Profit with a Stock Trading System

Cash In with a Stock Trading System

A stock trading system is fundamental to reducing risk and increasing profits. A system leads to consistency in decision making and stabilizes your trading.

Tracking the movement of stocks over time can be done using charts whether that is with a simple spreadsheet program or sophisticated stock charting software. It can be very useful to undertake a visual, graphical analysis of stock data to assess potential candidates for the next trading position or to monitor the permoformance of existing stocks in your portfolio. Your trading style will determine your time frame of interest. Day traders will analyze stock data over hourly periods and long term traders over months and years.

What are some of the things to look for in stock charts? A trading range is where a stock's price movement fluctuates between between two values. This gives a sideways movement to the stock value over time. Trading stocks based on a trading range can be used for smaller percentage profits. Another aspect of a stock exhibiting a sideways trading range, is to be on the alert for the stock to break out of that pattern since this can indicate rapid changes in stock value representing opportunity for financial gains or the potential for losses to cut.

When the movement of stock price is graphed and three peaks or troughs can be joined by straight line, this is said to indicate a trend. Both upward and downward trends have the potential for profit depending the what you have predicted the stock will do and how you have positioned yourself in the market. Shorting stocks is a method which relies on a drop in the stock price whereas trading long, means to buy low and sell high.

Proprietory or custom software can provide many tools for charting analysis to assist in formulating and sticking to a trading system. Used wisely, charting software can save time in integrating information to assist in decision making. Charting software can also be used for archiving your data analysis for future reference.

Being consistent with a trading system is important and it is equally important to be flexible enough to tweak the system where required> In so doing a trader will develop their own style. Weathering the inevitable loss is also important on the way to tweaking a trading system. Clearly not everything is predictable and it takes time to properly evaluate a system's effectiveness. Discarding a system without due consideration is a mistake.

Being a savvy trader means to be aware of changes in the landscape of trading systems. At the same time, have the flexibility to create and tweak your system as a blend of both personal insights and trading tools.

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