If you want to be the most effective trader you can possibly be, there are a few things you need to know. Knowing them will help to prevent you from losing too much money and steer you in the right direction of maximizing your returns….
1. Start Small
It’s tempting to go all-in when you start your new career as a trader but this is really not a good idea. It’s far preferable to start slowly making smaller trades while you build up your knowledge base. Most seasoned traders would agree that the 10,000-hour rule holds pretty well for the business of treading, and it takes around this length of time to really know what you’re doing. You need to read everything you can, practice simulated trades, and develop your own system before you can truly get into the game.
2. Pick a methodology and stick with it
Some traders are able to be successful while shaking things up and trying different methods, but it can get confusing, and most people find that sticking with one method is the best way to do well. Whether you start by using this website explaining candlestick patterns in detail or you start out with the buy-and-hold strategy, stick with it and you’ll more easily be able to gather the necessary intel, spot the important patterns, and determining the timeframe for entering and exiting a trade. There’s just far too much information to be gathered if you go for a multiple method approach that you’re likely to miss something somewhere and that could be disastrous.
3. Don’t bet it all
If you’re serious about turning trading into a successful business, you can’t afford to lose it all, which means you should always hold something back because, after all, if you can live to trade another day, you always have the opportunity to make a success of it. It can be tempting to put everything on a “sure-thin” but really there is no such thing and as a business, you need to have a ready supply of the operating capitol, so think on and be sensible.
4. How to analyze the market
It’s obvious really, but if you want to succeed as a trader, you really do need to understand technical analysis. You need to look at as many price charts as you can – ideally thousands of them – so that you can spot patterns and see how it all works in practice.
A lot of people think that focusing on fundamental analysis is the best approach, but actually, it’s price action that can throw you off course, so it is price action that you need to be aware of. Focusing on the cheats, therefore, will get you familiar with patterns and predictions which will help you to time your trades just right.
5. There will be highs and lows
No matter how well you think you’ve studied the markets and no matter how much practice you’ve put in, there are always going to be times when you get it wrong. Learn to ride the rough with the smooth and you’ll have a far easier, and ultimately more successful career in trading!