For anyone who wants to be a successful stock trader and treat it as a serious business, it won’t be hard to search online to find all the typical phrases. Although there can be some great anecdotes to consume, most new traders will want to know how they can start making money, and start making it fast. Oanda is a great place to learn all the information to become a serious trader, but if you’re looking for simple rules to follow, here are a few to significantly increase your chances of becoming a success in the trading world.
Table of Contents
Treat Trading as a Business
The first rule to being successful in trading is to treat it as a real business. No matter if that is a full or part-time endeavor, look at trading as more than a hobby. Give a full commitment to learning. As a trader, you are basically a small business owner, and with that comes all the pros and cons of owning a small business. Do research, strategize, and set targets.
1. Protect Trading Capital
Raising the funds to start a trading account can take a considerable amount of effort and time and is even harder if you have to do it more than once. Keeping your trading capital protected is essential to remove the chance of trade loss. All traders will experience losing trades, so protecting your capital ensures you are never dealing with unnecessary risks which helps to preserve the life of your trading business.
2. Use a Trading Plan
Having a trading plan is a great way to have an idea of trading projections before dealing with actual money. A trading plan is a set of rules that will deal with money management, entry, and exit criteria of every purchase made. Also known as backtesting, this exercise gives you the ability to demonstrate and determine ideas with historical data to check whether they are a viable option.
When you are satisfied with your results, the plan can be used in a real-life format for real-life trading. The main objective is to stick to the plan you have made. Even if they are successful, trading outside of your trading plan is not a good strategy to follow.
3. Take Advantage of Technology
The trading business is a competitive market so it is safe to presume that all the other people surrounding the industry are taking full advantage of any technology available. Charting platforms are great as they give traders an outstanding amount of ways to analyze and view the markets. Backtesting, as mentioned before, is a great way to try before you buy, understanding historical data surrounding potential trades.
You can trade anywhere in the world at any time with market update notifications sent directly to your phone. Other technologies such as the overlooked internet speed can help to make trading much more efficient, helping to increase your performance.
4. Don’t Use Money you Don’t Have
Before you start spending money that you don’t have, ensure that all of your trading account cash is completely expendable. If this is not the case, keep saving. The money you’re using shouldn’t be next month’s house bills. One of the main rules of trading is that you should never feel you are simply borrowing money from other areas of your life as not all trades come to fruition, putting more strain on other financial areas of your life.
5. Study the Markets
Studying the market should be a continual effort, never feel like you have learned all the information available. Education and study of the market is a never-ending task but something that should be enjoyed and developed. Many intricacies come with the trade markets, so hard research is essential. With this research, you can understand all the facts allowing you to make much better decisions. Learning nuances and trusting intuition can only be developed from observation and focus.
There are a lot of determining factors that affect the market, everything from politics, economic trends, and even the weather. The trade market is dynamic, so the more traders understand the past and current events, the more they can make better judgments for the future.