Trading might seem simple but truth is, you need some skills to make profits from your investments. Some people have made millions from trading. However, it is also possible to lose all your money while trading. If you lack self-control or you trade as a hobby, you risk losing all your money. To some extent, trading can be compared to gambling. Therefore, it is advisable that you do not trade with money that you cannot afford to lose.
Becoming a successful trader is not difficult or complicated, as long as you have a plan. If you go in blind, you risk getting frustrated and going broke. Yes, some luck plays a role in making successful trades, but chance does not come every day. When it comes to trading, you cannot just sit and wait for luck and miracles; you need a solid plan.
Here are ten tips on how to become a successful trader:
Learn the basics of trading, from different markets, assets and trading periods. Arm yourself with guidebooks about or by successful traders and watch video tutorials on the various strategies and systems. Learning once in a while is not enough. You have to obsess about furthering your trading knowledge and set aside some time daily, to determine the market. Further you should have a sold understanding of the financial market. When you trade an asset you have to know what you purchase or sell.
2Take trading seriously
One of the worst mistakes that traders make is taking the job lightly, almost as a hobby. If you do not receive trading seriously, you have lower chances of succeeding.
Trading as a hobby is unhealthy for you and your pockets. Like any business, trading attracts losses, expenses and taxes, therefore, it is only wise to have a more severe approach. A successful trader makes a solid plan, on what to do in certain market conditions and how much to invest about the expected reward.
People who trade when they are bored are mostly unsuccessful, and they usually end up losing more investments than the ones who take the time to plan and strategise. For those who trade online, the rapid movement and changes in the market gives an absolute thrill that unsuccessful traders fall for -and they find themselves trading even when the market is not good for them.
3Find yourself as a trader and strategise
Trading without a plan is no different from trading as a hobby. First of all, you must test the various strategies of trading and decide which is best for you. Note that by ‘test’ we mean to use a trading strategy long enough to be able to determine if it is right for you.
Examples of strategies are the Martingales, Fibonacci, RSI e.t.c Before picking an approach and using it with your real money, ensure that you understand how it works. For instance, if you are using the Martingale system, you are supposed to double your investments whenever you lose.
Assuming you lose 20 Euro, your next investment should be 40 Euro. So, if Martingale does not match your bankroll, and you lose continuously, you might end up with an huge loss.
Your strategy should also include when and what you are trading on. While successful traders pay attention to time, days and assets, unsuccessful ones think that trading is guesswork buying and selling.
Take note on the best time for you to trade by considering when markets open and the moments that you have traded successfully in the past. To figure out when the market is most favourable to you, check the opening times for different zones.
Plan on the assets you plan to buy and sell by doing extensive research and staying updated. Before buying shares, carry out a thorough analysis of the state of the selling company to avoid purchasing plunging stakes.
A plan will help you develop consistency and healthy trading habits. With a plan, you will be able to notice where you are going wrong and do something about it. Having a strategy helps you to avoid making silly trading mistakes.
4Be disciplined -Know when to stop
One of the significant problems that amateur traders face is not knowing when to stop and walk away. Successful traders know when to stop either after winning or losing.
Knowing when to exit the market is essential for successful trading. If you are losing continuously but do not stop, you risk losing all your bankroll. Also, if you do not have enough self-control to stop trading after a good win, you might find yourself back in step one.
Even while trading, it is necessary to have a bright idea on when to exit the market. Sometimes, trades do not go as planned. -But if you know when to exit the market, you can cut down on your losses. Unsuccessful traders usually ‘hang in there’ and refuse to cancel a losing trade in the hope that it will reverse.
Trading is all about increasing profits and minimising loses. If you are not disciplined, chances are your loses will exceed profits, thus making you an unsuccessful trader.
5Chose a reputable and reliable trading broker
The type of broker you use can significantly affect your trade earnings. While a broker with little payout processing time is right for you, a company that takes hours to deduct payouts from your account might cause losses and time wastage.
It is also essential to check the history of the broker company you are using. Your chances of being a successful trader are increased when you trade on a successful platform. Plus, successful brokerage companies have more traders, which enhances credibility.
6Seek guidance from a better trader
Look for someone who is already a better trader than you. A trading mentor will offer you valuable insight that is based on their own experience. You can also ask them to direct you to other resources like books, videos, and events that can help you in becoming a successful trader.
7Evaluate and take note of your progress
Take notes whenever you trade. Write down both the successful and the unsuccessful trades. Remember to include all the details; time of entry in the market, which type of market it was, the strategy used, how the market behaved after you placed the trade and after it was completed. Also, check to see which economic events affected your trade and note them down.
Taking note of your progress helps you to know yourself as a trader, thus coming up with a better plan. If you did something right, you would be able to notice it and continue doing it. You will also be able to avoid making the same mistakes that have caused you to lose money before.
8Accept your losses but learn a lesson from them
No one goes into trading hoping to fail or lose. Successful trading is mostly about knowing how to take loses and re-defining failure. Succesful traders concentrate on how much loss they can prevent, more than the wins they make. The hack is, making more profit on the winning trades than what is lost in the losing trades.
Traders who do not know how to accept loses usually continue trading in the hop of recovering their losses, eventually losing all their bankroll. Instead of sulking and complaining about your losses, evaluate yourself to figure out where you went wrong.
Thanks to advancement in technology, there is a variety of modern tools that can help you become a successful trader. High-speed internet and fast computers have facilitated direct-access trading, through websites and apps. With just a mobile phone, you can enter orders, scan for trading setups and manage positions.
Traders that use additional technologies like market research tools, trade automation and test-trading systems based on a company’s historical data have more chances of being successful.
Patience is a valuable virtue in trading. The process of becoming a successful trader requires practice and patience. If you are impatient, you might start using real money even if you are not ready. Impatience will also push you to trade even if the time and direction of the market are not right for you.
In conclusion, the best way to be a successful trader is educating yourself on the basics, knowing yourself, being disciplined, staying focused on your goals and never giving up. Also, remember that it is possible to lose all your money. You should not trade with money that you cannot afford to lose.