tWhat is a Trading Edge and How to Get One

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One of things that comes with experience is a trading edge. If you are unable to develop a good trading edge over the other traders,Jordan 5 Grape, you could end up losing all of your capital, even if you are very disciplined and organised,Jordan 5 2013.

In this article I will cover some pertinent factors that I quite often use in achieving my own personal trading edge,Red Bottom.

Fundamental Analysis.

Fundamental analysis as we all know by now, is the best method of checking out the financial condition of a company,Retro Jordan 5. This is easily accomplished by using financial reports, price/earning ratios, incomes,Jordan 5 Retro, market share,Jordan 5, sales and growth,Jordan 5 Grape, etc.that are available This type of analysis can be very time consuming but I find it well worthwhile the effort that I put into it.

Here are a few factors that I take into consideration when researching a potential stock,Red Bottom Shoes.

1 Earnings Per Share (EPS) .This shows me the stock’s average short term (recent quarters) and long term (last three years) earnings growth rate actually is.

2 Relative Price Strength (RPS) This measures a stock’s relative price change in the last 12 months in comparison to other equities Iin the Stock market.

3. Sales + Profit Margins + ROE (Return on Equity). This shows you a company’s sales growth rate during the last 3 quarters, before and after profit margins and the return on equity.

If you like the idea of including fundamental analysis into your own trading plan, I would consider trading only stocks that meet some of the basic minimum requirements.

I personally like to use fundamental ratings for longer term trades such as the ones I plan on weekly charts. This won’t be of much help to you if you happen to trade intraday.

Fundamental analysis can be a phenomenal way to build up a list of good solid potential profitable stocks, or as an alternative you can utilise it as a way to filter out the weaker stocks, but that’s about its boundaries. It will not provide you with an objective method to either enter or exit your trades. All of my trading decisions (entry, exit, and stops) are all based on technical analysis. Which we will now take a closer look at below.

Technical Analysis.

Technical analysis is basically all about the analysis of prices and their behaviour. These price actions depict patterns on charts and because human behavior is notoriously repetitive in nature, these price patterns can also be seen as very repetitive as well. By being aware of this important element definitely puts the odds in our favour right from the start.

You can choose from a variety of chart types that are readily available. The Japanese candlestick charts I have found by far are the easiest to utilise and could quite possibly be the one chart that you will use the most.

There are entire books devoted to the study of these candlestick patterns – if you are really serious about studying candlestick charts, Just take a look at the free books available on www />

Support and Resistance:

This is one of the most important concepts in technical analysis. Support and Resistance forms the very basic foundation for nearly every trading decision you will make. To give it full coverage would require many pages but I will limit myself to some very basic definitions and just a couple examples:

Support level:

This is a price level that a declining market or stock has failed to penetrate and has rebounded off at this level.

Example: the low of the previous day forms an line of support and this price level is often frequently used as a stop loss.

Resistance level:

This is a price level that a rising market or stock has failed to break through and has rebounded off it and headed back downwards.

Example: a previous high in an uptrend forms an area of resistance and this can be used

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