That which we learn and practice in investing and trading becomes habit and profitable trading habits lead to profitable trading and investing. Fundamental analysis is part of profitable trading. Profitable habits include routinely updating fundamental analysis of traded stocks. Other profitable trading habits include staying current with fundamental analysis and technical analysis skills and routinely reviewing trading results. Traders who practice profitable trading habits learn to make profitable stock trades, commodity trades, futures trades, and options trades. Profitable trading habits can be as simple as having a strict set of rules about when to trade and when avoid trading in an uncertain market. It may also have to do with when to engage in options trading or futures trading as opposed to direct stock trading. Profitable habits include learning and practicing the use of technical analysis tools.
Technical traders realize that the fundamentals of stocks are almost immediately discounted by the stock market. They also know that varying degree of market inefficiency follow big changes in fundamentals as the day trader and investors interested in bargains for long term investing seek to buy stock or sell stock after a significant change in fundamentals occurs. Learning how to invest short term involves trading skills. Profitable trading habits include having a strategy in place for trading bad news gaps when the market opens after breaking bad news or simply being ready to do gap analysis on any quickly changing stocks in times of high market volatility. With the routine use of technical pattern formations traders are commonly able to predict market corrections and fluctuations following major breaking news.
What is the first step in investing? It is to keep investing and trading skills sharp. Major league batting champions still take batting practice. It is how they keep their skills at a level above the rest. It is said that basketball legend Larry Bird ran the bleachers for five miles when the stands emptied out after each professional basketball game. Profitable trading habits are like the constant training that professional athletes like Bird, Jordan, Russell, Chamberlain, or Jerry West used to keep on the top of their game. A diligent trader will envision a profitable variation of his standard trading strategy for stocks, commodities, futures, or options. He will routinely engage in simulation trading with stock charts in order to test the strategy. Then, when he applies the trading strategy to live testing he will routinely review his results and back test to see where he can improve trading results.
Profitable trading habits include learning from the skills and experience of others. For example, signing up for an investing forum a beginning investor can learn the skills of investing and trading first hand. Following the trades and of an expert is one of the profitable trading habits that increases the knowledge base of the trader, enhances his skill set, and widens his field of vision in picking stocks, trading stocks, and understanding how technical patterns help the trader profitably predict changes in market sentiment. For profitable trading it is important to develop the knowledge base and skill sets necessary for profitable trading. Then it is necessary to practice profitable trading habits to maintain that trading edge that leads to continued investing and trading profits.
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