A trading strategy is the key to success.  It doesn’t matter if you are a growing stock investor, pattern day trader, or long term dividend specialist, having a strategy is what differentiates winners from losers.

The first and most critical step in building a stock trading strategy is to know yourself.  Do you like the action of trading, do you like risk, can you tolerate large draw downs, are you analytically inclined, do you make fast decisions, how much data do you need to act, do you prefer to make tons of trades during the day or is just one or two more your speed?

These questions will get you started on understanding your trading personality.  For those of you who want to dig deeper into this question, I recommend the two classic books in the field of trading psychology: Van Tharps—“Trade Your Way To Financial Freedom” and Brett Steenbarger’s “The Psychology Of Trading”.

It is important to remember that there is no one best strategy.  Professional stock traders have created great wealth by using any number of strategies.  It’s not the strategy that will make or break you in this game, it’s how and when you apply it.  I consider the following 4 strategies to be the primary strategies you can implement stock trading.  They are not listed in any order, will be described briefly as entire books can be and have been written on each one. Keep in mind that they all contain the same 3 parts, the 3 T’s if you will:

1. The entry
2. Time in trade
3. The Exit