A key to weathering – and potentially profiting from – a market correction is planning and implementation.
Make Your Own Luck With These Trading Skills
Unless you find a pot of gold, reaching your financial goals will take time and planning. Since the market is always changing, that means accepting an inherent level of risk – and luck. However, if you believe that thorough preparation makes its own luck, acquiring a few trading skills and using some established tools can help your trading plan leave less to chance.
Strive for Stability Through a Process
“The conventional wisdom of buying what you know is a great starting point for market research, but how much do you actually know about a company or industry?” asked Brian Bachelier, vice president of active trader strategy at Scottrade. “Developing your technical analysis skills can give you a framework for trading decisions.”
You could begin by establishing rules for trading and managing your cash. For example, you should decide what percentage of your portfolio should be allocated to each trade and set selling target prices that will minimize losses. You could avoid illiquid stocks or limit yourself to higher-quality securities.
By implementing a systematic approach to trading and then reviewing your results, you can gain more effective performance comparisons across different trades. When you’ve identified successes and failures, you can focus on areas for incremental improvements. Your biggest challenge will be to stay consistent within the system you’ve built.
Become Handy with Trading Tools
Narrowing down a couple of trading opportunities from the entire market can be an intimidating process. You may want to pursue trading individual stocks, or perhaps an exchange-traded fund to get a more diversified access to a market sector.
Scottrade provides the following tools. They deliver everything from high-level market overviews to specific updates about individual securities:
- Top Performers
You don’t have to take a chance on which companies are doing well, relative to others. This tool lets you filter securities by activity, gains and losses.
- News Visualization
It’s easier to find a four-leaf clover than a grain of truth in your typical message-board rumor mill. News visualization provides quick access to factual news stories for positions in your portfolio.
- Market Movers
If you’re looking for an objective overview of securities that are moving up or down in significant ways, this tool can help.
- Watch List Heat Map
You have Watch Lists, but how do you quickly assess whether a security is gaining or losing momentum? Our Watch List Heat Map offers an easy visual representation for all securities on your list.
“Nobody can predict the future, but trading tools help you stay in sync with market activity,” said Bachelier. “Trading isn’t something any of us should leave to a lucky guess.”
Next Step: Follow your trading plan and take the emotion out of trading.
The content provided is for informational and/or educational purposes only. The information presented or discussed is not, and should not be considered, a recommendation or an offer of, or solicitation of an offer by, Scottrade or its affiliates to buy, sell or hold any security or other financial product, or an endorsement or affirmation of any specific investment strategy. You are fully responsible for your investment decisions. Your choice to engage in a particular investment or investment strategy should be based solely on your own research and evaluation of the risks involved, your financial circumstances, and your investment objectives. Scottrade, Inc. and its affiliates are not offering or providing, and will not offer or provide, any advice, opinion or recommendation of the suitability, value or profitability of any particular investment or investment strategy.
Investors should consider the investment objectives, charges, expense, and unique risk profile of an exchange-traded fund (ETF) before investing. A prospectus contains this and other information about the fund and may be obtained online or by contacting Scottrade. The prospectus should be read carefully before investing.
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