The stop is a tool to take the emotion out of trading and provide risk and profit protection. Don’t kid yourself we all need them.
Trading is easy, it is only ourselves that make it hard.
The probability attribute tells us that if the average is rising and the price is above it this is a bullish sign.
The price / volume relationship is fundamental to chart analysis and is part of the jigsaw that creates a powerful trading tool.
Trends occur all the time and being able to identify and ‘ride’ them profitably is a very attractive challenge for us all.
Here are five things we should always know to trade and invest successfully.
A picture tells a thousand words and as you know I am a visual person and that’s the reason I use charts.
Perspective and clarity
Charts sum things up beautifully. They collate, reflect, simplify, cut through the distractive and unnecessary crap and also tell us what to do and when. Stock charts tell us where the money is going. To a large degree accuracy and benefit will depend very much on the quality of the analyst and this makes me a realist and not a dreamer. I am always prepared to expect the unexpected. Charts however provide precise price information at any point in time and are a great help in telling us all we need to know to trade and invest successfully
Rumour or fact
They provide a complete collection of investors’ perceptions based on the information available and yes that information can be based on fact or rumour. That is unfortunate but it doesn’t actually matter; what matters is what moves the price and rumour and perceptions are a part of that.
Human behaviour and ‘traits’
Certain traits are reflected in this price movement and that’s a reflection of human behavior and if we can determine or read, how this behavior is going to play out it can be of great advantage. We can’t read every jump, jive and nuance but what we can look for is a general trend in that behaviour. It is this trend in behaviour that I capitalise on. It’s just like catching that big wave in the surf when it breaks, you ride the momentum of the wave until it subsides, and then jump off before it stops. Simplicity is the essence.
Building a plan
Markets behave irrationally so our involvement requires cool headed actions at all times and as a part of the Stockradar service we help investors understand the engagement process and how to respond appropriately to what the price action is telling us. What are you doing and what should you be doing right now? An interesting question as the market currently tosses prices around with abandon. By having a rule-based approach it makes the trading process easy by telling us what to do, and when, and at all times. Armed with this knowledge it will help you grow your awareness and ability to succeed as an investor and to achieve the steady growth in your equity which we all desire.
Two key clues
In the end it comes down to two things, common sense and control. By following our real time examples and understanding the psychological motivations of investors your market insight becomes switched on and responsive allowing a clearer path to your investing success. The stock market is a fun and challenging place. Come along for the ride you’ll enjoy it.
Blogs, videos, newsletters and a fully comprehensive Trading Centre are all at your fingertips when you subscribe to Stockradar. Take a free 2-week trial.
We all need a reality check and to get back to basics, The Stockradar stock selection process is based on three easy to understand common sense analysis setups.
No matter what your analytical style of investing it’s the wise commentators who reinforce the perspective, wisdom and necessity of ‘not losing money’ as the primary focus during times of market volatility.
Catching trends is like surfing. Catch the wave, enjoy the ride and jump off when it subsides. That’s the simple message.
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