Buy Signals Sell Signals: Strategic Stock Market Entries and Exits pdfdrive com

Warning signs that something is wrong:
Big losses, ten consecutive losses, an inability to take your entries or exits, and
excessive stress or emotions will tell you that something is wrong with your
trading system. Revisit your position sizing, total risk exposure, time frame, stop
losses, and the faith you have in yourself and your system. Usually the issues
come down to trading too big and/or having to tight of a stop loss.
How will you know that your trading methodology is not for you?
To be successful over the long term, your trading has to fit your personality.
Some traders love day trading and the pace of constantly monitoring quotes.
Others hate day trading and it bores them or stresses them out. Some love to pick
stocks and carry focused position sizes for weeks and months. To be good at
trading you have to love what you do. Find a methodology you are passionate
about, and one that you are willing to devote the time and energy necessary to
making it a winning system.
If you need help in the areas of risk management and trader psychology,
www.newtrader101.com
can help.

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Why you build your own signals
“Listen only to what the market is telling you now. Forget what you thought it
was telling you five minutes ago. The sole objective of trading is not to prove
you’re right, but to hear the cash register ring.” – Marty Schwartz
The purpose of creating buy and sell signals is to capture a trend’s profitability
inside your trading timeframe. Let’s think about the creation of a trading edge
and its many levels.
First, we can consider that taking trades randomly should give us a 50/50 chance
of being right or wrong. If we flipped a coin before we entered a trade, half the
time we should be entering in the right direction whether long or short, and price
should move in our favor theoretically.
How can we improve these random odds? We can go in the direction of the trend
in our time frame on the daily chart while using the weekly chart to monitor the
larger trend. While the stock market has a bias to trend upwards in longer time
frames, buy and hold investing is not more profitable because large profits are
given back during bear markets.
Trading stocks from the long side during bull markets and removing the short
side during bull markets will move the odds in your favor by better than 50%.
The stock market goes up more than it goes down over long periods of time.
There are more bull markets and range bound markets than downtrends, markets
crashes, and bear markets. Shift to a long-only strategy during bull markets will
help you develop an edge in these environments.
Contrarian traders with no valid reasons for their actions frequently miss stock
market uptrends. Buy and hold investors hold their stocks during bear markets
when they shouldn’t and give back years of gains. Capital flows and creates

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trends in all markets over longer time frames, and it’s much easier to go with the
direction of the flow than to try to predict every turn and reversal.
The majority of profitable traders I know personally trade with a trend. The
easiest way to filter a trend is using moving averages. Moving averages smooth
out long-term price movement, and can show you the ascending or descending
trend in your time frame. They are used in building most trading systems.
Trading on the right side of the key moving averages in your time frame will
give you your first edge over other traders. Your odds of being right improve to
more than 50% when you systematically stay with the right moving average.