Over the past few weeks I seem to have been bombarded with trading tips; mainly from email newsletters and updates. So, I thought I’d vet them all for you and give you what I consider to be the most relevant.
Here goes…
1. Take a step back before you dive in
If you’re new to trading you’ll probably be thinking ‘get rich quick’, when what you should be thinking is ‘get rich… but it’s going to take alot of time, dedication and control’. Your best bet is to get over all the excitement that comes with trading and the only way I’ve found to do this is to WAIT. Yes, backtest, paper trade over several months (6 or more) before you place your first trade. I guarantee by that time you’ll be feeling pretty familiar with it all and have a better appreciation of what’s ahead of you.
2. Keep focused
Most new traders don’t know where to start, so open trades they think are winners or trade the latest hot tip on CNBC. Experienced traders know to break the markets down into managable segments that they can monitor on an ongoing basis, get a feel for and execute trades where the probability of a winner is greater than a loser. So, start by focusing on 1 or 2 stocks, indicies, currency pairs or commodities.
3. Your Stop-Loss isn’t a goal
The key factor to losses is incorrect portfolio management. Remember that a stop-loss is not there for decoration, either to prevent huge losses. Use it wisely!
4. Trading Systems aren’t optional
Every trader develops his/her own individual trading system, depending on the amount of time they have to dedicate to trading. Traders with more time may adopt a day trading system, while others might trade longer term. The important thing to remember is to stick to your trading plan. One or two loosing trades don’t necessarily mean that your system isn’t a profitable one.
5. Taking Profits
The number one problem that new traders encounter is closing their trades too early. Remember to stick to your trading plan; therefore you won’t reduce your potential profits.
6. Don’t turn a profitable trade into a losing one
Once the market is going your way and your positions shows a positive P&L, keep a close eye them. First of all move your stop loss to your entry point to secure your funds. Then move your stop loss in the direction of the trend to prevent the trade from turning into a loss.
7. Plan Ahead.
Never enter a trade because the price is suddenly rising or decreasing. Always plan your trade. Know your entry point, take profit and stop loss rates.
8. Capital preservation.
Profits are there for the making, but the real key is not to make money; it is actually keeping it. Hold profitable trades and cut your losses quickly.
9. Momentum and the Trend.
New Traders are often unaware that as a new trend starts, momentum tends to increase. Additional traders jump on for the ride strengthening the trend as it continues higher. Try to trade with the market’s momentum on your side, as it will often push your trades in the right direction, hitting your take profit sooner than you expect.
10. Don’t waste your time on a losing trade.
If you find yourself in a losing position, remember that sometimes it’s better to cut your losses and move on to the next trade. The markets are full of profitable opportunities, just waiting to be taken, so don’t waste your time on an unprofitable trade!
Well, I hope this has helped give some of you a better understanding of what it takes to be a successful trader. If you’re looking to get started and want to cover the above points off in more detail take a look at our top rated trading systems.
