Trading on financial markets and retrieval of long-term benefits is extremely difficult and complex process that requires careful preparation, healthy nerves and proper strategy.
In this respect, the continued questioning by the investor and its improvement to achieve lasting success is critical. Here are some of the questions that everyone should ask.
1. Are investment product and my strategy suitable for market conditions
Often, an investor can have a good trading strategy, placing stops on entry and exit position, but not reap success because the market is wrong.
The last is characterized by moments of higher and lower volatility, which can be put to the test and create a suitable or unsuitable environment for one or another strategy.
Investors must be confident that they have established rules applicable in this market environment, and if not, maybe it is better to wait for a better time to make its investments.
2. Is the trend in my direction?
The market is characterized by many trends, some of which are essential, other remedies. The investor should however be aware that the trend is in its direction, which is critical for the registration of a positive financial result in the short term.
Trading against the trend, if not sure loss, at least it would seriously hurt the potential income from an investment.
The investor must determine the mid-term and short-term trend of the market in order to properly assess and time their investments.
3. Have I clear rules for entry and exit position and I respect those rules?
The determination of appropriate rules and winning is only one side of the coin. They would be totally useless if not followed and respected. Respect the rules is one hard thing in investing and requires iron discipline and psyche – something over 90% of traders do not possess. This determines the largest percentage losers on the market.
4. Should I enter all signals, or only under certain?
When you create a system is essential to be tested by historical standards. Depending on test, trader often defines itself percent for entry into a position which corresponds to its risk profile. Many investors sometimes specify additional criteria for entry in position depending on the situation by changing the preset rate entry in a position corresponding to their personal discretion.
5. Did I created and follow a money management?
Setting rules related to the amount of eligible losses, relationship between potential gains and losses on transactions and more, these are critical to the success of any trader. Moreover, it is crucial for the success and compliance with these rules, which again is the hardest part of the task.