It is no secret that successful traders always look to cherry pick the best possible trade setups. Such traders spend hours analyzing charts and data in order to find the right opportunities to act upon. This process, known as technical analysis, requires a well-honed skill set and a sound understanding of the markets.
Cherry picking involves identifying trades that have a better than average chance of success, based on a number of factors that are typically not visible on the surface. Such factors involve both fundamental analysis – which evaluates macroeconomic data and long-term trends – and technical analysis – which studies charts and short-term trends in order to detect meaningful patterns.
When seeking to identify the best possible setups, experienced traders often review a wide variety of technical analysis tools such as trend lines, Fibonacci levels, momentum indicators, and various chart patterns. The goal is to identify potential trends and cycles that may be indicative of future price movements.
The most successful traders understand that the markets are largely unpredictable and that profit-making opportunities can come as often as losses. Thus, cherry picking entails taking calculated risks that are informed by the researched data and analysis.
Many traders also opt to use stop-losses to limit their potential losses, and this is especially the case when trading volatile instruments or when investing large sums of money. A stop-loss order instructs the broker to close the trade in the event of an adverse price move.
In summary, the best traders always cherry pick their setups. One important aspect of successful trading is to spend time and effort in the selection process, as this allows for better risk-adjusted opportunities. Professional traders also utilize stop-losses to limit potential losses and protect their investments.