Abstract:
In this paper we will discuss about some important factors, like prices, risk control, trend analysis etc, of trend trading which the traders should know clearly before entering into the market.To get success in trend trading the traders, especially the first time trend traders, should thoroughly know some important factors, or better to say they should obey some trading rules. These are discussed below.
First of all the traders should know clearly about the prices. If the prices decrease continually, then the market is clearly showing a downtrend. Several market indicators are available which predict the future price movements. According to the experts, trading with the trend is more profit worthy than going against it.
The traders should know the money management policies, otherwise if a downtrend occurs then they will not be able to cope with it. Since trend trading does not predict any price level therefore,
Risk control is another important factor of trend trading. The traders have to learn how to control the risks by adopting an efficient risk management system. If the volatility is high then, the traders should reduce their trading size. In one word, the traders should preserve their capital till the trend turns in their way. Before trading an issue, the traders should completely be aware of the risks associated with it.
The traders should not follow the market trend on the basis of demand and supply. The traders should learn when to enter into the market, when to exit and how many shares should they trade with at a particular time.
