Effective Strategies for Trading the Markets

What do you trade for? Is it about a little extra income? Is it about the game, the constant battle between buyers and sellers? Or is it just something trendy and stylish, all about keeping up with the Joneses? We all have a reason. Perhaps you dream of riding an ostrich off the beaten path in some tropical paradise with a White Russian in one hand and a Cuban cigar in the other. Or maybe you want to cage-dive with Great White sharks without the cage or ski down from the summit of Mt. Everest in an American flag speedo. Or sometimes it's something as simple as putting a little capital away to get your kids through university. Maybe an early retirement, a new Mercedes, or a face-lift?

Whatever the reason, the stock market can be a fantastic vehicle towards your goals. What is your hot button? What drives you and pushes you towards your financial goals? We all have something, a certain desire whether it be material or just a state of being. I would not mind an Aston Martin parked in stall 143 in my building. The sleek design, the notoriously shoddy, mechanically challenged English sports car that looks and drives like a dream in movies like Casino Royale. Yes, that would be nice. But how to get there ....

Setting goals is a crucial part of investing. Like any aspect in life, having the foresight to set attainable goals whether it be in your career, at home with your family, or in your investments will only help you along the way. Having an understanding of what you want and how and when you'd like to achieve it will greatly improve the odds of realizing these goals. In investing, your goals are inextricably linked to risk management. Every time you buy or sell, you're setting a goal. A stop-loss or a price target, somewhere up or down the price levels. That's where you want to be at some point in the near future. Without setting these, it's just gambling. What's the point? How often have you taken a position only to watch it rise and then fall leaving you in the red?

You were pending up in the position, let your emotions get the best of you and before realizing it, the stock turned and so too did your profits. Nothing a little refresher on risk management can not address. We've touched on this subject in numerous trading rooms and will continue to belabor the point. Goals should be the cornerstone of investing. Without knowing what you want to achieve to begin with, how will you know at what point you've achieved it?

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Source by Mat Denney