The careers of many traders have taken off abruptly without the right advice and the right trading strategy.
You may be familiar will all the trading world. There are also tips and tricks that even experienced traders can find along the way.
Here are the top 6 trading tips for beginners.
1. Choose a Trading Style That Goes With Your Personality and Your Goals
There are four different styles of trading: scalping, day trading, swing trading, and position trading.
Scalping is for those who don’t have a lot of patience. They want to come in, go out and continue.
Scalpers are looking to make small profits, perhaps as small as a pip in per-trade 500 Forex currency trading but on many trades.
Day traders are actually similar to scalpers but can analyze a bit more and are patient enough to at least hold a position for part of the day.
If you consider yourself someone patient, you can always wait for the right trade to develop, scalping is not for you – you are more of a swing trader.
If you like long-term market analysis and have incomes from fundamentals that take weeks or months to develop, position trading is more your style
Your personal preference for fundamental or technical analysis, the type of trading strategy you like and the time you dispose to trade are also factors that can take a good place on it.
2. Keep Records of all Your Trades
Making mistakes is how all traders learn and improve their skills and abilities.
But without recording the trades you made, the risk/reward ratio, and the reasons why you decided to trade, how is it even possible that you can remember all of that?
The answer is to write it all down. As annoyingly as it sounds, it can really be very helpful when you take the time to look back on your previous trades and analyze what went wrong and what went right.
You can use this information to adjust your trading style and strategy to meet your performance goals.
3. Keep Your Emotions Under Control
Trading can spark strong emotions in anybody – there’s nothing special about it. When you are trying to make a living and each trade can wipe out your entire trading account, it can be something very stressful.
One of the keys to keeping these strong emotions in check is not to risk a lot of your money in just one trade.
Think of trading as a game of long-term probability, instead of a lottery or all-or-nothing proposition.
Some traders may actually need some few broken accounts to realize this, but the most successful traders are the ones who keep control over their risk and minimize their stress.
This helps them to keep their cool and well positioned to make the next move to bring much more profits.
4. Always set a Stop-Loss
When you study trading strategy and learn as much as possible, you develop a level of confidence that your trades will be successful.
But this healthy expectation of profit in must be tempered with a firm understanding that you will not always be right.
Consequently, it is necessary that you always set a stop-loss on all your trades, as soon as you open them.
This protects you against real big losses on your account in the event that the market turns against you, even if you are not watching your position.
5. Don’t be a Greedy
There is a saying that “pigs are slaughtered”, and this is very true in any type of trading.
What this saying means is “don’t be greedy”.
Set a goal for each trade and exit the trade or set stops or trailing stops to let your trade run while minimizing the risk.
Another strategy is to bring your shutdown to breakeven as soon as possible. This allows your trade to operate without fear of loss, which limits the risks.
6. Choose Wisely When to Walk away, know when to Run
Sometimes you just know when you have to go. A basketball player knows when he or she misses his shots. A good trader knows this when he or she loses on trades.
Any type of trading is a really difficult profession that needs not only a solid plan and strategy but also mental discipline and lots of concentration.
People are simply wired in such a way that high-performance day in and day out is sometimes just not possible. Learn on your own and learn to recognize when you should be sitting down for a day.