Tip 1 Trends are friends
Don't go against the trend. The way to make the really big money is to identify major trends and ride them. If the trend of the market is not in your favor, then it is time for you to get out. When you are in a bear market and the main trend is down, you should wait for the rally and go short instead of trying to pick its bottom.
In a big bear market, you may miss the bottom several times on the way down and lose everything. The same goes for bull markets, always go with the tide—never go against it.
Tip 2: Pay attention to the market's reaction to the price
This tip goes hand in hand with "don't buck the trend." When you always profit by shorting lower priced markets, those markets are also public favorites and in which a huge buying pressure has built up. When soybeans hit $6 a bushel in 1973, public stocks were shorting their contracts, but that price was a record high. And it was already in the resistance zone.
Who'd have guessed that the $6 price wasn't even halfway to its all-time high of $13? Always remember that it is not the price that matters, but the market's reaction to the price.
Tip 3 The best deals are often the hardest
You have to have guts, you have to be bold when you enter. When the trend of the market is not right, stop the loss quickly. When relevant news is released, it always sounds most bullish at the top and most bearish at the bottom. This is why the technical climate of the market is so important. If the news is favorable but the market stops advancing, ask yourself why and listen carefully to the market.
Bottoms are often the hardest to understand, and during the stage where insiders are accumulating positions, there may be markers such as reactions, opposite trends, stock market volatility, and false reversals to name a few. After a bottom has been formed, many traders look for the next breakout in order to be buyers. After all, the market has been weak for a long time, and the chances of at least one breakout to the upside are getting bigger, right? But it never appears.
Those in the know won't let it show up. Their goal after the bottom is complete is to push the market to another lower point. Perhaps the best time to buy is this moment when you feel the worst.
Tip 4 Plan first, then execute
If you have a plan in place and stick to it, you can avoid emotion, which is the worst enemy of all deals. You need to stay calm and focused during frenetic trading sessions. In order to do this, you have to be fully prepared before the bell rings. You have a daily mission to make money every day if you decide to accept it, or at least not to lose yourself too much if you don't accept it. Next, you must always limit losses on trades that don't follow your plan! This requires willpower, a quality that is just as essential as having a lot of money.
In fact, it is more important to have a lot of money. Funds are not used to hold tightly in the market, but to achieve value-added and double. If you have to take a lot of risk, don't make that trade. Wait for the moment when you can place a tighter stop loss. When your risk point is touched during the trading session, if you do not have enough willpower to bear the loss, you must use a stop loss order. The simple way is to set a stop loss point when you start trading.
Tip 5 Don't Regret
When you liquidate a trade based on sound reasoning, never regret your decision. Continue with the plan, and if quitting at that point was a mistake, all you can do is learn from it. We all make mistakes, don't let them get you down. Otherwise, you will lose perspective and become intimidated in future transactions.
How can this be done without emotion at all? Try not to think about the price you entered the market at because that is irrelevant. If you feel the market is not right, don't try to get out at a breakeven price after deducting commissions. Trying to break even will cost you more.
Tip 6 Money management is key
Think about how to manage your money every day. You don't necessarily need a high profit-to-loss ratio, but your average win must be higher than your average loss if you want to be successful. In order to do this, there must be a "big win". You have to maximize profit on certain trades. You need these large profits to offset the inevitable multiple losses (and these losses may be small losses).
You will find that as long as you stop your losses as soon as possible, even small cumulative losses per trade can make a huge difference to your bottom line. This requires decisiveness, so if the trend is not in your favor, have the determination to "cut the wrist". In addition, canceling or extending a stop loss order is not a good practice, you should never do it, you need to know that canceling a stop loss order is 99% of the wrong decision.
Secret 7 Specializing in a certain field is often easier to succeed
Every market tends to have its idiosyncrasies. Some usually build their tops or bottoms the fastest. Some form round tops or round bottoms, some form double tops or double bottoms, and some form tops and bottoms after long periods of consolidation. If you are familiar with the characteristics of the market, you can better understand the market. To be familiar with the market, you need concentrated energy and rich experience. If a market doesn't fit your personality, find another, and learn to stay away from markets that don't suit you.
Tip 8 Deal decisively
Some traders are so reckless that they overtrade as a result, others are afraid to pull the trigger, and this weakness must be corrected. You have to train yourself to be able to trade in a way that you have neither expectations nor fear. When you enter or exit a position, trade decisively without any emotion. This is often especially important after a serious stop loss.
Tip 9 Be Time Sensitive
In other words, you need to know how long each market will take to reach the target price. The longer the market moves in one direction, the faster you can buy or sell pairs in the final stages of the swing. In most cases, an important part of a big market appears within its last two days. No doubt everyone wished they were still in the market.
Even though we say be time sensitive, keep a close eye on the volume after a long market move. Volume tends to be higher than normal near the end of a swing because this is the "distribution zone" where those in the know are closing out their positions to a public panicked by news releases.
In fact, it is important to be aware of what stage the market is in. Phases of the market tend to move in similar ways. Most of the time, markets that are at the bottom will bounce back on light volume. This suggests that the actual volume of selling is modest and that even the previous bulls are starting to get wary and things will get worse before they get better. A top is the opposite of a bottom, and few people will notice that the market is saturated, yet the market may stop going up. On the first breakout from the top, there will most likely be a "failed test of the high" on light volume. When the market fails to break out to a new high and instead makes a lower high, it may be your last chance to liquidate if you don't get out.
Tip 10 Pay attention to the market's reaction to the "news"
This is very important: the news itself is not important, but the market's reaction to the news is important. Undoubtedly, news can appeal to public perception, but you have to be alert to the difference between news and market movements, it's all about expectations and reality, looking for the difference between what's happening and what people should think about those things difference. If the big market comes, ordinary people will always stand in the wrong direction. Consider the following methods for analyzing market reactions to news.
1. If bad news is announced and the market starts to sell on a high volume, it is likely that the market will go lower.
2. If the market does not react much to the good news, it may have been discounted.
3. Important quotations always tend to start before the news is released. When the market has already started, the fundamentals began to slowly emerge. Rather than a sharp rebound or decline that has already been reported, it is always bullish or bearish.
4. It is not a good practice to buy after a lot of bullish news releases, or sell after quarterly bearish reports. Because whether it's good news or bad news, it's usually already discounted in the price.
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