Know These Trading Secrets
Trading is not investing. Trading is speculating. Trading can be challenging. Speculating is defined as taking business risk in the hope of profiting from market fluctuations. Successful speculating requires predicting outcomes and analyzing different market situations. It also requires putting your money on the side of the trade on which you think the market is going to go up or down.
Trading can also be the appreciation of the fact that you can be wrong 70 percent of the time and still be a successful trader if you apply the correct techniques for analyzing trades, managing your money and protecting your account.
Opportunity keeps on shifting from one market to another. For example, forex and gold markets are really hot while stocks are down. Gold prices are going up. Those who entered the trend at the right time and ride the trend for maximum profits will make a lot of money in the gold markets. Right now countries, institutional investors, retail investors, in fact almost everyone is running and buying gold as a hedge against turmoil in the global markets.
This situation may continue for some months or some years but suddenly you will find that crude oil futures have become a great investment opportunity. Many hedge funds had made a lot of money by investing in crude oil futures in the year 2008.
Oil prices will again go up in a few years time as the global economy recovers and demand for oil increases. In trading it is the timing that is of essence. Timing for entering the market and the timing for exiting the market!
A lot of people make the mistake of focusing only on one market. Many people end up spending time on only one market. In reality all the markets are interlinked. Successful trading requires mastering a strategy that enables you to trade multiple markets and multiple time frames. If something happens in one market, you will find the repercussions in the other markets.
They do testing, development, put on a million indicators, go and trade live. They do everything they can while spending all kinds of time trying to figure out one market and one timeframe. But then what almost happens is that market starts to go sideways or the opportunity shifts to another market.
There were so many stocks just a few years ago that were incredible to trade that either dont exist anymore or would not trade successfully today. So you really have to have the ability to be able to adopt the market conditions and not waste your time to really master one market which is critical.
Many gurus will teach you that you really need to learn the ins and outs of one market. They will tell you to focus only on one market and then stick with it. But the problem with that philosophy is that opportunity keeps on shifting from one market to another. Mastering different markets is counterintuitive. Always remember a good trader always follows where the money goes. In other words, follow where the opportunity goes.