It doesn't take much experience trading the markets to realize that most 'tips' and 'pointers' range from the blind obvious to the flagrantly unhelpful. Anyone should know that keeping your losses and exposure to a minimum is integral to success. But what separates winning traders from the pack is their willingness to stick tight to a series of trading secrets. Used individually, these are going to be helpful, but when used in unison - and alongside an effective formula that suitably serves your strategy - your trading performance can massively improve.
1) Trading Is Your Business
Perhaps the most important advice any trader can receive is to understand that you invest in trading to make money. It is a business, that will involve expenses. Your returns may be erratic and it is essential to keep a close eye on your cash flow. Never associate trading with recreational gambling. The entire point is that once you have accounted for your operating costs, you are left with a good profit, and the only way to achieve that is by approaching your trading with a professional mindset.
2) Research Is The Key To Success
Successful traders will not just seek out as much data as possible, but they will also learn how to interpret and factor the information into their portfolio. Hands-on experience can be just as essential as understanding the theory, and you ought to expect to be stung a few times during your early trades. Protecting your funds is essential to maintaining appropriate levels of liquidity for fully taking advantage of opportunities when they present themselves. The more you learn, the better your results will be.
3) Always Use A Daily Stop Loss
A stop-loss policy ought to be implemented with every trading strategy. These serve to place a limit (numerical or percentile) that you are willing to lose when making a trade. Even if the market takes a turn after you have bailed out and would have made you a profit should you have stuck with it, never change this part of your strategy. Traders who cannot settle on and stick with a stop loss threshold are those who do not last long at this game.
4) Be Your Own Worst Critic
Wondering why your strategy keeps failing? Perhaps it is time to take a look into Scalping or Momentum based strategies instead. These day trading secrets can help realign a broken system, and of course, adapt to your own stop-loss limits. You may think that your ambitions and strategy match one particular style, but the truth is that other systems may simply be more appropriate to your style. Always look at ways whereby even successful systems can be improved. The old saying "if it ain't broken, don't fix it" does not apply to successful day trading.
5) Be Realistic & Forward Thinking
If you intend on forging a career out of trading then you must approach this realistically. Sure, people can and do carve out great livings from such enterprises, but remember that you must always keep your 'business hat' on. Keep accurate records of how much you are earning/losing daily and try to pay yourself a regular salary. Be sensible when deciding how much profit to reinvest in the fund and how much to layaway. Successful career traders will employ a percentage system here. Use technology to help keep a constant eye on your portfolio and always be ready to strike fast at any opportunity. Investing in quality professional trading software can make a massive difference.
These five tips ought to be enough to help any prospective trader realize that trading is a complex skill that relies far more upon technical skill than chance. When formulating a trading plan be sure to employ a degree of backtesting to see how it would have performed when compared to recent trends. Use this data alongside projections, and always be monitoring the financial news for any sudden shifts and upsets. Trading is a long term business and many people fail because they plunge in headfirst without a suitable strategy. To prevent becoming one of those numbers, never forget that any profit is a successful result.