The best way to profit in the stock market, or any financial market, is to capture a trend in your time frame. There are other ways, like selling option premium or hedging production by selling futures contracts.
DECEMBER PNL AN REQUESTED BY MANY
But the majority of market participants are trying to capture a trend on their own trading or investing time
frame. Buy and hold investors are betting on the long-term uptrend of the stock
market over the course of their working life. Day traders try to capture trends
from the time the market opens, until the time it closes, all in one day. Swing
traders are looking to buy a low and then sell it as it trends higher over a few
days, or sell a high price short and cover it at a lower price over a few days’.
I have found that the longer the time frame, the simpler it is to capture the trend.
Long-term trend followers filter out the noise and capture trends on daily or
weekly charts and strive to avoid the random, intraday noise. Different systems
will work based on the velocity and volatility of the trend in a particular time
frame.
In a strongly trending market that consistently makes higher highs and higher
lows each day for weeks at a time, trend followers do well. Markets that stay
inside a defined range of resistance and support on the daily chart for weeks, will
prove profitable for swing traders. Day traders like intraday volatility, as it gives
them chances to be profitable.
Any trading system on any time frame is just a set of rules that give the trader a
high probability to capture a trend. When building a trading system and
developing a trading plan, your goal is to discover ways to capture trends in a
way that makes you comfortable psychologically and financially profitable.
SOURCE - Thabits
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