The trading world has become quite popular because of its low barriers to entry. You need a little bit of money and access to the internet to get started. But, succeeding in the financial markets is a completely different ballgame. People enter the trading market in droves, but most of them are unable to survive for long. As a matter of fact, a lot of them are done in a matter of days and end up quitting. This is due to the massive losses they suffer. You definitely don’t want to have the same fate and the only way to make sure it doesn’t is to learn how to be a good trader.

If you are in the same boat, then here are some top tips that can help you become an amazing trader:

  • Come up with a trading plan 

Even before they invested a single penny, a trader should know how they can make a profit. The steps for attaining these profits are outlined in a trading plan. This document states what a trader will trade, when they will trade, how and why they will enter and exit trades, both for winning and losing ones. 

  • Test methods before trading with real money

Once you have come up with a trading plan, you should test it through a demo account to see how it performs. If the plan doesn’t give good results in a demo account, then it won’t work in the live market either. You can make changes and adjustments until you come up with a trading plan that does give you results, even if it is with virtual money. Only then you should think about moving forward with a live trading account.

  • Create a routine for avoiding mistakes

You need to come up with a proper trading routine, especially when you are becoming a full-time trader. This includes starting trading at the same time every day and keeping an eye on scheduled economic data releases that can have an impact on the market. Lots of brokers, such as 101Investing, provide traders with an economic calendar they can use for keeping track of such important events. You can also set alerts to ensure you don’t forget. End trading at the same time daily and also review your trades to make sure they align with your trading plan. 

  • Review trades every now and then

Reviewing what you have done is critical to your long-term success. If you don’t review, it will be difficult to get an overall picture of what you are doing right and where you are going wrong. Compare your weekly trades to see how you have deviated and if those deviations have helped or harmed your bottom line. Identify areas of your trading plan that need improvement and figure out how they can be made.

  • Have a mental checklist that every trade must satisfy

It is very easy for traders to be distracted from their trading plan when they are watching a price chart. You should come up with a checklist to use before you enter a trade. The purpose of the checklist is to ensure that the trade meets the requirements that are laid out in your trading plan. It takes only a few seconds to go over the checklist and will save you from making a lot of bad trades.

  • Use a stop loss order

A stop-loss order is aimed at getting a trader out of a trade if the price doesn’t move in the direction predicted. This is the point where traders have to accept that they were wrong. Losing trades do occur because it is impossible to predict what will happen in the market from moment to moment with accuracy. With a stop-loss, a trader can stay protected from big losses because this risk management tool closes the trade at a predetermined price. All reliable brokers, such as 101Investing, offer their clients the ability to use a stop-loss for their ease. 

  • Risk less than 1% on a trade

When placing a stop-loss, it is best to limit the damage of a losing trade to 1% of your capital or less. This ensures that you will have capital left over to make more trades later on, even if you lose one or two trades. 

Leave a Reply

Your email address will not be published. Required fields are marked *