Let's touch on how one formulate a winning strategy for stock trading from my amateur perspective. It is widely known that most technical strategies fall into two categories, namely enter on breakout or on retracement. It is not a question of which is a better way to trade, but which really suits your personality and trading philosophy as a trader. That is why most people cannot reproduce the results on their own after attending seminars conducted by professionals trainers!! It is simply a mismatch in personality and trading philosophy... While most trainers teach methods, rules, secrets, procedures which are essential to expedite learning, I feel beginner traders should not be totally spoon feed and had their creativity bounded by hard set rules. They will progress faster by picking up just the fundamentals, and through their creativity and experience, formulate a strategy that suits both their personality and philosophy. The art can only be perfect by the student, and the trainer can only be a catalyst...
Simple questions to ask about personality and trading philosophy:
- What is my trading horizon (i.e. Day trader, swing trader or position trader)?
- Do I prefer a mechanical or discretionary approach to trading?
- Can I stay emotionless and execute trades consistently?
- What is my risk appetite? Am I an aggressive breakout trader or a more conservative retracement trader?
- Which do I value more: capital preservation or capital expansion?
- Do I have a realistic expectation on my returns?
- Can my lifestyle cater for my trading strategy?
- Do I love this business?
Before ending this article, let's take a look at this counter: ARA Asset Management. Whether you are a breakout or retracement trader, both will make you money when you find the right trading method that suits you!!!
Happy profits!!!
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