Many books and articles have been written about how to use moving averages and a variety of technical indicators to trade the markets. Amazingly, very few of these books or articles show actual test results.
One of the soundest bits of trading advice is to let your winners run and cut your losses early. To many traders, this means use a stop loss order to prevent large losses.
Some futures brokers provide significant leverage and very low margins for day traders. It is relatively easy to find brokers that will allow trading with margins as small as $500 per contract.
Many individuals are drawn to trading thinking they won’t have to do math. This belief is rarely held by successful traders, and few actually succeed in modern trading without some math skills.
After finding rules that work, many traders are tempted to optimize the parameters. This is easy to do, and is the beginning of the end of many solid trading plans.
Let’s start with the bottom line. When starting to trade, it’s best to plan on committing at least an hour a day as the minimum time required for success. If you don’t have that much time, then a system based on weekly, or even monthly, data might be a better entry level strategy.
Designing a trading system is simply a series of decisions. First is deciding what edge you have over all the other players in the market. This isn’t as difficult as it sounds. Using a logical approach to the markets, any individual can develop a unique insight that lets them profit.
To be successful in trading means that you make money and the most important rule new traders must understand is that it’s more important to make money than it is to be right.