Maximise your trading success with market analysisWhen it comes to trading, one of the most important skills to develop is market analysis.
When you know how to read the market and make informed decisions, it can be the difference between spotting high, medium and low probability trades.
Here are some ideas to analyse the market and maximise your chance of success.
Start with the Main Indices
The first step in market analysis is to take a look at the main indices.
These indices, such as the JSE ALSI, SP500, Nasdaq, FTSE100, and others, are a good indication of the overall market direction.
Once you have seen the indices, you’ll get a sense of how the market is moving as a whole, and what kinds of opportunities might be available.
Identify the major Trends
Once you’ve looked at the main indices, it’s time to:
Identify any market trends (Market environment)
If the market is showing a strong uptrend (trend, momentum, moving averages analysis)
Then it’s best to ONLY look for longs or buys.
On the other hand, if your indicators suggest that the market has confirmed a downtrend, it’s best to look for sells or shorts.
Look for Breakouts
Sometimes the market doesn’t confirm an up or down trend.
If you see the market is moving in a sideways manner, there’s still an opportunity to profit.
In this case, it’s a good idea to write down the levels of breakouts you’d expect.
If the market breaks up, you’ll expect longs, and if it breaks down, you’ll look for shorts.
This way you’ll prepare for both outcomes And you’ll be able to capitalize on whichever direction the market takes.
Final Thoughts
Market analysis is a critical skill for any trader to master.
When you start with the main indices, to identify trends, and looking for breakouts, you’ll be able to make informed decisions about your trades and get a good idea of where they’re more likely to head.
