Click here to make money

The goal of technical analysis in the stock, futures or commodities market is to help us determine when a market is trending, and when it is not. If a stock or futures contract we want to trade is trending, then we want to be on board. If it's not, all you are going to do is lose money as you get whipsawed around day after day. This is not what we want as traders.

If you trade using a weekly chart, all it takes is a couple of trends a year to make a lot of money trading. If you trade something like that S&P Emini futures contract, using a 3 minute chart, then you'll need one or two of these strong trends a day to do well, but it's all relative.

Unfortunately, many people fight the trend and buy at every small up tick in a down-trending market, thinking they have picked the bottom, only to see the Stock or index fall further immediately. By the time the sellers are finished, these traders have spent their monetary and psychological capital in a futile attempt to pick the bottom of the market.

Another common mistake traders often make is buying more as the price falls, or averaging a loss. You can imagine how dangerous this strategy can be in a strongly down-trending stock - it's something good traders never do. The trend is your friend, don't ever buck it.

Good technical analysis skills, especially in fast moving futures and commodities markets, give us a mechanical indicator for price points to use for entries and exits and take a lot of the guess work out of our trading. It is very hard to argue that the trend is anything but down at any time if you are simply looking at a series of consistent lower tops and bottoms on your chart.

Does good technical analysis mean you'll always make money?

No, of course not. Losses on some trades are inevitable, as we cannot know for sure what the market will do. It only takes one person somewhere in the world to invalidate your perfect trade set-up and send the price of any market in the opposite direction to what you were certain was going to happen.

All our analysis can do is alert us to probabilities - there are no certainties in financial markets. This is the hardest thing for most traders to accept. We all hate to be 'wrong', but that is the nature of the trading business.

All we can do is take every trade and see what happens. The better our analysis and our trading system, the more likely our trades will produce profits.

Every one of us must learn or develop a system of analysis that we are comfortable with, based on what we learn from other traders, mentors and coaches, and then we must take every trade that system signals.

If we start to second guess our system, we may as well throw it away and just stick with our day job.

Make a decision to develop or learn a technical analysis system you are happy with, and commit to taking 20 trade set-ups in your preferred stock, futures market or commodity no matter what.

Then follow your trading rules to the letter. This will give you an objective measure of how profitable your system is and whether it is right for you.

If you can enter a trade and hold a position, your plan is sound. If not, you may be over-trading (have too many open positions for your account balance and your personal temperament) and need to reduce the size of your position or adjust your plan is some other way.

The large profits come from using a proven technical analysis method to identify a strongly trending market and taking multiple positions with that trend.

This naturally involves holding firm and not jumping out at the first sign of trouble. Of course, you can only take what the market is prepared to give, so a system of trailing stops is a good way to lock in profits as they accrue.

Bottom Line: Find a trading and analysis system that's been proven to work from somebody who has been actually trading it for a long period of time, have that person coach you through their system until you can implement it flawlessly, then take every trade signal the system produces regardless so you can test it's validity.

Download TradingSolutions

All great athletes, business people (and yes traders) have a mentor or role model who they turn to for advice and guidance. Find one for yourself and your results as a stock, futures or commodity trader are bound to improve.

 

Traders who stick around for a while, blow their accounts and give up are usually trading for the excitement the action gives them or for the rush of being in the market.

If that sounds like your current trading style, beware. You are due for a lot of emotional and financial pain before your trading days are over (which could be sooner than you think). Treat trading as a business, learn and test different approaches, and you'll massively increase your chances of long-term success.

Step 2 - Don't try to forecast where the market is going - trade reality.

I spent years studying WD Gann's work and all it did was blind me to the facts - if you think you can forecast where the market is heading consistently, you are deluding yourself. The bottom line to whether you can forecast will be your account balance, and for most people who try, it's not a pleasant experience.

Sure you'll get it right sometimes, and that's the most dangerous thing about forecasting. By tossing a coin you'll be right half the time, so you tend to get random rewards when you trade. You win some, and think your forecasting ability is great. Then you lose some after doing the exact same analysis, and you start to question yourself and your abilities.

Eventually this lack of consistency forces you to either change your strategy or give trading away to protect your sanity...

Step 3 - Learn how to trade from somebody who is prepared to coach, guide and mentor you until you are proficient and making money on your own.

To succeed long-term at trading you must think and act like a competent business person in any other market. You will need to study and learn your craft by taking courses, you will need to develop a business plan, and you certainly need sufficient capital to ride out your learning curve and become a successful trader.

You will need a certain amount of on-the-job training, but learning this way from scratch can be terribly expensive compared to finding somebody who will coach you until you are ready.

You'll learn how to trade the Emini much more quickly if you have somebody who's done it professionally watch over your shoulder and guide you as you trade. You simply can't learn this stuff from books and courses. You need to be shown how to do it...

If you were mining for gold, what would you prefer; somebody to sell you a map, a shovel and a compass and tell you where to go, or somebody to actually take you down deep into the mine, physically show you to where to dig for the gold, and then help you carry it up to the surface?

The answer is obvious isn't it?

Bottom line: Find somebody who is prepared to coach and mentor you and your chances of becoming a wildly successful Emini trader will become a whole lot better.

 

Coupons
Dental Care Savings
Entertainment Savings
Eye Care Savings
Degrees online
Food and Restaurant Savings
Higher Education Opportunities
Home Furnishings Savings
Home Improvement Savings
Hotel Savings
Insurance Savings
Personal Finance Savings
Pet Care Savings
Travel Savings

Enter your search terms

Submit search form