Being a successful trader is very challenging. Data quotes the failure rate of forex retail traders at about 90 to 95%. These figures alone are enough to scare some people. But, intelligent people will ask themselves this, what is it that the 10 to 5% of traders do differently to become successful?
The following tips can shed some light on some of the key strategies you can implement to increase your success rate in trading.
Set A Goal
Before opening a trading account, ask yourself what your primary goal is. Clear goals prevent unnecessary distractions and will improve your trading discipline. It also makes it easier to come up with a better strategy that’s likely to succeed.
Choose The Right Broker And Platform
Working with the right broker makes a huge difference. The good news is there are dozens of trading brokers to choose from. Sadly, only a tiny fraction of them is good enough to meet most trader’s goals. The worst part? We also have some fake brokers in the market.
That means you need to be extra keen on who you decide to work with. Ensure they are licensed and vet their backgrounds thoroughly by checking online reviews to see what other traders have to say.
You must analyze their platform as well. A good platform with all the necessary analysis options that blend with your strategy will simplify the trading process for you.
The other important detail to scrutinize is the securities traded. Check what exactly they offer and whether it matches your portfolio needs. The most common securities are ETFs and Stocks, but it’s ideal to have as many options as possible should your goals change in the future, so you have to read more about this before settling for any particular broker. Then check the minimum investment required and the commissions.
Start Gradually And Practice
Start your trading journey slowly and give yourself sufficient room to learn and make better judgments with each trade.
One benefit of starting slow is it allows you to make and learn from your mistakes. This is so much better than a big-money trade that can end your trading career within hours.
The best way to learn is through practice. Don’t expect to become a successful trader overnight. The best traders explain that smart and relentless practice makes the difference between successful and unsuccessful traders. The good news is you don’t have to practice with your funds right away. Many brokers provide demo accounts with dummy portfolios to help you learn the basics without losing your money in the process. Take full advantage of these accounts before you start live trading.
Prepare for losses
Don’t let anyone fool you into thinking there is constant success in trading. You can have a good run, but you’ll eventually suffer a loss at some point. It’s upon you to stay open-minded and prepare yourself psychologically for losses. This reduces the impact of losses making it easier for you to learn and recover from each failure.
The best approach here is investing money that you can live without. Money that you don’t rely on for your living expenses.
Perform Weekly Analysis
When the markets close over the weekend, take your charts and start analyzing your performance for the week. Identify patterns in the sheets and try to find the underlying cause. Check what the news and the pundits are suggesting.
It’s also good to keep a trading journal. Document some of the important details of your trades and patterns. You should also add a brief reason for the thinking process that went into executing specific actions. Analyze this journal extensively and learn from the success and mistakes of each trade.
Learning never stops in the financial markets. Even experienced traders with decades of success will tell you they learn new things every day.
Listen to reliable pundits, analyze the news, keep up with the latest trends in the markets, and create a network of serious traders.
Take Breaks Whenever Necessary
Spending hours on end in front of the computer analyzing graphs across multiple computer screens is unhealthy in so many ways. It induces mental fatigue, which will affect your ability to concentrate and make wise decisions.
Take a break from your computer every few hours. Enjoy a cool breeze and let the sun rays hit your face for 30 minutes or so. You will come back feeling fresh with an active brain picking up more details. This results in better analysis and decision-making.
The above tips should help you get through most of the basics of trading. It’s not a bulletproof plan, but it’ll go a long way towards getting you on the right path. Constant learning and practice will help you through the rest.