In business, strategic management is conducted by the world’s top organizations. Top level management focus on identifying the firm’s economic environment to its competitors, and attempt to create and implement goals and objectives in order to strengthen their position within that marketplace.
Professional trading is no different. Well-aware just how competitive trading the financial markets can be, professional traders combine their market expertise, skills, and technical analysis into a refined trading strategy. Their objective is simple, to make money through trading the markets. The necessity for developing and applying a strategy that can applied to diverse market trading each and every day is now more important than ever. But why is trading strategy so vitally important?
In the years of financial trading and education, the Academy of Financial Trading has noticed one key difference between the novice inexperienced retail trader, and the professional trader. That is, the proper implementation of a trading strategy coupled with a well-defined control of risk. The motivation behind developing trading strategy is not simply to look for good trading opportunities, and make trades based on their high level of probability, although this is certainly an advantage. It is to propel your trading away from the anchors of human emotion, idealistic trading and those two deadly distractions of FEAR and GREED.
The objective of the professional trader is to trade the markets profitably for a long period of time. This is done through objectivity, application to good technical analysis, and knowing exactly when to take those winners, as well as the losers. With this strategic thinking, fear and greed are removed from the equation, and the professional is allowed to simply react to the market as it moves. In contrast, the greedy novice is all too eager to make money and after a few wins in the market is over-confident with their trading acumen. When that first loser comes it is usually accompanied by instinctive human emotions of fear and greed that dissuade the retail trader from following proper risk management. Without the structure of a trading strategy the battle is already lost for the eager novice.
In the world of professional trading ‘hope’ is a dirty word. Especially when concerning an open losing position. However, ‘hope’ is not lost. As a trader you will take winners and losers. That is part of the game. In developing a trading strategy you must accept this and move on. Application of technical analysis should always dictate your trading decisions, not your emotions or an over-indulged idea that a market is over or undervalued. That’s how the professionals do it!
Let’s stay in the game with strategic trading. A confident well-disciplines approach to your technical analysis is the focus to your professional trading strategy!