Wednesday, October 22, 2008

The Holy Grail of Stock Trading

Everyone always searches for the infamous holy grail of stock trading. The magical trading system that will make them rich and allow them to never lose money again.

So does it exist? Is there a trading system or oscillator that will allow them to never lose money again? No, there is no magical system out there that will make you an instant stock market millionaire.

Yet so many people pay thousands of dollars looking for that one special system. They go to seminars after seminars or buy systems after systems. All of this to find the famous holy grail of trading, a system that will not fail to make them money.

There is no such thing. Many people who try to find the best system just switch from Stock market program to stock market program. Getting nowhere and spending a lot of money doing it.

But there has to be a way to trade right? There are many people who consistently make money in the stock market after all. There are a few things all stock market professionals have in common.

1. All traders have a system or multiple systems. Remember there is no holy grail that will make you right every time but there are systems that are right more than they are wrong.

2. All traders manage their risk. If you lost 10% of your account on 1 stock you are not managing your risk. No single trade should set you back more then 2-5% of your total account value. This way a loss will not hurt you too much and it can easily make it up on your next trade.

3. No traders will get their stock picks from the news. All successful traders are able to weed out everything they are hearing on the news and make rational decisions based on technical analysis.

4. All traders control their emotions and make rational decisions based off of their own trading plan.

So there you have it. The Holy Grail, build a system and follow it, control your emotions, and minimize your risk. If you can do those things you can succeed in the markets.

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