Exchange trade is an entrepreneurial profession that requires that you risk your money. To make money, it is worth sticking to a rational conservative approach to the market. Following are some tips for traders who are preparing to plunge into the trade with their heads - and the main focus is on preserving capital and reason, and not getting rich quick.
- Do not hurry to trade
The market will exist tomorrow, next week, next year and next decade. Do not worry about that, while you are trading on a demo account without real money, you can miss the movement that falls out once in a lifetime. Opportunities will always be - you do not lose anything by investing your time in education and training.
- Do not trade without reason
When you finally start trading, do not trade just because you feel you have to do it, either from boredom or under the influence of a rush. Risk your money only when you see the facts confirming the existence of an enabling trading opportunity, and the trade plan with which you can take advantage of this opportunity.
Do not trade for no reason, trading, exchange
- Beware of early success
Placer of successful transactions at the beginning of your career is unlikely to be anything unlikely. This is one of those little jokes that the market plays with us - at the very beginning we knock out some good deals and gain the conviction that we are brilliant players in the market.
They say that newcomers are lucky, and this applies to trade as well as to everything else, so do not get too self-assured. Many traders who lost money early in their careers are grateful for this lesson - in retrospect - because he gave them a realistic view of the problems and risks of trading.
But, even with experience, it is difficult to cope with the ups and downs coming along with the bands of wins and losses. A trader experiencing a lane of luck, often without the need to increase the size of their trade - just on the eve of a big losing deal. And although it is difficult, strive to take both losses and winnings dispassionately.
4 . Work yourself, think for yourself
"The essence of knowledge in experience, but the essence of experience in independence," this phrase succinctly describes most of what is the ability of exchange trading.
Our culture to some extent accustoms us to think that for every problem or need there is a product, medicine or service that we can buy and that will allow us to achieve our goals. And although we sometimes really want to rely on someone's trading ideas, research, recommendations or systems, we found that for the most part, progress happens when you yourself do the analysis, form your own hypotheses and rely on making your own decisions.
Studying the work of other people is part of the education of the trader , and there are many widely available ideas that become components of a successful trading plan. But there are no short cuts. Many experienced traders say that even a successful trading system will not work if it is not performed correctly, and the reality is that it is very difficult to completely trust someone else's things - especially if you do not fully appreciate all the nuances and do not quite understand why this system works, and when it can refuse.
Such confidence in the trading idea comes, as a rule, after you do all the work yourself and understand the concept from its very foundations. Trade using ideas that you understand and that make sense to you.
- If something seems too good to be true, it probably is
Whether it's a trading system, "right" information or an indicator, anything that promises big money and / or almost no risk should be avoided. In trade, there are no short cuts - this is a complicated business that many highly educated and successful professionals from other fields of activity find fault with. There is no such thing as a trading strategy that brings success in 95% of the time, gives you a six-figure amount per month and does not have a risk of loss.
Be a skeptic . Find confirmation of every trading idea that interests you, including those that you come up with yourself.
- Engage in trade ideas that you can explore and test
Unclear trading ideas - for example, "buy when the market is resold, and sell when you have a decent profit in your hands" - give vague results. The trick is to turn market observations and hypotheses into specific rules that you can check on past price data.
For example, what is meant by the word "oversold"? It can mean anything. An example of an objective rule can be the following: when the market reaches lower lows and lower closing prices for five consecutive days. Whether this definition will be a good buy signal or not is a question that you should answer objectively through research and testing.
- Keep a log of transactions and regularly review the results of your work
Regardless of your past or approach - investing, short-term trading, technical, quantitative or fundamental analysis - almost all good traders agree that it is extremely useful to keep a log of all your transactions and learn on past experience.
- Be patient
In any case, trading in financial markets is not as easy as it may seem at first. It takes time to master any discipline or profession. Can you expect to become a good musician, doctor or engineer in one single year?
In addition to the natural period of training, trade is also a profession - unlike music, medicine or law - in which on any given day you can lose money and not make it. "Salary" is not guaranteed here.
Success is given by hard work. Some traders work without profit for years before they finally get on their feet. Remember that the markets from you will not escape.
- Have sufficient capital
Insufficient capitalization condemns to death the majority of new enterprises, and trading in financial markets is no exception. The lack of sufficient money for trade calls into question every second item on this list.
In addition, when you start trading, do it at the capital level even more conservative than your projected minimum. For example, if you determined that you have enough money on your trading account to pursue a certain trading strategy, using lots of 500 shares in deals for less than $ 30, try to start trading with 100 or even 50 shares at a time until you will not be familiar with your strategy, the execution process, the brokerage firm and the psychological tasks associated with the risk of real money. Then slowly increase the size of your transactions.
If you listen to these tips, then your trading on the stock exchange will improve much faster. Each of these points is important, but only in aggregate they are able to bring your trade to a high professional level. The main thing is not to be afraid to develop, to comprehend the new and then everything will necessarily turn out for you!
As practice suggests, it is better to learn from people who have already achieved success.