Sep 17, 2013

EQUITY, COMMODITY, FOREX TRADING: 2 BASIC APPROACHES/STYLES

STOCK TRADING STYLES, STOCK TRADING APPROACHES, COMMODITY FOREX TRADING STYLES, COMMODITY FOREX TRADING APPROACHES...

Below are 2 different and diverse approaches to trading. These are not system but approaches.
1. JUMP AND TRADE APPROACH:
The basic feature is not to wait for sl when the line is going against you and many times not to wait for tgt when the line is going in favor of you.


Here the market is very volatile. There are bigger opportunities to grab and to miss. The markets are many given break out or it is trading at further support or resistance after giving the initial breakout with bit moves.
There are usually also many news factors and new pressure is also higher. There are multiple news factors from domestic and international levels.
In this approach ultra alertness is required.
Apparently higher churning and turnover takes place.
Losses are mostly limited so in that sense it is very good approach to keep the losses short.
It doesn't mean that you do not average on the winning side and not extend your target if you feel so.
There is good chance of missing profits due to premature exits.

2. SL AND TARGET APPROACH:
This is a standard and systemic approach.
You have made a system of risk management, risk reward ratios are predetermined by you and you strictly follow it in most or all trades.
You stick to SL even if you are long and there are all chances of hell breaking loose. At the same time you remain in position till the target is achieved even if it is taking time for any of them to occur.
When market has reasonable movement then even 2-3 trades can fetch good profit due to wait till the target and absence of premature exit.
Review of system is more possible and practical at the end of duration in this approach.
This system is cool and calm, does not require ultra alertness, you can place limits and relax for days.
This is particularly effective approach when markets are moving from one end of the range to another or when market are slow but in trendy or untrendy but consolidating with room for individual stock movement in individual sectors.

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