This advice is subjective but based on many years of trader’s experience.
1. Always place stop-losses
Don’t listen to traders who recommend not placing stops, alluding to the fact that the market “chases” stops. Yes, this is true, but a stop is necessary for risk control. Where to place a stop is another matter. But it should be placed at all times. Statistically, traders who place stops or exit a position with a new position in the opposite direction make money. And those who trade without stops are basically playing the lottery. So, if you want to be a successful trader, first of all, always place a stop-loss and set a daily/weekly maximum loss limit, at which you will close your terminal. Remember, if you don’t put a stop-loss – you are not a trader, you are a gambler, and sooner or later the market will punish you for it. No hedge fund, no proprietary trading company, no proper investor will give you money for management if you trade without stops or if you don’t hedge the risks.
2. Control the risk
Control your risk – it is an axiom. The main reason most traders lose is high-risk trading. This problem arises due to greed, impatience, and high expectations. Most beginners want to get everything at once to get rich quickly. But you know that this is a myth, don’t you?
3. Develop your trading strategy
Most investors trade the market intuitively, and as a result, they lose their deposits. But how can you tell if you have a strategy or not? It is very simple. If you have specific rules (market conditions) for entering, holding and exiting positions, as well as risk management rules, and this is all written down – you have a strategy. If not – you have no system.
4. Don’t jump from one strategy to another
This is a very common mistake that traders make. Very often, if a trader gets several stops or several losing days in a row, they will probably review their strategy and try to improve it by making adjustments, but usually this will only lead to worse results. Backtesting is the basis for becoming a professional. Yes, it is a tedious process, but it is the only one that will teach you how to trade effectively.
5. Losses are absolutely normal
Losses are like consumables in a car. The main thing is that losses should be within the system and not exceed the set risks. It is better to get a system stop than a non-systematic profit because, in the second case – it is already an intuitive trade, which means gambling.
6. Don’t trade with your emotions.
Emotional trading is the way down. Everyone understands this, but still, most trade emotionally. Why? Because emotional trading is much easier, especially in making decisions, in justifying a trade. Even if you have a profitable strategy tested on history, you can easily lose a lot of money because of one instance of emotional weakness. Emotional trading is very difficult to get rid of. You must apply a comprehensive method here, from planning your trading hours to physical and spiritual training.
7. Don’t over-trade
This is another problem for many traders. Choose only high probability trades with a good risk/reward ratio. This selectivity requires a lot of patience. If you are constantly sitting in front of the terminal, looking at the charts, you will start finding trades where there are none, you should not forget your own health. Alerts can help you.
8. Don’t overthink it
As paradoxical as it may sound, you can’t think too much in trading. When a trader starts to wonder if they can enter a trade, they start to doubt and feel insecure. How do you solve this problem? You receive a signal on the system – you set trading orders and follow the trade according to the plan. No signal – no trade. If this is not the case, it means that you are either trading unsystematically or deviating from the original strategy.
9. Treat trading as a business
Trading is just like any other business, and you must treat it accordingly.
If you want to be a professional trader, you must dedicate enough time and money to this.
10. Choose a quality broker.
No comment here. You know where to go.
