Turning Market Analysis into Profits

There are a lot of words that get used in trading and investing on a daily basis that are misapplied by the investors using them. While the simple semantics do not really matter, understanding what is being derived or the goal of the process is incredibly important. In the futures market, knowing the difference between an analysis of the market and what has been happening and using that to forecast what is going to happen turns information into something actionable so that you can take a position and potentially realize a profit.

A complete trading system and strategy will not only allow you to use the analysis to forecast a trend, but it will also allow the emphasis to be placed on the proper indicators to watch for a signal to enter or exit a position. While in a perfect world, accurately predicting a trend will allow you to take a position and make a profit, to maximize profits and limit losses the use of signals to determine optimal timing is imperative. The proper timing based on signals will allow timing to be based on what the market is most likely to do rather than what it has already been doing. This is a proactive strategy that will extend profitable runs to their full potential while at the same time allow you to exit sooner from a losing position before it becomes a trend.

The proper use of signals is essential for automated trading. While watching a single position or two closely is doable (if time consuming), for serious traders with multiple positions and pairings running simultaneously, some automation is imperative. The setting of stops based on actual signals instead of simply choosing price points will prevent inadvisable entry or exit caused by a single large transaction that causes blip in the daily chart. This will prevent the retrospective second guessing that occurs at the end of the trading day when you look at a short profit or even a loss caused by a 15 minute spike or dip and not reflected in the overall results of the day.

The selection of which signal to follow is largely a matter to be determined by each investor. The signals are based on numerous different strategies that are available. A quality forex trading platform will allow the individual investor to employ a variety of different strategies and to import the indicators needed to implement the strategy chosen.

Versatility of a platform, such as the TradeStation of MultiCharts platforms, can be judged by ease with which it can be adapted for use with various strategies. The more versatile platforms will allow investors that use sub-routines and tailored indicators to place trades based on their analysis and indicators of choice rather than being limited by the pre-sets on a platform. This is instrumental to the serious investor as it allows them to use indicators and signals beyond the most basic used by large numbers of casual investors. This is what separates and increases their potential for profits. Simply using the pre-sets causes an investor to be lumped in following the same buy and sell guidelines that propel trends and unable to capitalize on greater potential available by more in-depth analysis. The availability of advanced strategies and indicators makes it possible for individual investors to realize results and profits comparable to those of large brokerage and corporate investors in years past.