stock while also getting a feel for the traders who influences it, which will improve your chances to repeatedly tap that stock for pattern trades.
To Follow Patterns
The patterns that are observed, is the behavior of the individuals and not the stock, the key principles who interacts with the various traders, fund managers, brokers, and the public.
These cast of individuals are uniquely different in each stock or group of stocks, bonds, or commodities. As a result, unique patterns will develop, so recognizing them becomes the key.
So instead of impulsively jumping back and forth looking for a better opportunity, stick with the ones which keeps producing on a routine cycle. Then you’ll develop a pattern, so you can collect over and over again.
Narrow Down The Odds
This principle of narrowing down a group of stocks will get you intimate with their patterns. What you’ll also need is to study the behavior of the company. How they react to earnings or losses, what products they’re releasing, how the stock responds.
Some traders will spend their entire time trading one or several companies. Then once others begin to see your success, you’re knowledge, what they’ll then want is your expertise on what that stock’s going to do next.
What these traders will then do is start following and hopefully profit from your valuable insight. The mistake that they’re making is that they’re asking you for tips, but not asking you to teach them how to trade like you do.
It’s folly to think that you’ll readily give them the information. Would they not learn more if they took the time to learn the skill themselves, this rather than just using the trading tip. But that’s human nature.
The Easy Way Out
This is how most function in their lives, and that’s they want things handed to them on a silver platter. They want and are willing to take the path of least resistance. It’s the give a man a fish or teach him how to fish, mentality.
What everyone wants to know is the secret, a free magic strategy just handed to them. What the economy is based on is selling the sizzle and not the steak. We constantly search for the fountain of youth, a short cut, the inside edge.
The one universal constant which remains, is the belief that working smart is much better than working hard. In the end, the magical solution is finding the key, the reason or the core of the matter, and then developing your own simple and specialized skills around it.
Developing Your Own Niche
So once you find the best solution and can cultivate and harvest it over and over, then you’ve discovered one of the fundamentals of successful trading.
The secret is finding a consistent stream of residual income which runs on autopilot. Patterns exists because we’re all creatures of habit, and the market is run by human emotions.
Once you have 6 to 10 stocks to trade and are familiar with their patterns, then you’ll always have something to trade. Once you find a better performing stock, then you can replace the weakest performer and place it on the back burner, this until it corrects itself and behaves.
The biggest problem with traders is they’ll chase the latest greatest hot trendy stock, while allowing their greed and emotion to cloud their vision, constantly making the same mistakes. This the bright shiny object syndrome.
Instead, once you find a group of stocks along with a few strategies that work, then stick with it. Don’t stray and mess around with what brought you all the profits.