Creating A Well-Balanced Stock Trading Strategy Like A Pro Trader

Creating A Well-Balanced Stock Trading Strategy Like A Pro Trader

Becoming a professional trader in the stock market is one of the most difficult tasks in the investment world. You might have extensive skills in running a business but this is not going to make you a successful stock trader. To become successful in the stock trading market, you have to curate a professional trading strategy. So, how do we develop a well-balanced trading method and take the trades with strong confidence? Well, there is no exact answer to this question. In order to take the trades with strong confidence, we should be following certain rules.

Crafting your own trading method in this stock market will become easier when you start following some core rules. Go through this article as we will teach you the proper way to develop a robust trading routine.

Study the basics

Without having strong analytical skills, you are never going to succeed in the stock trading business. Most novice traders jump into the stock trading business without having any training or basic skills. Eventually, they lose their trading capital within a few months. But if you want to take your trades in a systematic manner, we strongly recommend that you go through the basics before you start creating your trading strategy. You should have a fair knowledge about the support and resistance level and learn about the major stocks. Once you develop the basics, it’s time to move to the next level.

Practice in the demo account

Practice makes a man perfect. If you wish to master the art of trading, we strongly recommend that you learn things in the paper trading account. Keep on practicing and try to understand the nature of the price movements in major stocks. Once you get the basic knowledge about the stock market movement, you may start creating some rules which will allow you to take the trades at any market condition. But do not make the rules complex. Visit the official site of Saxo and analyze the actions of the successful traders. It should give you a decent idea about the structured trading method.

Phases of the trend

While developing a trading strategy, you must learn about the different phases of the trend. If you try to take the trades during the retracement phase, you have to use a wide stop loss. Moreover, you might have to lose the trades. So, we strongly recommend that you take the trades at the end of the retracement. Learn to use the Fibonacci retracement tools as it gives you a better trading level. Being a Fibonacci trader, you should move back to the higher time frame. The lower time frame trading signals are not that accurate and you will be losing money most of the time.

Determine your goals

Unless you have a predetermined goal for this market, you are never going to learn the true art of trading. In most cases, people get frustrated since they try to curate a trading strategy without having specific goals. On the contrary, professional traders always have their predefined goals. Based on their profit target, they curate their trading method. They never set unrealistic goals since they know it can cause them big trouble. Aim for a rational profit target and you will be able to curate a robust trading method.

Testing your trading strategy

Once you have developed a draft trading strategy, you should back-test the system in the demo account. By back-testing the trading strategy, you will be able to find the most common mistakes. Fix the issues and again do the backtest. Repeat this process until you are confident with your trading system. Once you become certain that you can earn money with the trading strategy, you may start trading the real stock market. But remember, you can’t avoid the losses even though you might have a professional trading strategy. So, keep the risk factors low in every trade and trade with discipline.

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About the Author: Jill T Frey