The key to making consistent profits in the markets is to enter trades where there is relatively low risk compared to much higher reward, thus MoneyShow’s Tom Aspray shows how you can spot good entry levels, set profit targets, and devise an exit strategy.
Picking tops or bottoms is generally quite difficult as one often does not have clear technical divergences that can give them enough conviction and discipline to take a position. Oftentimes traders will convince themselves that a market can’t go any higher or lower and keep fighting the trend as they are repeatedly stopped out.
Successful trading or investing is dependent on trying to put the odds in your favor and then having a clear exit strategy for when you are wrong. The S&P 500 had several wide swings in 2012, which made it a difficult year for many traders and investors. Buy and hold was only possible for those who were totally oblivious to current events.
Despite the powerful performance of the stock market in 2013 there were several classic corrections that allowed both traders and investors to buy. Clearly, 2014 has been even a more difficult year. To successfully trade retracements, you need to have patience and there are several technical tools that can help you identify in advance potential buying or selling zones.