Hey Joe! If I get all my buy and sell signals to work properly, I should ....

[Joe Ross]

Hey Joe! If I get all my buy and sell signals to work properly, I should come out a winner, right?


Wrong! The perennial questions are, “Should I buy? Should I sell?” All too many traders focus their efforts on identifying buy and sell signals. In fact, that’s what most trading books consist of—some way to find buy and sell signals. Trading systems are usually all about “where to get in.”

The research and analysis traders do is geared towards reaching the goal of getting that magic “base line” directive to guide their actions. Don't be ignorant!

Any successful, experienced trader will tell you that although properly identifying buy/sell signals is important, it’s not the key to being successful. Instead, the way you manage each trade is what will determine your success.

Traders who take the baseline approach tend to believe that the success of their trading activity is dependent on following the right buy/sell signals at the right time. Clearly, it’s important that a trader be able to understand the process of generating signals and to use the methods involved. Realistically though, almost any trader can find a way to generate signals (whether using technical methods already out there, coming up with their own system, or using their platform’s automated signal generation tools).

Any successful, experienced trader will tell you that your trade doesn’t begin and end with a buy or sell. There’s a trade management process involved. For each trade you make, you’re making a group of decisions. The way you manage and time those decisions is what will determine the success of your trade.

Let’ say two traders get the same signal at the same time and act on it. One’s trade may result in profits while the other’s results in losses. How is this possible? It can occur because each trader made a different combination of decisions throughout the course of the trade. The decisions might include scaling in and/or out of the trade, using or not using trailing stop losses, setting or not setting profit objectives prior to entry, patience or lack thereof, etc. The trader who made the most effective overall combination of decisions will have the better trade results in the end. Of course, there are time when pure chance, gives the better result to the worst trader.

It’s very important to regard trading as a process, and to understand that as a trader your efforts need to be focused on the activity of trading itself, as opposed to getting a quick base line answer. Because there are many things to take into consideration in making your trades successful, it’s essential that you educate and train yourself in all the different areas. Learn how to develop better trading plans and analysis methods, and then learn how to apply what you’ve developed to the process of a making a trade–from the original impulse to enter or stay out of a trade to the control of your thought processes and emotions in managing that trade.

All the best in your trading,

Joe Ross
Trading Educators

[volvo264]

Excellent post Joe. Thanks for the valuable contribution. Superb!

[JanaSergeevna]

A great pleasure to see your helpful and informative posts here, Joe. And an opportunity for people like me to thank you for helping me to become a less clueless and slightly more understanding trader than I was before discovering your books!

[flyswatter77]

Hello Joe,
and Ditto. Thanks for the excellent post. It is refreshing to hear from a pro. To trade with consistent success is certainly a challenge, but it is doable. Thanks again for guidance on the road to becoming a successful trader.

Michael