Looking for some straightforward tips that could help you improve your trading results immediately? Here, we’ve provided 6 helpful tips that every trader should definitely know about.
Tip #1: Learn to Take a Break (Sometimes)
There are certain times when we need to take a short break from trading. Experiencing strong emotions would be a good example of one of those times. Anxiety, fear, excitement, and greed can really interfere with our thoughts and cause some unwise trading mistakes. Anxiety can cause us not to place a trade because we’re overthinking, excitement can make us take more risks, fear can cause us to doubt ourselves, and so on. Experiencing a “lucky” streak is another less obvious example of a time when one needs to take a break. This is because those that have been winning tend to trade too much and risk more than they should. Having a bad streak can cause one to become anxious and could make you pull out of trades too soon. Whatever the emotion, step away when you need to and try yoga, listening to music, or whatever helps you keep calm until you’re feeling more level-headed.
Tip #2: Understand that it’s Okay to Lose
Traders make choices based on probabilities, not facts. It isn’t possible to win all the time and even the best traders have misjudged the market at times. This doesn’t mean you should go risking all your money without fearing the consequences, but you shouldn’t beat yourself up when it happens. Try to learn from the bad trades and let go of the blame. If things go against you, consider whether the problem is something that you should have done differently, or if it was unavoidable. If you made an error that could have been avoided, use the mistake as a learning experience.
Tip #3: Keep a Trading Journal
Traders use trading journals to log their trades in detail, including entry and exit times, reasons why they entered and exited the trade, how much they made or lost on the trade, and so on. The idea is that you can then look at the bigger picture of how your strategy is working and what you should or shouldn’t change. Trading journals can point out flaws that might not be obvious to us in general. For example, maybe you have a problem with getting overly anxious and exiting your trades before they reach their stop loss. This could be a big problem and you may not realize how often you’re doing it. A trading journal will bring these types of issues to light so that you can figure out what to work on.
Tip #4: Never Stop Pursuing a Trading Education
Traders need a solid understanding of the market before they even begin trading, from basics like terminology to the mechanics of how things work, to more complex information about strategies and different types of analysis. Unfortunately, some traders get too eager and start trading without a proper understanding of all of these concepts. Even once you’ve done a lot of research, there will always be more to learn. You should never stop reading articles and brushing up on your trading knowledge and if you feel that you haven’t done enough research, then you should get online and get to work.
Tip #5: Lower your Risk
Many professionals recommend risking around 1% on any single trade. Even though this may not result in a lot of profits, it helps stop losing trades from being a big problem. If you go risking 15% on one trade, 20% on another, and so on, then chances are that you’ll wipe out your account quickly. Even if you aren’t risking a lot, you should consider lowering the amount of money you’re risking on each trade if you’ve been experiencing a lot of losses lately.
Tip #6: Use a (Proper) Stop Loss
Hopefully, you’re already using a stop loss. If not, you should know that using a stop-loss is one of the best ways that a trader can manage their risk. If your trade hits a certain loss target, then the stop loss will close it out and prevent it from losing too much money. When you set your stop loss, you also need to make sure that you place it properly or you’re still in danger of losing a lot of money. Try reading articles online about where to place your stop loss if you think yours should be adjusted.