5 Tips For Successful Trading

 

There are many people who want to make money in today’s market environment. Many people who come to trade currency pairs, stocks, options, and other assets are attracted to the potential of making a lot of money but usually, they aren’t aware of what it takes to be able to make money consistently, or to position themselves to make a lot of profit, and all this while protecting your account from losses.

The good news is that in the third decade of the 21st century there is a huge amount of resources to help you but the bad news is that often a beginning trader doesn’t know where to start. In this post, we will give you direction on what areas you should focus on in order to improve and trade successfully.

1. Learn the language of the industry.

Learn what a ‘stop loss’ is or what a 'bullish market' means and how are they related to your trading. If you run into a term that you don’t understand, just use google, and find out the meaning. It is difficult for you to know what an article is saying or an experienced trader is talking about if you don’t know the basic terms of trading.

2. Learn how to read price action.

Price action is considered to be the language of a stock or any other given market. It shows you what the stock or other asset has done and what will probably do next. Know how to read the carts. Is the stock in a long term bearish trend? Are gold prices in an intermediate bull market? Is there a signal of a possible trend change in oil futures from an intermediate bear market to a long term bull market? Learn how to read price action and it will pay off very soon.

3. Learn how to control your risk. 

Every successful trader knows how to control his risk in the markets. There are plenty of risk management strategies and tutorials you could explore. Learn how to assess and control risk and you will certainly increase your chances of becoming a successful trader.

 

4. You need to have an “edge” when you trade.

An edge is anything that gives you an advantage in trading. The more edges you have, the better chances you have to make profits. An edge can be successful stock selection, superior chart reading skills, money management, etc. Take some time to study some of the great traders and you will get a glimpse of the edges they use to become trading legends.

5. Mental discipline and emotional balance.

Most of the trading is mental. If you give two traders the exact same trading system for futures, stocks, forex pairs or options they will end up with different results. Why? Because their mental and emotional states may not support them in being successful even with the system they were given. One of them may experience anxiety and nervousness which causes him to exit his trades way too early, hesitation in taking signals, or he will take profit too early and miss the big moves. Second trader may have the control and discipline to take each trade as on time with no other focus, and he will follow the system knowing that the losses he may experience are just part of trading and that he will make his big profits over time using that system.

These five steps will help you to become a successful trader. From time to time, you may want to return to this post and begin with the ‘basics’ to keep your focus and help you stay on the path of making profits.

Good trading.