Whenever I hear the words “Trading is Simple”, I actually scratch my head. You see, trading in principle is easy. You just buy shares and sell them for profit. Pretty simple, right? But, if you’re talking about trading for the purpose of acquiring profits, then there is more to that as part of the swing trading strategies.
Strategy
Yeah sure, you can create “strategies” to help you with trading, but that is actually not that simple. Those things that you call “strategies” are actually just set STRUCTURES. For instance, if you’re talking about “only buy share A if the price is B”, then that is just a structure and that is not, in actuality, a strategy.
Since we are moving more to a digital platform, the strategies are just a set of algorithms specifically to perform in a certain scenario.
You could call it parameters or something, but it is easy to refer to it as STRUCTURES because, well, just a foundation of what style of trading you’re going to employ.
Think of a building. If it doesn’t have a solid foundation- a set structure, then it is bound to fail. This is particularly true in trading. If you do not have a solid structure that you can use, you might not earn a lot of money in the process.
Selection
The next fundamental of trading that you need to know is SELECTION. Yes, you can follow a structure when trading or betting, but it is only through selection where you can really earn some profits.
For instance, if you’re betting on horses, for example, your selection process will be the one to decide if you’re going to win or lose. You can certainly create different strategies for this like choosing only the horse with the best form or choosing a horse based on its endurance if the weather is not apt for racing.
For you to best select something for trading, you need to keep a close eye on it. And, since we’re using a digital platform, you’ve got to look at your screens more and more for possible signs of winning.
Wide Stop
Right, so we’ve established that having a set structure and selection are the first two fundamentals, what is the third?
The third is actually what is known as the Wide Stop. Typical “gurus” would tell you to use tight stops or limits that are too tight that if there is a potential trade that is not within your strategy, then you’re not going to go for it even though it looks really promising.
The wide stop is different in the sense that it gives you more flexibility. Take “stops” as a measure to hedge your bets against possible losses. So, you might think that betting on only one horse would be the key for you to keep your losses to a minimum, but actually doing that will not earn you a lot.
Having wide stops will make sure that even though your first bet doesn’t win, you can bet on other horses that have the potential to win it all.
