Trading Strategies

Finally, a recap on some proven strategies that will work in most financial sectors. We have covered the general principles of how you can expect a market to move, and also how you have to be indifferent to whether it goes in the direction you expect. The market is always right, by definition, and your first lesson is to understand that so that you do not become upset and irrational if things don’t always go the way you want.

It is important to distinguish between winning and making a profit. You may win most of the time, and still not make a profit. If you think about making lots of small wins, but having a few large losses, you can see that this is true. Make sure that you keep an eye on your risk/reward ratios, as well as any probabilities of success.

The following are general principles, on which you can impose your own detail to customise the strategy to your personal propensity for risk, the markets you like to trade, and the time you have available. The first two work in an uptrending market, the next two are for a bear market, and the last one works when the market is going sideways. These are general strategies, and they can form the basis for developing your own trading plan, setting exact criteria for the entries and exits which should be back tested in the markets you are trading.

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