Trading Logic - The key to making huge profits fast

Trading Logic - The key to making huge profits fast

If you trade any financial market, will be aware that most investors simply do not make money. It is not because they are incapable of trading - investors are not making money because they do not understand trading logic.

A focus on trading logic is essential for any trader who wants to make money. Forget, opinions and emotions, and focus on the reality of the trading environment - it can be admitted to trading logic, to make huge profits consistently.

Here are some observations on the trading logic, and how you can use to your advantage.

Market price

First, before you look at something else, we need to look at what moves financial markets:

Supply and demand (basic) + Investor perception = market price

Therefore, prices are determined not only by supply and demand - but also by the people. So, what does this tell us trading logic? - Predictive theories do not work, but chances theories do not work.

There are many theories, which argue that markets move to scientific theory - this is not true - if it happens, then everyone will know the price in advance - and there will be no market!

Correct trading logic tells us that although we do not know exactly where prices are going to go, we can calculate that the chances of a move - by studying price history.

While human nature is unpredictable - driven by emotions of greed and fear, there are models that are constantly repeated - and this does not lead to technical analysis.

Human psychology is repeated

Trading logic tells us that human psychology is repeated - because we can see in the charts.

While there is never a perfect scenario, we can calculate that the chances of commercial success - based on what happened in the past. Therefore, using the sweeping-based trading method, we can make money - over time.

Day Trading V Long term trends

From the above, human logic tells us that day trading is futile. Why? - Due to the nature of man is very unpredictable over short time spans. Human nature only becomes predictable over long time spans. Look in any currency (or any financial instrument over time) and you will see long term trends - and they are the ones you need to focus on.

Emotions are a trader's Worst Enemy

Traders hate to trade alone - they constantly seek opinions, and success from someone else. As most traders get it wrong, they step in the majority of commercial and find themselves caught in a losing mentality.

The only way to trade successfully in isolation - using trade logic to look at the facts, not what others think.

Trade Entry and Exits

Trading logic tells us that market timing is futile. Why? Because you can not predict - and this is what market timing tells us to do. Therefore, you should follow the market action - rather than try and predict it. This means leaving the top and bottom picking, losing the majority.

Money Management

As we're playing the odds game, money management is essential - we must be constantly trying to protect our capital.

If you lose 50% of your capital, you must be 100% on your next trade, only to return even - so try not to lose money in the first place! This course is hard - and involves doing two things:

1st Only trade when the odds are heavily in your favor - and in many markets, it means trading only a few times a year.

2nd Given enough risk - so do not stop by your trade in normal market volatility.

Risk and Reward

Trading logic tells us that the risk is a combination of the following factors:

Volatility in the market trading methodology + + money management = Risk of trade.

This complex interaction is much more than placing a stop, or distribution of 2% of the capital of trade - which is how most traders view it. It involves viewing risk in a different light.

Some trades will be made to seem risky - but if you have balanced the equation correctly, the odds will be on your side.

Logic Trading

There are many other examples of trading logic, we can look at - but the above covers most areas.

To make money you need to see the markets, and their behavior as they are - not as you want to see.

Do not make the same mistake as most of the traders. Instead, think logically and without emotion - and it will lead to huge long-term gains.