Saturday, April 18, 2009

The 3 elements to be a successful trader

To be a successful trader you must take into consideration 3 points:

Price forecasting, timing and Money management.

The first point indicates Vich way the market is expected to trend. It is a crucial decision. Determines if the trader will buy, sell or wait.

To predict future price movements, as well as trends, you can use the tools provided by technical analysis or fundamental information.

The second point is timing, that means, trading tactics. Determines the specific entry and exit moments. Here is especially usefull technical analysis.

Money management is the efficient allocation of funds. It includes portfolio management, diversification, how much money to invest in any market, the use of stops,and whether to trade conservatively or aggressively, etc.

Many experienced traders consider key to know money management to win in the long run.

Adaptation from: Chapter 16th of “Technical analysis of the financial markets” by John J. Murphy.

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