A trading tool is anything that has a function that helps you be a profitable trader.
- Back testing software is a tool that helps you see what type of price action trading signals were profitable in the past price data.
- An entry signal is a tool that tells you when to get into a trade because the odds are in your favor for a winning trade.
- A stop loss is a tool that limits the size of a losing trade.
- A trailing stop locks in open profits when a trend starts to bend.
- Position size determines how big your trade should be based on market volatility.
- A profit target is a tool to measure the potential reward if your trade works out.
- Moving averages are tools for quantifying a trend.
- Passion for the markets is the powerful internal trading tool that gives you the energy to do the needed work to be a profitable trader.
- Perseverance is a psychological trading tool that keeps you going even when you want to quit.
- Self control is an internal trading tool that enables you to follow your trading system regardless of your emotions.
Your greatest trading tools are going to be perseverance and self control. These are the only things that will buy you the time to learn how to build a profitable trading system, and once you have developed a system that works to then follow it long term.
This article was written by Steve of newtraderu.com and can be found here.