The 4 Golden Rules of Great Traders
Traders come in all different shapes and sizes. Each trader has a different personality, style, and strengths and weaknesses.
But, no matter what kind of trader you are, there’s one thing for certain: All great traders share some common attributes and behaviours.
Trading with a plan
Know why you’re placing a trade. Why now?
Have a maximum risk for every trade. Is this figure suitable for current market conditions and your risk appetite?
Set take profit for every trade before you enter. Realistically, how many pips can you hope to earn within a reasonable timeframe?
When you’re losing money, markets can terrify you out of your fixed risk plan. And when you’re in profit on a trade, you can find your greedy little self hanging in for a few extra pips more than what you planned for. But giving in to these impulses means you’ll never be sure about anything enough to optimise your plan.
Markets have moods
In their zen state, markets can be seemingly patient streams of global consciousness that appear to follow a natural order.
But just like nature, markets can exhibit wild, untamed spells that can wreak havoc, before settling back down into a more peaceful state.
These spells are known as periods of high volatility and can wipe out your account in hours, minutes, or even seconds if you’re not careful.
They can also significantly increase earning potential if you’re on the right side of the swing.
Data releases, such as unemployment figures out of the US, or huge one-off events, such as the result of the Brexit referendum, can cause markets to suddenly and sharply rise or fall, before either correcting or settling into a new trend.
You need to be prepared for these moves by making sure you have enough margin to survive the wild swings, and set your take profit and stop losses a little further away than you might normally.
Don’t chase the markets
You think the rate of a given asset will go up in the near term.
You place a buy trade.
As soon as you place your buy trade, markets suddenly start dipping.
Reactively, you close your long position and open a sell position instead, expecting the markets to continue to fall.
Suddenly, markets correct themselves and begin climbing back up.
Now you’re two trades down because you chased the markets.
It’s simple, don’t do it.
Don’t overuse technical indicators
Technical indicators are an important part of the most successful trading strategies. They can give you valuable clues on when to enter and exit the markets.
However, they should rarely be relied upon as the only factor in your decision making. Relying solely on technical indicators should be reserved for very short-term strategies.
By following these golden rules and applying them to your everyday trading strategy, you’ll get better and better every day. So, are you ready? Register here to trade with a fully licensed and regulated broker.
Thank you for your email
Someone from our support team will contact you shortly about your inquiry.
Thank you for your callback request.
We will contact you shortly.