Trade Your Edge in the Market

Trade Your Edge in the Market
By [http://ezinearticles.com/?expert=Rob_Johns]Rob Johns

Your trading edge is your asset. Quite simply without it you will never, in the long run, be profitable. So what is it, and how do you keep it sharp? Well, to be blunt, it encompasses your entire approach to trading, i.e., the set of disciplined objectives you have developed to predict and capture profitable moves in the market, while minimizing potential loss.

Market direction is fundamentally predictable, which is why it is tradeable, yet at the same time there is far too much unpredictable movement, or seemingly random behaviour, for 'whim' trading to be viable.

Objectives must be set to take advantage of what may look like a potential move in a particular direction, yet also there must be a contingency plan if that move fails to materialise within a particular timeframe, or does something less expected.

An 'Edge' therefore encompasses a variety of criteria:

The strategy you use to enter (and exit) a trade: This is likely to depend on your personality, and, or, other commitments. Do you prefer the smaller, intraday, time fames trading during the London session, or are you likely to prefer a more 'set and forget' approach working off the daily charts at end of day, revisiting to monitor progress briefly only every 24 hours? Whatever your strategy they have one thing in common: they all adhere strictly to a set of simple rules. If the rules are not met and the boxes not ticked there is no trade. It is always as simple as that. There is no deviation. The box is ticked or not.

Your market analysis: When is it appropriate, given your chosen strategy, to enter and exit the market? You are looking for entry set-ups that comply with your strategy rules. If you see something that looks promising but doesn't quite tick all the boxes, then there is no trade. Again it is as simple as that, no matter how desperate you are to place a trade. A golden rule to bear in mind at all times is, 'capital preservation first, capital growth second'.

The way a trade is managed is also critical, with capital preservation being at the forefront of the thought process. You will also have to consider target levels, or whether you will set a target. 'Suck it and see' is never part of strategy rules.

How to keep the edge sharp:

When you rel=nofollow [http://www.thelazytrader.com]learn how to trade, choose a strategy that suits your needs, and then stick with it until you are very familiar and comfortable with it. Review trades that don't work out, review trades that do work out. Review the way you managed them. Never look for scapegoats. Stick with your strategy and hone it.

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Article Source: [http://EzineArticles.com/?Trade-Your-Edge-in-the-Market&id=7994328] Trade Your Edge in the Market