Usually, when people talk about trading tips, they refer to information on which stock to buy or to avoid. While these are important, they won’t help you become a better trader. You will just be acting on someone else’s tip, without a real understanding of how they came to it. Not to mention that a tip can prove to be a bad one. Instead of spending your time on finding those tips, we suggest you try our approach. Take some time to learn the basics. This way, you can be in a position to give out tips, instead of asking for them.
Table of Contents
Create A Trading Plan
A good trading plan will contain all the elements a successful trader needs: entry criteria, exit criteria, and money management criteria. These three are fundamental in determining whether an investment will be a profitable one or a bust. Of course, even the best plan is useless if you are not adhering to it. People tend to get carried away and hold on to a position longer than they should. Occasionally, that can lead to increased profits. Most of the time, however, it is a recipe for disaster. If you are happy with the plan, stick to it, unless something changes dramatically.
We live in the age of information and there isn’t more precious commodity on the market today. If you want to stay on top of your game, you have to be informed. The markets move at unprecedented speed and he reaction times have to follow the same pace. The best way to do that is to follow the finest stock market reports Australia has to offer. You will find all the relevant news, stock information and prices, and other interesting tidbits of info that are very helpful in determining your market position.
Make Use of Technology
Using technology in trading has become a must in the last decade or so. Frankly, there is no excuse not to use it, as it can be one of your greatest assets. Things we take for granted today, like high-speed internet connections, have been game-changers when they appeared. Today, there are plenty of apps and software solutions designed specifically for traders. Each of them has its pros and cons and it usually comes down to a personal choice which one to use. But make no mistake, you have to use them if you are to stay afloat. Every other trader does and by ignoring technological aides you are placing yourself under a handicap for no good reason.
Being a trader is similar to being back to school – only this time there is no teacher to remind you about your missed homework. Becoming a successful trader involves a lot of learning. Staying successful takes even more. Essentially, it is an on-going process that will never stop. So many new things appear daily in our world that you have to devote a significant portion of your time to just keep track of them, let alone learn anything in depth. You never know when one of the smaller developments you ignore can lead to a major breakthrough and a game-changing event.
Never Risk More Than You Can Afford to Lose
People often see trading as a high-stakes gamble where you have to bet big if you want to score big. While bigger investments usually lead to larger profits, that doesn’t mean you have to be reckless and invest more than you can afford to lose. This is a sure way of losing your kids’ college fund or life savings. The “I’m just borrowing it” mentality has led many families to ruin. The key to avoiding this mistake is to be prepared to lose everything you invest. That way, you will risk only the amount you are comfortable with. It may not lead to some spectacular gains, but at least you are not gambling with your family’s future.
Keep a Trade Journal
No, we don’t mean a little black book in which you are writing down all your trades. There are several software solutions that will keep track of all your investments, with key data saved for later review. Every once and a while, you should do just that, review your previous trades. The main goal is to keep track of your progress and how much have you learned over time. Secondly, it can offer you insight into how your reasoning has changed as your experience grew. Finally, there might be a nugget or two in there that may inspire some future trade.
There is far more to trading then “buy low, sell high” and “keep your losses to a minimum”. The rules we listed above are just the tip of the iceberg and you will need to spend a lot of time learning how they work together. Incorporating them into a successful system is what will eventually make you a successful trader.