What"s Your Stock Trading System?
Gypsy Rose Lee told new entertainers that "you gotta have a gimmick".
For stock market traders the advice is "you gotta have a system".
Without a system, trading is erratic and risky.
Stock trading systems generally rely on some combination of charts, ranges and trends.
A chart is a visual representation of the stock prices over time shown in graph format.
Think back to geometry; the x axis on the left is price and the y axis on the lower line is the time whether hours, days or weeks.
Charts can be made on an Excel spreadsheet or custom software.
Day traders will track the prices in hourly increments.
Longer term investors look for patterns or trends from price charts over months which may be compared to charts over past years.
Charts show either positive momentum or negative momentum that reflects trends.
A trading range shows the sideways movement of stock prices.
Traders are looking for stocks that are range-bound because a dramatic movement up or down signals action for trading.
Although the range is useful for some traders it does not indicate a price trend.
A trend indicates movement in a stock price which peaks the traders attention.
Trend lines occur when three peaks or three troughs are plotted on the line and linked with a straight line.
Trends may go up or down and to the experienced trader there is money to be made either way.
Some stock market systems look for breaks in the trend and buy or sell on those points.
Identifying trends can be tricky particularly for day traders who watch for possible trends within a matter of hours.
But catching the trend for a stock market trader is much of an exhilarating ride as a surfer catching the big wave.
Custom software places a stock trading system elements in the hands of less technical investors.
Investors can spend hundreds or thousand on software to develop their stock trading system.
Using custom software saves time integrating information to produce charts and archive tracking information.
Whether high tech or paper and pencil, every trader tweaks a stock trading system to meet personal style.
Smart traders know that a stock trading system is fluid not static.
No matter how much they believe in their system, as the market changes.
Another important aspect is to be consistent in applying the system.
Otherwise the trader will not know whether wins or losses are the result of a solid stock trading system or pure accident.
Every trader has losses, no matter how good the system.
Resist the urge to trash your stock market trading system at the first loss.
Savvy traders keep up with information on what's new in stock market trading systems.
Comparing new software or trend reports can spark ideas for ways to improve your stock trading system.
Consider the time saving aspects of letting the software draw charts and handle routine activities so that your attention is focused on studying the results and making the buy/sell decisions.
That's a great blend of technical and personal talent for a stock trading system.
For stock market traders the advice is "you gotta have a system".
Without a system, trading is erratic and risky.
Stock trading systems generally rely on some combination of charts, ranges and trends.
A chart is a visual representation of the stock prices over time shown in graph format.
Think back to geometry; the x axis on the left is price and the y axis on the lower line is the time whether hours, days or weeks.
Charts can be made on an Excel spreadsheet or custom software.
Day traders will track the prices in hourly increments.
Longer term investors look for patterns or trends from price charts over months which may be compared to charts over past years.
Charts show either positive momentum or negative momentum that reflects trends.
A trading range shows the sideways movement of stock prices.
Traders are looking for stocks that are range-bound because a dramatic movement up or down signals action for trading.
Although the range is useful for some traders it does not indicate a price trend.
A trend indicates movement in a stock price which peaks the traders attention.
Trend lines occur when three peaks or three troughs are plotted on the line and linked with a straight line.
Trends may go up or down and to the experienced trader there is money to be made either way.
Some stock market systems look for breaks in the trend and buy or sell on those points.
Identifying trends can be tricky particularly for day traders who watch for possible trends within a matter of hours.
But catching the trend for a stock market trader is much of an exhilarating ride as a surfer catching the big wave.
Custom software places a stock trading system elements in the hands of less technical investors.
Investors can spend hundreds or thousand on software to develop their stock trading system.
Using custom software saves time integrating information to produce charts and archive tracking information.
Whether high tech or paper and pencil, every trader tweaks a stock trading system to meet personal style.
Smart traders know that a stock trading system is fluid not static.
No matter how much they believe in their system, as the market changes.
Another important aspect is to be consistent in applying the system.
Otherwise the trader will not know whether wins or losses are the result of a solid stock trading system or pure accident.
Every trader has losses, no matter how good the system.
Resist the urge to trash your stock market trading system at the first loss.
Savvy traders keep up with information on what's new in stock market trading systems.
Comparing new software or trend reports can spark ideas for ways to improve your stock trading system.
Consider the time saving aspects of letting the software draw charts and handle routine activities so that your attention is focused on studying the results and making the buy/sell decisions.
That's a great blend of technical and personal talent for a stock trading system.
