In the investment business, a common question is often asked that how a trader can find the best trades. Because most of the traders think emotionally, they make silly mistakes while looking for the trade signals. So if a trader likes to analyze the market technically, they must choose the right market. The most important thing while you trade with technical analysis is you must need to reevaluate the market according to last week’s price movement. This reevaluation will help you to decide whether you should follow the last week’s trend or not.
The reevaluation is done by assessing the list of trading instruments based on their previous price movements. In the following article, we are going to talk about how a trader can do this and find profitable trade setups.
Exploiting the Market
If you are a trader and you pay attention to the market, you will find out that the market follows a certain type of cycle and goes through a series of different phases. For instance, when the market is in a ranging or consolidation condition, it is followed by trends then that trend and turns into a stronger and longer trend.
When a strong trend is slowing down then the market can enter into a ranging zone or it can reverse the trend. It is not always fixed but you can make a rough idea about the market. Such market movements often last for hours, days, or weeks and you can follow a single trading system in a single period. Those who are confused, read more about the different phases of the trend to get a clear idea about circulating market movement.
For example, the ranging strategy will only be used when the market is in a ranging condition, momentum strategy will only work when the market is trending or making a reversal. The trader who just follows 1 or 2 trading systems will not be able to cope up with the market dynamics. This is why traders need to analyze the different assets every week when the market is close to having a clear view. It helps a trader to pre-determine their potential entry or exit zone for next week.
Making consistent profit
Almost every trader has a special type of trading strategy which often works well for a certain type of market movement. It usually consists of a single type of pattern or setup. So different traders have different types of market preferences for opening the trade. Suppose a trader likes to trade in market reversal so he got a trading system that only works when the market is going through a reversal. But if a trader got only one trading system, it will fail him miserably most of the time.
Reversal traders don’t trade during ranging or in the trending markets. So now we can understand why having just one trading system based on moving average is not enough for staying alive in the trading market. To survive in the retail trading industry, a trader needs to develop multiple trading techniques.
Brief Watch list
Once you find out in which market condition your trading system works perfectly, you just need to review your previous trades. Try to find out the reason behind last week’s loss. Work hard and determine whether you have opened the position in your preferred market condition. If the answer is yes then you must need to find out why your trading system didn’t work on time.
So for reviewing your strategy, traders just need to give at least 4 hours on the weekend when the market is in a standstill position. By doing so they can learn from their mistakes and also can predict potential trading zone.
For becoming a profitable trader you cannot just ignore what we described in this article. We hope this article will come in handy for making your trading life easier.