Best Trading Advice for Newbie Traders
If you’re a newbie trader, you’re definitely going to need some trading advice. Trading is never easy for beginners, so we offer below the top pieces of advice for those who aspire to become a profitable trader.
Always have a trading plan
A trading plan is a written set of rules that tells something about the trader’s entry, exit, and money management standards. When you use a trading plan, you allow yourself to have a clearer vision of what trading should be like for you.
With today’s tech, it’s quite easy to test a trading idea before applying it to the live market. Backtesting, or the process of applying trading ideas to historical data, lets traders know if a trading plan is viable. It also shows the expectancy of the trading plan’s logic.
Once a plan has been created and backtesting shows favorable results, the plan can be used in real trading. The main point here is to stick to the plan. Taking trades outside of the trading plan, even if they turn out to be winners, is considered poor trading. It also destroys the expectancy that the plan may have had.
Mean Business
If you really want to be successful, you have to mean it. You have to approach trading as if it was your full-time or part-time business. Some traders say they treat it merely as a hobby, and those traders are usually the ones who gain nothing.
When you treat it like a hobby, there’s no real commitment, and it can be very expensive. When it’s like a job, it can be frustrating since you find no regular paycheck.
Meanwhile, trading as a business incurs expenses, losses, taxes, uncertainty, stress and risk. As a trader, you are practically a small business owner and you must do your research and strategize to maximize your business’s potential.
Tech’s on Your Side
If you haven’t noticed it yet, trading is an extremely competitive business. And you can always assume that the other trader is taking full advantage of the tools at his disposal — technology.
Charting platforms provide traders an almost countless variety of methods for viewing and analyzing the markets. Backtesting an idea on historical data prior to risking any cash can save a trading account, not to mention stress and frustration.
Getting market updates with smartphones lets you monitor trade virtually anywhere. Even the taken for granted technologies today, like ultra-fast internet connection, can very much increase trading performance.
Protect Your Trading Capital
It takes a long time and a huge effort to save up adequate amount of trading capital. It can even be more difficult, if not impossible, to do it another time around. It’s important to note that protecting your trading capital is not synonymous with not having any losing trades.
All traders have losing trades; losing trades are part of the game. Protecting your capital means not taking any unnecessary risks and doing everything you can to preserve your trading business. In addition, your trading capital should be money that you can afford to lose, not something dedicated something more important, like mortgage or bills payment.
FSM Smart is a leading online broker offering Forex and Derivative trading services on commodities, precious metals, indices, and stocks.
