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Wouldn’t you love to own part of a successful business without having to take the pressure that comes from the day to day management of the business?

Stock trading makes this a reality for many people.

By owning stocks in a given company, you can sit back relax and watch your company grow from one level to another.

Stocks are excellent financial instruments that allow you to grow your income by doing nothing but collecting dividends at the end of a financial year.

Investing in stocks is an integral part of any investment portfolio.

It is, therefore, important for you to have a solid understanding of stocks and how to trade them before embarking on your journey to financial freedom.

Stocks are traded in stock markets.

It is, therefore, important for you to understand the stock market too.

The number of people trading in stocks has increased considerably over the past few years.

This has coincided with the advancement in technology that makes stock trading much easy.

What is Technical Trading

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These predictions may not be always be precise but they would help traders understand which way the stock prices might move

This anticipatory power would help the traders know where to invest and when to sell or buy a stock.

Technical Trading deals with the buying or selling of stocks, commodities or any tradable instrument where the price of the tradable instrument is influenced by the outcome of supply and demand.

Technical Analysis can predict both short-term and long-term trends.

Technical Analysis is often graphically represented and it focuses on the movements of stock/trade instrument price.

Keeping the move mentioned points in mind, we are well aware that all traders wish to make the most of their trading skills.

When one invests in a stock or a tradable commodity, they are aware of the risks they might have to undertake.

Trading is thus, not just an investment of money but also an investment of precious time and mental wealth.

To make this an easy task, one must know the initial rules to be followed before beginning to indulge in e-trade.

Technical Trading is well acceptable due to its versatile nature.

Its rules are universally applicable and this makes it a simpler method to work with trading.

There are several books in the market which would provide a quick insight into the world of “Trading”.

But, most of the time we lose ourselves in the complexity of the graphs and the pointers provided in those books.

Therefore, let us look at some of the many guidelines you might follow for a profitable trading.

Guidelines

Trading has gained immense popularity in countries all over the world and this is solely because of the high success rates enjoyed by many stock traders.

Trading is more than just the understanding of derivative markets but also an attempt to learn the ever-changing movements of the stocks.

Several tools like Technical Indicators contribute to the knowledge of the traders.

Technical Indicators are the often represented by squiggly lines found above, below or on-top-of the price information on a technical chart.

One of the most widely accepted rulebook traders swear by, is the Donchian Trading Guidelines.

According to this

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Some of the other essential guidelines that have proven to be useful to traders in the past are:-

  • When you are not certain of market position, always make small commitments.
  • It is important to follow the market trend. Always know which market trend you wish to follow – long-term, short-term or immediate.
  • Always buy commodities that have a strong background and are showing signs of strength.
  • Most successful traders agree that when all experts and forecasters agree on a particular move – there is scope for something else to happen. So, always be on the lookout for more. In such cases, trading for safer options is the best call.
  • It is important to remember that a stock which shows a very strong ‘uptrend’ or a very strong ‘downtrend’ for too long would return to a long-term moving average. Therefore, proving that none of these movements last too long.
  • Following the moving averages provide objective behind buying and selling signals.
  • It is vital to remember that volume comes before everything else. Volume as a factor contributes to the movements of all derivatives in the market. Thus, one must watch out for good buying or selling opportunities during a medium or dull volume when the trend lines are being approached.

Conclusion

Trading is a rapidly growing field and it requires for the trader to be aware of the share prices before being completely indulgent in the stock market game.

Thus, we can conclude that the art of trading brings forth a need to know how and when to invest our capital so that our initiation and experience in the field of trading proves to be a profitable one.