Unlike investors, traders can make profits even on a down trend. Traders enjoy a brilliant advantage over investors and they can make profits irrespective of the market’s movements. All you need is the right skill-set and strict discipline. It is definitely not the simplest way to make money, yet it is not rocket science. Half the battle is won before trading hours rather than during it.
Here are our 7 effective ways of booking good trade profit:
Always have a trading plan
A successful trader always has a strategy for the next day. Winning traders always maintain charts and analyze markets thoroughly so that they can trade better the next day. They develop a sense of the market’s main trend as a result. If you start having a trade plan, soon you will be able to identify the sectors in the market that will be more profitable for you.
Capture the large market moves
A trading account that does not capture large market movements is not sustainable. Novice traders book profits fast and want to enjoy the winning feeling. While expert traders lose trading equity slowly if they are satisfied with booking small profits. Booking small profits all the time will only be profitable for your broker and the best that can happen is you will be at breakeven by the end of the day. When you realize that you have entered a large move, you should ride it out till the markets stops acting weird. Use a trailing stop loss policy and let the market run when it needs to. Keep your stop losses wide enough so that you are balanced in between, staying in the move and protecting your equity. Capture large market moves every year and make worthwhile profits.
Trading is a business and be positive
Trading should be treated as a profit-oriented business. You have to review your performance periodically and analyze it thoroughly. The focus should be on consistent profits. Random and erratic profits and losses do not count. Never be in denial of your own mistakes. You have to admit that there is something wrong with your trading technique if you are actually wrong. Whatever you might do, be humble. Humility is a virtue that will get you a long way.
Invest in quality Mid-Cap and Small-cap stocks
To have a regular profit churning portfolio it is essential that you invest in mid-caps and small-caps. They are always on a growth trajectory and have higher stock price movement compared to large cap companies. If you take historical evidence, you will see that mid-caps and small-caps have often outperformed the large caps during a bull run.
Book Profits Regularly
When a stock has achieved your target price, you should book profits at that point of time and exit the stock. You should book profits regularly as it is extremely important for the rotation of funds in your portfolio as well.
This is a trading style that specializes in taking profits on little price changes. This happens as soon as a trade has become profitable. You should have a strict exit strategy because large losses can eliminate all the small gains that you worked hard to achieve. You should have access to a live-feed, direct-access broker and the energy to place as many new trades as possible to rake in small profits in order to achieve a bigger one.
Playing the Gaps
Gaps are areas on a stock market chart where the price of a stock is moving up and down incredibly sharp and has little or no trading at all in between it, This results in a gap in the normal price pattern on the asset’s chart. If you want to make a profit, you can interpret and exploit these gaps for your own profit.