STRATEGIC TRADING IN THE STOCK MARKET:

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Trading of stocks that are in harmony with the market is a good strategy for success in the stock market. And this is what we call strategic trading. When a stock reaches the line of least resistance, a careful analysis will show you the direction of the market or that of an individual stock that you are following. An experienced trader will not need a prophet to tell him that this is the best time to enter the market. This is the best time to take position in that particular equity. With this strategy, you will notice that the market is working for you instead of you working for the market thereby making the job easy for you while the cash keeps rolling into your bank account. There are times that this move will go contrary to your expectations and you will definitely lose money. That is why you must not trade without a stop loss. If anybody is promising you that you will never loose money with his strategy, that person is not telling you the truth. Stock investment is a high risk investment that you must not enter with your last capital or a borrowed fund.
To trade in harmony with the market simply means to take a long position when there is a defined up trend channel in the wave. Strategic trading equally means taking short position when there is a down trend in the channel.

Somebody may ask, can one be at the two positions at the same time? The answer is NO. Though it is possible to enter the market and trade from both sides at the same time, it is unprofessional and instead of making money, you may end up loosing your investments, because you will find it difficult to control your emotions at this point in time. Emotions most of the time works against the trader, that is why one of the first things you will be thought before going into the stock market is to control your emotions. So the best strategy is to be either long or short at a particular time.

That the trends of the market are pointing downwards or upwards at the same time with that of an individual stock is not a reason for you to take position.

While monitoring the movement of the trend, it is equally important to monitor the movement of the price. And if you notice that both the price of the stock in question and the market are high, close to the trend channels, such stocks should be avoided, especially when you are going long, rather check for those whose trends are near the bottom levels, especially, for short position.

When the market is in a range that can be defined, the trader can use the concept of relative strength and weakness to locate a profitable market. In most cases, these individual stocks can be at the same position in the market, but it is important to note that not all of them are profitable and that is why you really need to do a thorough research before investing.

The gain of trading in harmony with the market is obvious, but the trader needs to guard himself from a barrage of distractions from the brokers or the media. This distraction will come in the form of conflicting information that will be flowing into the market from all angles and sources and if the trader doesn't know his onions very well, he will miss the track.

These factors are some of the best issues that can guarantee a profitable trade. Immediately the thrust in a trend is completed, it is possible to measure both the relative strength and weakness index. This can even be noticed before the trend shows itself clearly. When a stock is making a large thrust than the trend, that particular stock should be monitored closely because, the price can make some surprise correction, which at times is the best time to take position. When stocks out perform the market, they most often provides profitable traders for the smart investment.





















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