Let me show you how to trade and avoid considerable losses. I am going to use the methods and practices of the market to create a winning strategy for you.
A few steps
1. Determine what assets class.
2. Determine your budget for trading.
3. Determine your minimum lot size and trading frequency.
4. Agree on Entry and Exit criteria.
5. Select investment.
Determine what assets class you want to trade in
There is a market for almost any commodity or security you can think of, from Stocks to Currency to Oranges and Carbon. Determine what assets you want to trade.
It is a good idea to trade in what you know or are willing to know. Do not trade Contracts for Difference if you do not understand global economics and politics.
Determine what your budget for trading is
How much can you lose and still pay your house rent, serious question? If you are earning a fixed income with no space for discretion, then trading is not for you. If you must borrow to trade, be careful, allocate an amount you can lose and still meet Non-Discretionary Expenses.
Determine your minimum lot size and trading frequency
Agree on what will be your set minimum in currency terms of asset terms. Set your minimum via the commodity itself as many commodities have a market set minimum e.g. for Currency, its Micro/Mini/Standard lots or 1,000/10,000/100,000 units per trade respectfully.
How often will you trade? Day trader? Opening and closing positions daily?
Establish Entry and Exit Criteria
When a trade is executed, it is only profitable if the exit trade is higher than the initial cost paid per share. So, timing is critical. A good way to time the market is to look at price movements, lowest, highest, Moving Day averages, etc, you want to strike at a low price.
What about Exit? This takes discipline if you are trading currency at what PIP do you exit? Pips being the lowest possible movement. For instance, you entered USDEUR at 1.1000, which means your bought USD by EUR for 1.100. let us assume USD now rises and EURUSD is about 1.1050, at what price do you sell? 1%? 5%?
Open Account, select investment
Open a trading account. You can do a traditional brokerage account or open with a FinTech that allows trading.
There are lots of them, I use Robinhood (https://join.robinhood.com/kalua1) and Trove (CDXFHH)
Next pick your target; remember, you are interested in NOT what you think is profitable but what you believe OTHER investors believe is profitable. In essence, you are trying to find a wave of demand, ride it, and exit when supply starts to kick in. A metric I use is price movements of 15% band from 52-week price high This we refer to is momentum trading driven by daily prices, fundamentals? Not so much (see why it is risky)
Let us assume you select Bitcoin – price is $22,000, you buy with a Stop Loss order to sell your position if the buy falls 2% to $21,560. This is your insurance. If the buy falls you can only lose 2%. You can make this 5% if you are aggressive or 1% if conservative
Once you hit your target, sell. Do not be greedy, do not argue with your strategy. If your target is 25%, sell, if you bought Bitcoin at $19,000 and the price rises to $23,750, you sell. Again, you can set exit at 5% if conservative or 25% if aggressive.
Rinse and repeat
Pick a target, set a watch on it, if it falls in price, you enter with your agreed lot size if prices fall your stop loss takes you out, if prices go you hold and sell. Considerably basic, I have ignored leverage and cross-asset hedging for now.
I have also stayed on just trading volumes as an indicator, there are many other indicators The last point I will make is open a demo account and practice, read up, watch, and read financial news. Be informed.
Finally, disclosures, trading is very risky, you can lose everything, including your capital. All assets listed above with prices are illustrative for educational purposes only.
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