The Three Components of Your Trading Strategy

Sep 17, 2011, 03:00 ET from City Index

LONDON, September 17, 2011 /PRNewswire/ --

The fundamentals of trading are simple in their essence: you either buy, sell or do nothing. One way to decide exactly what to do in a particular situation is to have a trading strategy in place. Sandy Jadeja, Chief Technical Analyst at spread betting provider City Index (http://www.cityindex.co.uk/), breaks formulating your trading strategy down into three key components:

Money

"Your primary objective is to preserve your capital. We all trade to earn money, but our ultimate goal is to preserve the money we have. You protect your capital by sizing your position according to your account size. You protect your positions against losses by placing stop-losses. Remember, if you lose your money, you won't be able to make money."

Method

"This is an important issue to address, although it may take some trial and error before you decide what suits you best. Firstly, you need to find the style that suits you, such as day, swing or position trading. Next you need to decide on the decision-making process you want to use. You can use technical analysis or fundamental analysis in your decision making process, or a combination of both."

"Either way you need to know your field, and that requires practice. The ideal way to start your trading career is to research and practice trading with patience and diligence."

Mind

"Trading is an alluring business, full of hope and promise of untold riches. The reason trading is hard is because factors like our fears and our egos will interfere with our decision-making process. Keep things simple, develop a trading plan and, finally, have patience. Remember, the only place not to have patience in the market is with your losses."

Learn more about trading, whatever your experience, with a free City Index seminar. See a full list of upcoming workshops at:

http://www.cityindex.co.uk/learn-to-trade/

Spread betting and CFD trading are leveraged products which can result in losses greater than your initial deposit. Ensure you fully understand the risks.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through City Index trading platforms.

As a group, we transact in excess of 1.5 million trades every month for individuals in over 50 countries worldwide. We provide access to a wide range of instruments including margined foreign exchange, CFD trading and, in the UK, spread betting.

We constantly look to improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer service and support. Visit http://www.cityindex.co.uk/ for more information.

SOURCE City Index