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Improving Analysis for Better Profits

Reactionary trading is usually not a great recipe for success in the traditional markets. There are a few reasons for this, but first, we must correctly identify what reactionary trading is. It is executing trades after information has already been acted on. If there is data out there that the price of gold will begin to drop, reactionary trading involves selling off future contracts after prices start to drop. Data has come out, the market has begun to react, and the reactionary acts once it is clear what is happening. There will be solid gains when a great trader uses this method, but they will always be smaller than they could be.

The reactionary could be profitable if three stipulations are met. First, the reactionary must act as early as possible. They must hop on a trend as close to the beginning as they can in order to ride the profitable waves for as long as possible. Second, they must have a good and reliable method of telling when the trend will end. And third, the successful reactionary trader must trade in amounts of cash that are large enough to make short term trades worthwhile. If you are at the mercy of paying excessive brokerage fees, you are making things much harder than they need to be and spending money that you could be putting to an alternative use making you more money.

Many day traders are reactionaries, and this is fine, but they are also missing out on opportunities by not having better predictive tools. Riding a trend is great, but if you’re only getting a small portion of the profits, you are missing out on extra cash. Trading with large amounts over a short period of time helps make up for some of this, but there are better ways of effectively creating profits for yourself, even short term.

These are time sensitive trades, but the profit rate is fixed throughout even if you are correct by a fraction of a penny. If you think gold’s price will go down, a put binary option will be used, and a correct prediction nets you a full return, usually around 78 to 80 percent of what you invested in profits.

Another method to increase profits is by learning other types of analysis. The truth is, most short term traders under-utilize the tools they have available and rely too heavily on only one of them. Usually, this is technical analysis. But, by looking at sentimental and fundamental analysis methods, too, you can make sure that your examining an asset more closely and from different perspectives. Technical analysis won’t tell you about a major gold ore discovery in Australia, but watching the news and seeing how investors react to it will give you more complete information of how to act, well before mathematical data would be able to tell you this.

A third method relies upon signals services. Even the best independent traders often use these. Basically, a report is sent to your computer or smartphone and lets you know what to trade and when. The data could come from a remote trading robot, or it might be sent by a professional trader. Either way, it allows you to look at trades you might have never considered before. In this, even low quality signals services have a lot of merit, although you should still try to avoid these. Focus on finding a service that will help you to enhance your own trading knowledge, all while making you some extra cash at the same time. You may pay for these, or you might find some for free. Either way, make sure you get one that is helping you more than hurting you.

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