Are you currently having a bad time with your trading and not sure how to turn things around in your favour? Then these tips could be perfect for you to change your fortunes.
As a fresh faced trader, things are bound to go bad from time to time. You could end up
picking some dirty trading routines and easily suffer an extended losing streak. At this point, you begin to doubt your every move and might lose confidence in your abilities or decision-making. Hope and good fortune seem like tiny dots in the rear-view mirror.
Fear not! We have 10 great tips to discuss with you that have been proven to help traders stuck in a bad spot. You can steer your trading in the right direction by implementing them.
Trading is about playing the percentages, not guarantees
Many beginners enter trading only to end up being confused about what they are actually meant to do to end up as successful traders. You will have to change the way you approach and view the art of trading to boost your chances of success. Trading has never been about certainties or guarantees, it is all about trying to make the most out of constantly fluctuating probabilities. The only guarantee is that the market will keep changing.
Despite this well known fact, traders make the dreadful mistake of being certain about the market’s future movement. As a trader, you should be following a strategy which could give you a slight, but vital, advantage in the market. A slight advantage means the chances of a
certain event occurring being more than something else. What you need to understand is that the winners and losers after a series of trades is completely random for any particular strategy.
This doesn’t mean that the market is unpredictable. If you are able to identify and act on a
series of events with a high chance of occurring over a relatively long period of time, then you have a decent chance of being quite successful. Hence, it is important to forget about the trade you just made and treat your next one as a completely unrelated or fresh event. Keep your discipline and consistency for every new trade.
Avoid trading too much
This tip is extremely easy to preach and tough to practice. But if you are really keen on improving your trading fortune, then it is crucial to avoid trading excessively. In this context, over-trading refers to making trades in the absence of a logical trading strategy or advantage. Trading too much is an extremely easy habit to get into, but also very tough to recognize or realize it in your behaviour. So stop trading too much, create a coherent trading plan and stick to it in a disciplined manner.
Don’t pay attention to the news
Trying to watch the news and making connections in real-time is just a colossal waste of time and only ends up in making the entire trading process more complex. Turn off all the news and pretend to be deaf when the ‘pundits’ open their mouths. Trust your own gut rather than someone who doesn’t have a stake in your fortunes.
Become an expert at placing stop losses
Placing a stop loss at the right point is a crucial ability in trading as it can mean the difference between a profit or a loss. If you can become good at this, then it can help you stay in trades that would usually have stopped you out a lot earlier. Many traders make the rookie mistake of placing a stop loss a bit too close to the entry price. They might have done it to get a larger position size only to find out that it is a mistake for being too greedy. They end up making too many losses which are otherwise avoidable. Learn how to place stop losses based on price action analysis and the structure of the market to be successful.
Understand the concept of sizing up a position
Having the knowledge of properly sizing up trades is vital to make fundamentally sound decisions. This knowledge removes any avoidable mistakes and makes things easier for you in the long run.
If you’re on a losing run, take a break from trading
At some point, you will have to just swallow your pride and take responsibility for your errors. A bad losing streak can make a trader feel lost, resentful and maybe even angry. Such emotions can only be harmful and it is best if you just take a break from trading for some time. There is no use trying to row a sinking ship.
As soon as you take a break from trading with real money, you begin to look back over your decisions with more clarity and objectivity. Your past mistakes will stick out like a sore thumb. It is important to get away from the hustle-bustle and clear your head to understand whatever you are doing wrong.
Lower your risk
If you are making mistakes in numerous trades while making losses, the wisest move for you is to lower the money you risk in each and every trade. Such a move will safeguard your trading account and gradually clear your mind from distractions like avoidable losses that are tough to handle.
Avoid peeking at the intra-day charts constantly
It is generally accepted that the daily chart and higher time frame trading charts are far more useful for traders who are struggling. Once you get your groove back, you can gradually take a few more peeks at the intraday chart.
Understand price action
This is one of the absolute fundamentals when it comes to trading. You will have a very bad time if you trade without having the capability to understand a price chart. This holds true even if price action is not your default analysis method. Understanding price charts will end up improving your trading efficiency swiftly. Make things a little bit easier for yourself.
Narrow down your trading strategy
Traders look up on the internet for ‘cutting-edge’ or ‘guaranteed success’ trading methods all the time. They tend to be inconsistent and find it tough to focus on one particular strategy. This inevitably leads to confusion and lack of a coherent strategy as the ‘noise’ stops you from implementing your philosophy. You have to make up your mind as to what kind of trader you are or what you want to be.
Once you gain that clarity, trading will quickly feel like a skilled profession rather than a bunch of gambling sessions. After all, a skilled profession requires discipline, education and hard work for a successful career.