A professional approach and rich quick mentality, the delicate blend of both is required to make the outstanding trading setup for retail traders. Every successful trader has a different style and mind setup. But in the end, the art is ultimately left up to you, and we can only help you with science.
The most successful trading setup includes price action & a mix of 5 different tools which are listed as follows:
- Trend indicator
The best trading setup for retail traders is using trend indicator that means not going against the trend, and it makes the job more difficult. It’s preferable to pick moving average to get an overall idea of the Trend.
- Try to use multiple moving averages to get a good understanding of small, mid and long term trend.
- Using Gann recommended moving averages will help you further.
- Momentum indicator
In retail setup, you might have heard that trend is your friend, but not all the time, because it’s only your pal till it lasts. Trend’s trading is quite easy, but knowing whether it would stay consistent or not is the essential aspect of the trading setup. We may have seen some beginners complaining about reversing back of trends after entering the business. Therefore, checking the trend’s strength is more crucial momentum indicator that works best for the job.
- Multi-time frame charts
The use of multiple times frames makes your trading setup much more efficient.
- Time cycle tool
While considering the price factor, most traders neglect the essential element, which is equally responsible for stock movement is a time cycle. Stock market charts consist of two axes: Price is plotted on the x-axis, while time plotted on the y-axis. Professional traders also take into account time axis which gets them more than 50% edge on retail traders. Time-action is as much crucial as price action.
- Support/ Resistance levels
To plot this, one should use Fibonacci levels and look for its confluence with Gann levels or pivot points. Higher the confluence of multiple levels, support or resistance level will be stronger.
Please, practice these concepts by selecting only 3 to 5 stocks, and keep paper trading in them daily. You will feel amazed at how these tools work like wonder.