With the right system you can make money trading. To say there is a system that fits all types of people would be wrong. It is very possible to make money trading and you need to have a system that is personally best for you and your situation.
If you want to make money trading you should choose a trading system that you personally feel comfortable with.
To find the right system that will work for your situation, you will need to define your financial goals and objectives. Ideally you should choose a system that fits in well with your situation and one that makes best use of your strengths.
It is a good idea to identify or review your approach and objectives to make money trading.
Here is a list of questions to help get you started:
1. Do you plan on trading part time or full time or every once in a while?
2. How much capital will you be working with?
You shouldn’t trade money that you are not comfortable losing. Don’t take any unnecessary risks with money you can’t afford to lose.
3. Do you have much tolerance to risk and how much risk are you comfortable with?
In trading there is a term called drawdown. This refers to money that you lose while trading. It is good to personally identify how much drawdown you are comfortable with, whether it is 20% or 30%. This is up to you.
4. What rate of return do you want yearly?
5. How do you want to make money trading in the stock market?
Are you looking for steady cash flow i.e. consistently taking profits out from the market or are you looking for capital growth (growing your capital overtime in the market)?
By answering these questions you will be closer to finding a system that suits your situation best for investing.
There are many trading systems to choose from which will help you to make money trading. It is important to know that you cannot trade using all styles. This lowers the success rate as you are learning each aspect of each market very thinly. It is better to know one really well.
There are many ways to make money trading in the stock market. Traders exhibit a wide variety of styles. Day traders are people who enter into and exits positions several times per day. One thing known with day trading is that they don’t hold a position overnight.
Some investors look to capitalise on long term macro economic trends. Then in between you have a lot of variety in styles. Other styles include swing traders, aggressive growth traders and forex (short for foreign exchange) traders – trading where the asset traded is currency.
Knowing your approach and objectives will help you choose the right trading system, course or book. Being okay at everything and a master of nothing is not a good situation to be in and it will be a lot more difficult for you to make money trading.