How To Finally Start Profiting From Trading The Stock Market

After 15 years of actively trading the stock market, here are 6 things I have learned that will help you to become a far more consistent, more profitable trader.

1. Only trade fast-moving trends.

Our ability to profit from the stock market depends more on this decision than any other: ONLY trade long-term, fast-moving trends.

The results of your trading depend less on which stocks you trade, and more on how quickly those stocks are moving from one price level to another.

Fast-moving trends allow us to accumulate profits quickly. It’s as simple as that.

2. Only buy stocks that show promise.

The second most important decision is this: You should ONLY buy fundamentally sound stocks that are also trending higher, because they present you with the safest buying opportunities.

Buying a stock just because it is going up can work out well for you. For a while.

However by limiting your purchases to stocks that are both fundamentally sound AND rising in value, your potential for building a profitable, long-term trading business is multiplied many fold.

3. Use a proven entry trigger.

Regardless of the fundamental outlook for a stock, or whether it is trending higher, always wait for a proven entry signal before committing your funds.

A candlestick charting signal such as a Bullish Engulfing pattern is a classic entry trigger, and is something you can often rely on to get you into up-trends.

4. Confirm the up-trend.

By drawing a 20-period simple moving average on your charts, you have a simple method for determining the trend.

Never buy or hold a stock that is trading below a 20 period simple MA. For clarity, I colour mine GREEN in an up-trend and RED in a down-trend.

5. Take profits.

Trading profitably means we must take profits. However taking them too early means we can leave a significant amount of money on the table unnecessarily. To lock in profits, use what I call the “Thin Blue Line” indicator.

The Thin Blue Line Indicator is created by drawing a blue, 8-period exponential moving average on your charts.

SELL on a close below the 8-period exponential MA, even if your 20 period MA is still green and rising.

6. Buy high, sell higher.

After selling on a close below the 8-period moving average, BUY again on a close above your 8-period MA, AS LONG AS the stock is still above a RISING 20 period MA, indicating the trend is continuing higher.

This means you can enter and exit a long-term trend several times, but you will be out of the market when that trend inevitably comes to an end.



Source by Rockford Tapscott

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