In trading terms your edge would be called a trading plan. A good trading plan can help you sky rocket your profits. Likewise a poorly thought out plan will hamper you and at serious cases make you lose all your money. A trading plan can be based on a number of techniques and factors. The main methods of analyzing data are fundamental and technical analysis, but every person has to decide for themselves what is better in their particular situation and for their goals. In any case, charting and graphing data and visualizing market trends are a part of every technique and something that every successful trader will do.

What is really important in your trading plan is money management. Money management is essentially a defensive position that seeks to protect the trader’s account before seeking any profits. While this might seem counter productive to many new traders, take a moment to consider the implications. If your account keep s on losing money, ever new trade you engage in means that your position size becomes smaller and thus your earning power weakens. But if you protect your account and go for smaller gains, over a period of time you compound your profits, thus growing your account steadily. The professionals all use money management rules and I would suggest you follow in their footsteps.

The next area to look at in your trading plan is your set up. Your set up can be said to be your edge, as it tells you when you have a temporary advantage over the market. It does not mean that your set up is always correct; there will be times that you will lose no matter what happens. That’s why you need good money management techniques. A good set up should comprise of both fundamental analysis and technical analysis. There are traders who rely on just one analysis type and have had great success with that. Still if you have all the tools why not use them to increase your chances of success?

Fundamental Analysis will help you spot long term trend movements and that will help you decide that your set ups will either be all shorts or all longs. Unless you are an experienced trader I would advice against counter trend trading as it is usually chancy and doesn’t yield a lot of profits for the risks taken. Technical Analysis usually shines when you use it to decide your entry and exit positions. As technical analysis is deals with price actions it is a trailing indicator and based on the premise that history repeats itself, we can estimate the next time the market will react in a set manner based on study of past price actions.

A good trading plan comprises all these elements and if one is missing, the plan will not be whole. Prepare your trading plan then get started, trade your plan and take all trades as they come. This way you will earn more profits over time.

Dr. Joshua Geralds is a successful investment specialist with over twenty years experience increasing the income of people world wide. For a limited time get his free Money Management to a Million Dollars e-course here: http://www.pipsalot.com