They say only a handful of traders in the financial markets get to benefit from it on a regular basis. Some of them even manage to make over a million dollars. You might be thinking, 'But I want that, too.' So why are you still barely scrapping by? What’s the secret of their success?
It’s plain and simple, folks: professional traders follow the rules every waking moment of their trading day.
‘But we know the rules,’ you’ll say. Some of you know maybe five of them, some might even scratch their heads and come up with ten. We offer you twenty-one rules of trading forex and stocks. Of course, those are not all. We did not intend this article to be a full and complete guide to trading. But we do hope following these rules will help you strike gold.
In order to enjoy trading and to make the right trading decision, you have to stay calm, confident and relaxed. You should always be ready to part with the money you use in a trade. Steer clear from any concerns or worries your mind might be overflowing with. You know what they say: scared money makes no money!
As a successful trader, learn to stay calm, objective and keep any emotions at bay. Trading decisions should be governed by logic and not emotion. With time, you may become fascinated with trading, but you should not lose your sleep over it. Learn to discipline yourself, do not take any situational factors into account or lose your common sense. One might call trading a fling; don’t mistake it for a serious romantic involvement.
Practise your skills first using a demo account instead of going straight to serious trading. You can open a demo account on TeleTrade. As a beginner, focus on a maximum of one to two currency pairs (e.g. EURUSD and GBPUSD) or stocks (e.g. AAPL, AMZN) during a session. Get the basic idea of trading, and then, after you feel you’ve killed it with the whole trading thing on a demo account, it’s time to open a real account.
For every open position, keep three times as much money on your account. If you have to reduce your trade volume to observe this rule, do it immediately. A surplus on your account will allow you to avoid stopping out or margin calling.
Any profit you might make on the market depends solely on the amount of effort you put into it. Simply wanting something will not get you anywhere. Don’t let your emotions or feelings get the best of you. It’s important to follow fact-based information, your common sense and your own good judgement.
Before the opening of the market, do your homework and study the general market. And only after that should you start trading based on what you learnt. When you’re in a winning position, just enjoy the fruits of your labour. But if you realise that your estimates have been wrong, close the unprofitable positions. Never go back on your trading decisions during trading day since they will only be based on your emotions and will bring you nothing but losses.
If you feel that your trading performance has been slacking lately, don’t overwork yourself. Go on a vacation. Make it a habit to take a seven-day break from trading every five or six weeks. If trading was successful, go to the seaside. If you haven’t made anything, a change of pace will do you good. It will help look at trading and your own self from a different perspective.
Professional traders always look for new opportunities to profit from. When there’s a hype over a position, professionals look in the other direction in search of something new. You can get a rough picture of the market situation by simply reading your average analytical article. Historically, the trades that pretty much every trader has already got into are most likely exhausted.
You can trust yourself completely, provided that you have studied the market thoroughly. Don’t let some third party opinion affect your trading judgement and your meticulous analysis of the market situation. Let the profit come to you. But if your calculations do not pan out, just close the trade that’s making you lose money.
You do not have to take up everyday trading: it may turn out too hard and expensive for beginners. Learn to set aside some time to make transactions. Track the market and find the best opportunities to execute winning trades.
Don’t try to kill two birds with one stone and work with shares, goods or foreign exchange at the same time. Choose one financial instrument, study it and execute trades in it.
An asset volatility can tell you how to trade it – both this day and the following. Besides, the direction of the market might help you decide on a long or short type of transaction.
If a position you chose did not turn out to be profitable, don’t fund it just to wait for the price to change according to your wishes. Don’t try to have the upper hand. Follow the market. And don’t forget: trend is your friend.
The secret of cutting losses is in the timely closing of positions that will not be profitable. Professional traders usually have only two or three profitable positions out of ten. They manage to close the unprofitable positions. Discipline and trade orders placed properly are their go-tos when it comes to getting profit. It’s not about avoiding mistakes; it’s about fixing them in time. Also, never leave unprofitable positions for the weekends.
The hardest thing a beginner has to do is learn to admit their mistakes. Failure often stems from our fear and pride: we’re not always ready to admit that our actions lead to some disappointing results. The market does not spare those who insist on being right.
If you have a profitable trade opened with the promise of the profit, do not rush into closing it. You can’t sell the position acting solely out of ‘profit for profit’s sake’ principle. Make sure you have reasonable motivation and plan the exit point in advance basing your decision on analytics you made.
It may sound weird, but losses are part of trading. You can’t have profit without losses. All we can do is to cut losses and regard them with a cool head. Don’t let them embarrass you or wound your pride and don’t go into panic mode every time you suffer a loss. Once you learn to accept losses, you’re well on your way to become a prosperous trader. Relax!
When you learn to place stop losses, it might help you with mastering discipline and cutting losses. But again, figure out in advance when and why you close the trade and then choose an exit point for placing a closing order.
The best time to open trades is when a new market trend appears. In this case you maximize your profits. Don’t enter the market by trying to guess its direction; it will only leave you vulnerable and prone to making expensive mistakes.
Prices will rise if few people know of some influencing factors. Those who manage to open a trade at the time have a chance to get a good profit. But when such factors become common knowledge and a lot of people start opening positions based on this knowledge, it is no longer valuable for the market, therefore the prices are not rising. It’s time to sell!
If you happen to receive more than you hoped for, keep your greed at bay. Don’t wait for the market to take what’s its. Close the trade and take your money.
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