Welcome To Street Investment
By Admin
Posted on August 17, 2024
Trading strategies are the most important thing for any trader. Without a strategy, no one can ever be successful in trading, which is why a trading strategy is essential. Many successful traders spend years developing their trading strategies to ensure they are perfect. Anyone can create a trading strategy in a short time by understanding the charts, but the most important thing is to create a winning trading strategy.
Many traders have been in the market before you and possess more knowledge, so why can’t you become profitable by using their strategies? If that were the case, then all traders would be profitable today, but why aren’t they? It’s because every person has a different trading psychology. Not everyone can trade with the same strategy, which is why it’s important to develop your own trading strategy that you’re comfortable with.
So, let’s learn today how you can develop a winning trading strategy. From my personal experience, I can tell you that this process is a bit lengthy. When I started trading, it took me 2 to 3 months to develop my own winning trading strategy. So, in today’s post, I will tell you all the methods that will help you create your own trading strategy.
In 2024, you have so many markets to trade in, more than you can imagine—cryptocurrencies, the forex market, commodities, and the stock market. You can trade in any of these markets according to your preference.
Now that you’ve selected a market for yourself, find a pattern within that market and understand its overall trend. This will help you in creating and understanding trading strategies. By trend and pattern, I mean that before any movement occurs in the market, observe the formation of candles. Identify which candle forms at support that causes a change in the market trend, and which candle forms at resistance that brings changes in the market like hammer, doji. These are just some examples of patterns that will help you understand what to look for in the market.
An indicator can significantly help you in creating a winning trading strategy; you just need to know which indicator to use. There are many successful traders who use indicators, while some consider indicators to be just a way to ruin trades. It depends on you how you use indicators. RSI, MACD, Bollinger Bands, EMA, and SMA are all indicators that are popular among traders. You can use them according to your trading strategy.
If you have read the book The Psychology of Money, you would know that it’s most important to understand your financial goals and book profits and losses accordingly. That’s why it’s essential to understand your financial goals, so you can apply them to your trading strategy and close trades by taking profits according to your needs.
As I just mentioned, taking profits and losses means that losses will happen. Now it’s up to you to determine how much loss you can bear. You should understand that even the biggest players in the market experience losses, and often much larger losses than you. It’s up to you to decide how much loss you are willing to endure.
You need to understand risk management well so that you never invest more money in a trade than you are willing to lose. That’s why it’s important to grasp risk management, as it will keep your trading psychology in check, allowing you to hold onto your trades.
In 2024, you can easily engage in various types of trading, from scalping to swing trading. It all depends on how much you want to do.
Alright, let me explain the different types of trades you can do. For example, scalping, where you place an order and close it within a short time. Next is swing trading, where you buy or sell and then hold the trade for a day or even longer, until you reach your profit target. And third is investing, where you put money into a company and leave it for the long term, sometimes for years. I would recommend that you first understand your goals and then choose a trading style that suits you.
Now that you’ve understood most things, start using different strategies. Spend as much time as possible in the market so you can apply your strategies. Observe trades on different timeframes and choose a timeframe that works best for you.
Now, whether you use indicators or not, that’s up to you. Focus on refining and optimizing your trading strategy. Work on the risk-reward ratio (RR), analyze the profits you’re getting, and finalize a strategy. You have selected your timeframe and trading pair, now just monitor the trades.
The real game begins after creating a strategy because now you have to execute trades based on it. However, many traders will still exit the trade midway. So, before you start, pay attention to how often this trading strategy results in losses and how often it results in profits. This will help you prepare yourself for both profits and losses.
Analyze your performance with the trading strategy, as I explained earlier. You won’t be able to create a 100% winning trading strategy, and if you do, let me know! Anyway, back to the topic—record your trades, and calculate profits and losses so that you can be prepared for the losses.
Understand that you won’t be able to create a perfect strategy in one go. While backtesting your strategy, make any necessary changes—meaning good and accurate ones—to improve its accuracy. This is important.
So, in this post, you learned… that you should develop your own trading strategy and create your trading strategy by researching different markets, I provided examples of how to find patterns in the market, Understand your financial goals and manage risk accordingly, and I explained trading styles so you can understand which style suits you—whether it’s scalping, swing trading, or investing. I provided tips for converting your trading strategy into a winning trading strategy.
Look, I always believe that in the trading market, the more you learn, the better. Not everything will always work, so it’s best to learn as much as you can from wherever possible. Keep developing your trading strategy along the way.
When you develop your own trading strategy, you learn a lot of things that you can’t learn by simply copying someone else’s strategy. And you can also make changes to that strategy as needed. You can learn much more when you spend time in the financial market on your own.
Best of luck to all new investors and traders.
