Trading for a living is very different from part-time trading. Professional trading requires a combination of a certain psychological make-up, technical skills and discipline; combine these three and you have a rewarding profession. And in this book, Ashu describes what it takes to become a successful full-time trader. He also reveals time-tested and market-proven trading strategies, secrets and techniques that can make you very rich:
Steps to becoming a successful professional trader
How to set your trading goals
How to develop trading plans that work in different market conditions
How to pick winning trades
How to control trading risks
How to control your emotions when trading
How to master technical charts without getting lost in the minutiae
What to do when you have been losing money for some time
The golden rules for day trading, swing trading and position trading
How to Spot a Low-Risk Trading Opportunity
There is no direct link between risk and reward in trading. Trading is all about finding low risk trades. Low risk trades are those where the price rise is backed by a rise in volumes for a number of days. This kind of rise shows either sustained buying, or covering by those who were short in the stock, or a structural ering by those who were short in the stock, or a structural change in the company’s outlook. Whatever the reason, a sustained rise in the price of a stock backed by volumes over a period of time provides a low risk trading opportunity. Every rally has a head, a body and a tail. The body of the trade is that part of the rally where the price and volume increases have already happened over a few trading sessions. The highest returns and the lowest risk are found in the body of a trade.
A stock may run up for a day. This may be driven by news or institutional buying, etc. If a stock runs up for a day, there is always the risk that it will not run up the next day. It may well run up even the next day but you don’t have to take the risk of trading it so soon. A stock may run up for a couple of days, but other stocks in the sector may not run up. When a stock runs up for a couple of days, it may be in the head of its rally. The risk that the stock will either stop running or suddenly reverse course is high at this point. If a stock has been in an uptrend for two to four weeks, there may be good reasons for its uptrend which may include institutional buying, the possibility of a news that is known to insiders, etc. At this point the stock is entering the body of its rally. This is the safest point to invest. You are now “surfing” with the wave and not trying to guess whether there is a wave at all. If the stock’s run is part of a run in the entire sector, your trade will be even safer.
A stock enters the tail of its rally when it starts to see a drop in volumes, or the price either becomes stagnant or starts to fall. Exit the trade at this point.
Trading The Markets For A Living by Ashu Dutt
