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If you’re a budding trader and would like to know the key to effective trading here’s some information that will guide you in the right direction. You must have heard a lot of traders talking about chart patterns, moving average or other factors or combination of factors. However, these are not strategies that will have you trade effectively, but starting points to get you into the world of trading.

Talking about strategy, experienced traders will tell you that serious trading will require you to strictly follow risk control and money management techniques. While these may sound very simple, a certain amount of discipline is required in regular, serious trading. Once you start trading, it’s very easy to lose control and get lost in the game of winning and losing. That’s where discipline comes into the picture, and this will help you maintain strict control on the money management side of your trading strategy.

That said, there is one more important thing to keep in mind. Although you may be a new trader, you should probably be aware by now that there are different kinds of trading and not just one standard type. You may have even tried your hand at more than one type of trading. While some of them specialise in just one type of trading i.e., in Gold or the Dow or in a trading index, such as FTSE 100 or in NSE, some others, or actually, most others try a little bit of everything as each one is as attractive and interesting as any other type of trading. The truth, however, is that being a jack of all trades in trading is not the way to go!

That’s right, while there’s no harm in learning the basics of each type of trading, you should strictly consider specialising in one type. Trading is an art. Therefore, it’s important to specialise in it if you wish to be successful. This is the key to effective trading. Most people are unsuccessful and lose their money because they don’t spend time mastering even one type. This is also why we very commonly hear that trading is purely based on luck and you either win or lose accordingly.

Here’s some proof to support the previous statement. If you’ve looked at charts of a few different companies, you’d have noticed that all of them look almost the same. But just find someone who trades only one company’s stock and show him another company’s chart and he’ll immediately be able to differentiate his from the other. This is the difference. A specialist knows A to Z of his specialisation, which considerably increases his chance of being successful most of the time!