Go With the Trend, Trend is your Friend 

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Go With the Trend, Trend is your Friend

One of the most useful skills that any trader can develop is the ability to identify a trend. If you can identify a market in an uptrend and enter a long position or identify a market in a downtrend and enter a short position, you have the potential to make a great deal of money. Too many traders spend all of their time trying to "predict" what will happen next, rather than simply focusing on answering the question "what is the trend right now?"

The fascination with predictions is understandable. If you could predict today where a given market will go tomorrow with any consistency you would be rich beyond your wildest dreams. Unfortunately this desire is just that, a dream. The heart of the problem seems to be that there are so many people making so many predictions that the naive trader almost can't help but to think, "well there must be something to it. These guys on TV can't all be wrong can they?" In fact they can, just not all at once. And therein lies the fascination with predictions. If someone makes enough predictions eventually he may get one right. If a market prognosticator on TV gets a prediction right he is likely to be sought out for more predictions for a fairly long period of time, regardless of how many of his subsequent predictions actually fail to pan out.

Expecting to trade profitably in the long run by latching onto somebody's predictions or by relying on your own is simply an exercise in hope. Successful traders learn that the ability to identify the current trend is far more useful than a thousand predictions.

Cut Your Losses

This topic will be discussed in greater detail in categories Using too much Leverage and Failure to control Risk. For now simply note that the effectiveness with which you cut your losses on trades gone bad will probably have more effect on your success or failure as a trader than any other single factor.

Categories in Trading Mistakes

Lack of Trading Plan
Planning plays a key role in the success or failure of any endeavor

Using too much Leverage
Determining the proper capital requirements for trading is a difficult task

Failure to control Risk
Refusing to employ effective risk control measures can ensure your long-term failure

Lack of Discipline
A lack of discipline can destroy even the most talented and best prepared trader

Useful Advices to Beginning Trader
You can control your success or failure

All about Stocks
Encyclopedia about Stocks. That you should know about Stocks before starting

Forex Glossary
All terms about Forex market

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