It's no secret that the stock market can be a great place to quickly earn a good income online. The internet has brought traders right into the stock exchanges with instant order execution, real time quotes and online brokers with an array of tools to help the trader.
So why do statistics show that ninety percent of those traders lose their entire account within one year? Why do ten percent of those traders go on to make a great income online trading stocks? Although the reasons can be countless, In this first of a series of articles I'll attempt to address the most common reasons and give you an overview of how to train yourself to become one of the few who go on to see great profits from the market.
Although most people begin their trading career with much hope for financial gain, they quickly discover that when it comes to money there is a lot of emotion attached to the hope they will make money and the fear they will lose it. Fear and greed are the two emotions you will have to train yourself to overcome if you want to be a successful trader. The best way to achieve this is to have a trading system in place that will automatically get you out of losing trades and keep you in winning trades. Your trading system does not have to be complicated but it should be profitable. Back testing your strategy against a stock chart will give you an idea of how lucrative your system might be during actual trading.
The best advice I can give you when developing your trading system is to create a system that is based on the price chart NOT indicators. So many of today's stock trading gurus are doing their best to bewilder the new trader with indicators that I wonder if they really understand technical analysis at all! Let me tell you right now that these indicators are nothing more than numerical algorithms of the patterns on the price chart. Why base your trading on a numerical statistic when you can easily learn to use the most important and accurate method which is the chart price pattern itself? Do yourself a favor and develop a system with a price based entry and you will be successfully setting yourself apart from eighty percent of those who are taking up trading stocks. Later you can learn to use an indicator to confirm what you already know by studying the chart!
Before committing real money to the market, your system should be tested by paper trading for at least a month. Paper trading is simply using your system to trade a predetermined amount of imaginary money against actual market conditions to see if you can grow the balance. While testing the profitability of your trading system you will also be teaching yourself self-control and soon your emotions will be removed from the trading equation. Of course, trading real money will change the game a little but you will the have the confidence to use your trading system because you know it's profitable. It's important to remember that losses are part of trading as it is in any business. A hard stop loss strategy will limit these losses.
Yes, the stock market is a great place to profit from the comfort of your own home. Whether it is a business, extra income or just to shorten the amount of time before retirement, stock trading is a real method for the ordinary person to make extraordinary profits. Your trading system will be the backbone of your trading from day one so spend some time developing your system and you will soon realize how exciting it to profit from the stock markets.
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