Tips for traders
Exchange trading is an entrepreneurial profession that requires you to risk your money. To make money, it is worth taking a rational conservative approach to the market. Here are some tips for traders getting ready to dive head-first into trading – with a focus on preserving capital rather than getting rich quick.
Don't rush to trade
The market will exist tomorrow, next week, next year, and next decade. Don't worry about missing out on a once-in-a-lifetime move while trading on a demo account with no real money. There will always be opportunities – you have nothing to lose by investing your time in education and training.
Don't trade for no reason
When you finally start trading, don't trade just because you feel like you should, or out of boredom or impulse. Risk your money only when you see the evidence to support a favorable trading opportunity and a trading plan with which you can take advantage of the opportunity.
Beware of Early Success
They say that beginners are lucky and this applies to trading just like everything else, so don't get too overconfident. Many traders who lost money early in their careers are grateful for this lesson – in retrospect – because it gave them a realistic view of the problems and risks of trading.
Work for yourself, think for yourself
Learning about other people's work is part of a trader's education. And there are many publicly available ideas that become components of a successful trading plan. But there are no shortcuts. Many experienced traders say that even a successful trading system will not work if it is not executed correctly, but the reality is that it is very difficult to completely trust something else – especially if you do not fully appreciate all the nuances and do not quite understand why this system works and when it can fail.
Such confidence in a trading idea usually comes after you do all the work yourself and understand the concept from its very foundations. Trade using ideas that you understand and that make sense to you.
If something seems too good to be true, it probably is
There are no shortcuts in trade – it is a complex business that is too tough for many highly educated and successful professionals from other fields of activity. There is no such thing as a trading strategy that is successful 95% of the time, gives you six figures in a month and does not have any risk of loss.
Be a skeptic… Find confirmation of every trading idea that interests you, including those that you come up with yourself.
Keep a transaction log and regularly review your performance
Regardless of your background or approach – investing, short-term trading, technical, quantitative, or fundamental analysis – virtually all good traders agree that it is extremely useful to keep a log of all your trades and learn from past experiences.
Success comes through hard work. Some traders work for years without profit before finally getting on their feet. Remember that the markets will not run away from you.
Additional trading tips
Deposit and volumes of transactions
- To get started, set aside an amount that you can part with easily. Losing such an amount shouldn't have a serious negative impact on your finances.
- Work no more than 10% of the deposit (10% is for the entire consolidated position at any given moment for all instruments and in all directions).
- Do not work for borrowed money. Use your funds. If you received a bonus or a loan from a company, you should still assume that you can only rely on your own funds until the bonus is completely yours.
- Don't make too many trades at the same time. This increases the chance of error.
- If this is not a tactical tool for your trade, do not “average” (do not add volume to a losing position).
- Analyze at least two sources of information (for example graphical analysis + news).
- Don't work against the main trend
- Analyze the situation BEFORE entering the market. Do not change your mind under the influence of other people's statements and predictions when your position is already open. If your strategy involves more or less long-term deals, then you can even turn off the terminal after the positions are set.
- At a minimum, pay attention to important macroeconomic events on the calendar. Consider the possibility of a sharp price movement at the time of news release.
- Refuse to trade if you experience excessive emotions (emotional excitement, inspiration, happiness, euphoria, or, conversely, depression, irritation, insecurity, and excitement).
- Take at least a day's break if you managed to lock in a large profit or had to incur serious losses.
- Develop discipline and a normal, stable professional assessment of your capabilities.
- Do not open a trade if you have no idea about the circumstances under which it should be closed with a loss, and under what – to fix the profit.
- Place a protective Stop Loss order to cut losses and a Take Profit order to fix profits. It is recommended to set Take Profit at least twice as much as Stop Loss.
- If you know exactly the entry-level, then use a pending order, not a market one. Pending orders are processed more accurately. On fast movements, the market can move away from the desired entry point, and it can be problematic to open a position with a market order.
- If you do not quite clearly understand what “lock” is, do not use this technique.
The main thing is not to be afraid to develop, to comprehend new things, and then you will definitely succeed!