Everyone expects to trade with the best trading system. A trading system defines how much money you are going to make as a trader. A person who has a well-balanced trading system does relatively well in the investment industry. Sadly, novice traders don’t even know how to assess the quality of a trading strategy. To them, complex trading strategies are the best in the market. In fact, some of them are buying the most expensive system from the online market place in the United Kingdom. Instead of buying such an expensive trading system, its better you develop the trading system with few easy steps.
In this article, you will learn to develop a unique trading strategy with a few easy techniques. Read this article as it might change your life.
Know about the support and resistance
Knowing about the support and resistance level is the first thing you should do as a trader. If you don’t learn about the support and resistance level, it will be hard to take the trades based on the indicators. Indicators should be acting as the trade filter. In case you want to ignore the indicator, you can rely on the price action pattern which is a bit more advanced. But no matter which technique you follow, you must learn to find the support and resistance in the higher time frame. Instead of trading both levels, you should be picking trade setups that favor the major trend.
Learn about the basic price action pattern
You must learn about the basic price action pattern to become a skilled trader in the online trading industry. Knowing about the price action signals is not that tough. Start with the pin bar pattern. Once you become good at spotting the pin bar, learn about the bearish and bullish engulfing pattern. After that go for the morning star and evening star pattern. These are the patterns that are mostly used by the top traders in the world. You don’t have to learn any more patterns if you can know how this pattern works in a higher time frame. Use the demo account and test your skill. If you manage to make a profit with this pattern it’s time to focus on your trade management technique.
Managing the losses
People easily develop their trading method but they fail to earn money since they don’t know how to manage the losses. They follow the aggressive method and try to use technical factors to manage the losses. Instead of doing that, you should be risking 1% of the account balance from the start. It will help you to manage the losses in the most efficient manner. Once you become good at analyzing the risk factor, you will be able to embrace the losses with a big smile. People who are trading for more than 1 year give enormous importance to risk management policy. They always prefer to trade with the setups that offer a 1:3+ risk to reward ratio. So, work hard on your risk management policy so that you can recover the losses.
Analyzing the key news
No trading strategy is well-balanced unless it can deal with the news. So, if you want to create a well-balanced trading method, you must learn to analyze the major news. By analyzing the major news, you can take the trade at the most critical condition of the market. It might seem hard at the initial stage but once you know the impact of the major news, you will be able to curate the trades in the most organized way. It will help you to build confidence and you will slowly become a professional trader. Learning about the news is not all tough. Start with the low impact news and slowly learn the impact of the major news. Based on the severity of the news, you should scale the trade accordingly.