Initially traders often take on the role of day trading as a way of trying to win money from the markets. The odds of success are very low in day trading (unless trading clients money), yet traders continue to blow their account doing so.
Trend following is based on the principle that price has provided evidence of a bullish or bearish trend and the trader enters in that direction until the trend has established an end. The trader does not require fundamentals to aid in decision making as this is purely technical trading based on price action over a given period of time. Trend following is far simpler than day trading, picking tops and bottoms or fundamental investing. There is no need to predict the trend duration, targets or be overly concerned with intra-day price movement (market noise). Trading the trends requires less time and many good trading software packages do all the hard work.
When I use to attend trading seminars in London as a guest speaker, I was often asked to share a simple strategy that can be used without too much time and understanding. Thinking trading does not require time and understanding is the first pitfall for a trader. If trading was that easy then surely we can train our pet dog to trade successfully. To become a good trader requires the education then time and understanding just like everything else in life. Private individuals do not qualify as a doctor, dentist or pilot after a brief weekend seminar. It takes a lot more time and work to become any type of professional and the same applies to becoming a successful trader.
Here are some tips in becoming a successful trader.
- Trade less
- Stay in the trade longer
- Trade the trends
Trade less allows the trader to get a better understanding of what is happening on the market and how it is behaving.
Trade longer means not exiting at specific targets and so staying within the period of unfolding price action. However, this does require advanced understanding to implement successfully and it is something we teach all our members.
Trade the trends increases the chances of success by going with the flow and not fighting the market.
There you have it. The above points are the starting ingredients in become successful in trend following and elevating a traders success in the markets.
Hope you enjoyed this trading article.
Good trend trading.