First of all, happy holidays to everyone. This is a good time to review what you are doing and what you need to change going forward. Remember that this time of the year can be a bit tricky when trading and can be moved by many different things. Some of the things that are affecting the market currently is the holiday time along with the fiscal cliff talks. This is why this time of the year is good to review what you are currently doing.
Knowing your rules are critical in becoming successful with your trading. This means you need to know several important things.
- Know what you are trading.
- Know what charts you use.
- Know when you are entering.
- Know when you are exiting.
- Know how much you are trading
Having rules for each of these can keep you on track for trading well.
- Know what you are trading is important so you don’t have too many things you are looking at. There are many different things you can trade including Gold and Silver, Forex, Futures, and stocks or options. Trying to trade all types of instruments can make trading difficult. You should really focus in on trading only a couple of things to keep it simple.
- Know your charts. This would include the time frame and whether is it a candlestick or bar charts. Also which indicators you are using
- Know your rules for entry. This means you should know exactly what you are looking for on your chosen chart to actually enter into the trade. This could be the price action of what you are trading or a specific set of indicators. This should be written out so you have no question as to whether or not you should buy or sell.
- Know your exit rules. Make sure you know exactly when you are getting out of the trade. This means that you need to know your stop losses and your targets. Without these you are just trading and hoping the market will make you money.
- Know your money management rules. This means you should have a maximum risk amount in mind so you are only risking a specific amount in each trade. In addition, make sure you know the total amount of risk you want to be trading your overall portfolio.
By knowing your rules and following them you will have all in place to successfully trade in the markets. Take some time over this holiday time to review what you are doing and to make sure you have your trading rules written out. Have a happy and safe holiday.