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Online Trading Tips

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I’ve been using technical analysis for years to make money in the stock market through stock trading and have found it to be a key to my success. Most people just put money into the stock market without any plan on when they are going to buy a stock or sell a stock. But if you don’t know when you are going to take your profits then the market will take them from you.

You see you have to do more than just get an idea from TV or read about a hot stock in a magazine to make money. You have to know basic trading tactics and fundamentals and put them to use. That is where understanding price action and stock charts comes in.

There are three principles to technical analysis. First is that market action discounts everything. In other words all of the known information is already factored in price. Knowing information won’t give you an edge, because the price already has it factored in.

The second principle is that prices move in trends. There are predictable trends that repeat over and over again that you can take advantage of. The trader’s mantra is “the trend is your friend.”

The third principle of technical analysis is that patterns happen over and over again. Traders and investors tend to move in herds and do the same thing over again, because people don’t change. This enables the technician to profit from the behavior of the crowd in the market.

From these principles the technician attempts to identify trends in the market and reversals of trends. To distinguish trends from meaningless short-term fluctuations they use one of two types of analysis or a combination thereof: charting and mechanical trading systems. Chartists use graphs of stocks to identify meaningful patterns in the price and volume action of a stock.

The whole secret to investing is to get your emotions out of it as much as possible. Most people by because they fear missing out on more gains and sell when they let losses pile up and can’t take them anymore. You just need to make rules to let your winning positions run and cut your losing positions quickly so they won’t eat up your account balance.

There are many books worth reading when it comes to stock trading and technical analysis. There are also some good trading courses out there. The world is at your finger tips if you just start to educate yourself.

For more from Mike Swanson get his free stock trading course at technical-analysis-charts.com.

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