Learn Stocks Trend Following Strategies

A trader must create a stocks strategy that they stick to when trading the online stock market. A trader must have the discipline to follow the rules of their stocks strategy at all times. That is why it is best to come up with trade strategies that are profitable - profitable stocks systems will be a lot easier to follow & stick to. This is because a trader knows that by following the rules of their stocks system they will be successful.

A carefully designed strategy which has been back tested & proven to produce profitable results is one of the keys to becoming successful when trading the stock market. This type of strategy will make it easier for stocks trader to follow the rules of their stocks strategy because they already know that the strategy is profitable, therefore maintaining the discipline to continue following the stocks system will be much easier.

Successful stocks strategies will also include:

1. Stocks money management guidelines

2.Stocks Psychology Mindset

These two will greatly improve the success of any stocks system.

However, Let us look at stocks price action strategy before explaining more about stocks money management and stocks psychology.

Stocks Trend Following Strategies

Stocks Trend following strategies are based on first of all determining the overall market trend, whether the stocks market is moving upwards or it is moving downwards. After determining the stocks market stocks trend the trader will then only open trades in one direction.

Upward stocks trend - in an upward stocks trend stocks prices keep moving up, and here the trader will keep opening buy stock trades.

Downward stocks trend - in a downward trend stocks prices keep moving down, and here the trader will keep opening sell stock trades.

There are various strategies of determining the stocks market trends and the two most popular ones are:

Stocks Trend lines - traders will draw stocks trend line on the stocks price chart to determine the current general market movement. Once the stocks trend direction is determine a trader will then open stock trades once the stocks price touches the trend line or when price is close to the trend line. The trader will only open trades in direction of the trend.

When markets form trends, the stocks trend will have a lot of momentum and this momentum will mean that the stocks prices will keep moving in that direction for a period of time that lasts for quite some time.

Trading the stocks trend is one of the most profitable way to trade the stocks market if a trader catches a stocks trend that has already formed they can make a lot profit just by trading in direction of the trend and the longer the stocks trend stays the longer a trader can continue to make profits. Some major stocks trend might last for years and these can prove to be the most profitable setups especially when they last for years.

Moving Averages Strategies - Another stocks trend identification strategy is the use of the 20 day moving average, and when prices are above this moving average the stocks market is bullish and if stocks prices are below this moving average the stocks market is bearish.

The 50 day moving average is also used for determining the medium term stocks trend, while the 200 day moving average is used to determine the long term stocks trend of the stocks market.

Traders can also use 2 moving averages to form the moving average cross over technique, this method will have a shorter period moving average & a longer term moving average & these 2 will be use to determine the current market trend. For examples a trader can use the 5 day & 7 day moving averages, & for this strategy the stocks trend is upwards if both these moving averages are moving in the upward direction and the stocks trend will be down if both these two moving averages are moving downward.

This system will indicate the stocks trend is about to change one these two line cross over each other. This signal will be a god time to close trades if a trader has open trades.

Stocks Strategies Tips

Once a trader has come up with their stocks strategy, they should also include the following so as to make their stocks strategy more successful.

1.Stock Money Management Rules

2.Stocks Psychology

Money Management Rules

Stocks money management guidelines should be part of your stocks strategy - these rules will help you as a trader to manage risk. This means that you'll use the two rules of stocks money management - these are risk : reward ratio and drawdown reducing technique when placing your stock trades to determine the lot size that you'll open in the stock market. The most popular stocks money management rule use in stocks & the one that you should also add to your trading plan is the rule which says a trader should never risk more than 2% of their account balance on any one single stocks trade.

To learn more about these two stocks money management guidelines, traders should read the stocks money management guide that is on the learn stocks tutorials section of this web site under the stocks key concepts lessons.

Stocks Psychology Mindset

In order to become successful when trading the stocks market a trader has to learn about stocks psychology. The stocks psychology or mindset that's required to become successful in stocks is one that avoids the emotions of fear and greed while trading the stocks market and is a mindset of total discipline that a trader will follow all their rules & their stocks strategy & only trade with signals that are generated by their stocks strategy. With discipline a trader will not trade unless their stocks strategy gives a signal. A trader will have the mindset of only following their stocks system 100% all the time without second guessing the stocks system. A disciplined trader will also not place trades in stocks market just because the stocks market has started to move up or down, instead a trader will wait for a trading signal to trade to be generated by their stocks strategy.

In order to study more about stocks psychology and how to manage emotions while trading the online stocks market a trader can read the stocks psychology guides from the learn stocks tutorials section of this web site under the stocks key concepts lessons.