In Part 1 of this article, I discussed the importance of sector analysis, and the use of the Relative Strength Comparison to identify the best performing securities in the best performing sectors. In Part 2, I will show you how to use MetaStock to find these securities.

For a number of years, fundamental analysis was considered the only real way to make trading decisions. Now I will reveal to you the truth about technical analysis of stocks vs. fundamental analysis. In the late ‘70s and early ‘80s, technical analysis of stocks was used by only a handful of traders. As difficult as it is to believe now, it wasn`t very long ago that most of the financial experts, major funds, and financial institutions thought that technical analysis of stocks was a flawed and nearly useless tool. Now most traders use technical analysis of stocks, and consider fundamental analysis flawed.

Are all traders risk takers? Trading is certainly risky, this is why you need a technical risk analysis. No trade has a guaranteed outcome, so the possibility of being wrong and losing money is always present. So when you execute a trade, can you consider yourself a risk-taker? Logically, you would think that if you engage in an activity that is inherently risky, then you must be a risk-taker. Virtually all traders make this assumption, and most traders even take pride in thinking of themselves as risk-takers.

Everyone makes mistakes in the markets. But, how do you bounce back and pull back from a bad trade? There’s really no such thing as a perfect trader, and don’t believe anyone who says they’ve never had a loss. They have, and if they are any good, they’ve learned from their mistakes, and then put the mistakes behind them.

A successful trader is not a simple person. They are intelligent, disciplined professionals that have taken the time to master their craft. In my previous article “Characteristics of Successful Forex Traders” I touched on some of the traits that set successful Forex traders apart from the crowd. In this article, I`ll cover a few more.

Why does one Forex traders succeed and another fail? What sets the winners apart from the losers? Well, you won`t be surprised to know that there are certain characteristics that all successful Forex traders share. While many investors take actions that aren`t in their best self-interest, such as making trading based on emotions, rather than on logic, or holding on to a losing position so they won`t have to admit they made a bad trade, successful Forex traders don`t do these things. But there are some actions that they take regularly, so regularly that they become habits. Learning about these characteristics and habits will help make you into a successful trader as well.

Even traders want to be trendy when they buy stocks. Many traders make trades because of public opinion, not because the trade itself makes sense. When a particular stock seems popular, they rush in so they don`t feel they`ve missed an opportunity. As a result they end up buying at a price point where the trade can`t possibly work out. You should always avoid the emotion of the “hot” stock.

In Part 1 of Designing a Trading System in MetaStock, I had discussed the major components you needed to be able to track to create a mechanical entry system. These were measures of price, liquidity, trend, and volatility. The question now is, how do we code this into MetaStock?

A trailing stop loss is very similar to a stop loss, but where the one kept your losses small, the trailing stop loss will enable your profit growth. A trailing stop loss is calculated in a manner like the way we calculated our initial stop loss. The only difference being that while we calculated our stop loss from the entry price, we’re calculating our trailing stop loss from the highest price since entry. The key to the trailing stop loss is that you need to make continual adjustments to make sure that the stop is moved in your favour.

The best stock investment advice you will ever read is to learn from mistakes when someone else has made them. So, this stock investment advice list I made a list of some of the most common trading mistakes that are made. Even I’ve made some of these. If you have already made some of the mistakes, you can rest assured that you aren’t alone in making them. If you haven’t made them, then here’s a way to get around having to learn by making the mistakes yourself, by reading my stock investment advice list.