By now, you should have a fairly basic understanding of how the stock market works and what it takes to trade in the Foreign Exchange Market. The next step comes in learning to spot trends and use them to make trades that will result in you making some money. We aren’t going to waste time talking about penny stocks and small fish, as we are sure you want to get into the real deal.
Success in the market depends on an understanding of statistics, which also means being aware that there is no such thing a 100% success rate when trading. You will be trading using statistics to make informed choices, but again, there is no way that you will be correct every single time. That said, your probability of success will be greatly increased if you learn to read statistics and trends as opposed to going with your best guess.
There is definitely an element of gambling involved when playing the market. For example, if you play blackjack and are aware of the cards already dealt, you will have a better idea of what cards are likely to come should you choose to “hit.” You are then able to bet accordingly, dependent on how confident you are of the outcome of that hit. Similarly, in trading, you can look at what a certain stock has done over the past day, weeks, months, or even years to get an idea of how it might perform moving forward. Follow the patterns and you can begin to make better trades.
Charts And Chartists
Some of you may have already decided to give up because you believe you will have to do all the work yourself. That is not the case, as there are people out there that make it their job to constantly track and report what the market is doing. They deliver their findings to traders big and small, giving investment companies the information they need for their stockbrokers to make big, profitable trades. You can partner with these big companies and allow them to manage your money, so that you earn big when they do.
Best of all, you will have access to the exact same information that the investment companies receive. Chartists are people who take all of the market information and compile it into charts that anyone can easily read. The information is generally delivered as a line graph and bar graph to create what is known as a candlestick chart. It essentially shows the behavior of a specific stock over a set period of time. This allows you to see if the stock in question is trending up or down during each major change. You can then begin to predict how long it may continue to follow that same trend.
