There are seven basic things you need to know that will enhance your trading abilities.
These I usually prefer to call the seven Capsules of trading the markets
These seven capsules are very important ; knowing and applying them can make you a successful trader or inve
- Fundamental analysis: This basically has to do with company news. The basic information on what is happening in the company whose shares or securities you want to buy or invest in. It is also important you know the management strength of the company, earning per share, profit after tax e.t.c. This information can be achieved by reading news papers, financial papers and journals. Company’s financial report is also very important. Government policies and reforms are also fundamental information that goes a long way to affect the capital market. A proper study of fundamental analysis is one of the basic things you need to do before trading or investing in a stock or security.
- Technical Analysis: This is simply the study of past securities prices with chart being the primary tool. It is all about analyzing stock history and possible future behavior by studying the chart. Basically, it has to do with three main features which are price, volume and emotion which results in repeating patterns. This analysis can be achieved by applying indicators to your charts. For you to take a good and well defined decision you need to look at the chart known as the Picasso of the market before you trade.
- . Speed of Execution: This is simply being timely in placing your trades. The only way you can be a winner trading is to exercise speed in executing your trades because a minutes late can make you lose all or part of your money. By being timely make you a professional trader. There are certain strategies which you can apply to enable you overcome the challenges of being timely when you want to trade. You can always get them when you come for our technical analysis training.
- Live Data Feeds: This is basically being connected to market information. Market data and information is the key to a successful trading. If you are trading and has no live data there is no way you will know the actual happenings in the market. Your decision making is strictly build on the data received. Therefore live data feeds give you a clear signal of the market.
- Risk Management: This is simply the ability to be conscious of the fact that; every trader and investor is a risk taker and as such should be able to manage this risk properly. Hence risk management is an important aspect of trading the market. It enables you to trade or invest part of your money and not everything. Risk management is also being able to take profit at the appropriate time without being greedy. There are so many other things you can learn about risk management that can help you put the odds in your favours.
- Psychology of Trading: This is simply the emotion that is characterized by the market situation. Studying the psychology of the market gives us the ability to know the direction of forces of demand and supply to ascertain the one that is winning. The psychology of trading is characterized by different conversations that are manifested by people who are ignorant of the real thing that happen in the market forgetting the trader’s emotion which is the forces behind the positive and negative state of the market. Studying the psychology of the market help you avoid hearsay attitude and as such help you take emotion out of your trading decisions. This can help you predict correctly on the future state of the market base on the direction of the forces of demand and supply. You must always put the odds in your favour by making right decision by not allowing your emotion to rule you.
- Trading Plan: This is the most important aspect of your trading decision. So many people trade without a plan and as such when things go against them they become confuse. There are certain features that characterized your plans; defined goals, daily routine, system for selecting securities (stocks, forex, commodities etc), risk management, defined entries and exits and means of measuring success. When put into appropriate use gives you a better investment return at the same time your risk appetite is reduced.
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