All traders probably have a dream of living in a high-rise near Wall Street, driving a Lamborghini, and spraying cash out the windows. But I think that when you've worked your way up as a trader, you stop having that pompous thinking, and you become humble and in awe of the market.
In doing business, everyone has an equal opportunity. If you have some skills, you can definitely go further than others. The good news is, you have plenty of time to master these skills.
Closer to home, today, we will bring you the 7 major trading guidelines that traders need, hoping to raise your trading level to a higher level.
1. Learn to analyze the market
If you want to be a master trader, you need to have extraordinary analytical skills. If trading becomes a gamble without market analysis, try your luck at a nearby casino.
Thankfully, analytical skills are not born with you, but acquired through experience. Learn to understand the patterns in the K-line chart, and use technical analysis to obtain clear entry points and stop loss positions. In no time, you'll be able to balance the risk-reward ratio with less to lose if you go wrong.
There's a reason why we prioritize analytical skills. They determine the basic ability to understand market conditions and predict trends. Without good analytical skills, traders are left to their emotions and rely on luck.
2. Keep calm
Life is full of ups and downs, and so is trading. Once your emotions get out of control, it will continue to affect your next transaction. Even if you know how to restrain yourself, you will suffer at least one major loss. And more often, maybe 4 or 5 consecutive losses can't bring you back to your senses.
To be a successful trader, you need to be prepared to take losses. People who crumble under stress are more likely to lose their funds.
In trading, being alive is the most important thing. Even if you make a mistake, there is always a way to correct it. Of course, it's easy to stay calm when you're lucky. But to be successful, you need to learn not to hold back even when everything seems to be against you.
3. Stay focused
Trading is a diverse field. There are many instruments, many asset classes, and of course many market opportunities.
There are also many ways to make mistakes. If you want to avoid them, focus on a single instrument and a limited number of asset classes. Pick a market and a strategy, then focus all your attention on it.
With experience, you'll learn how to multitask and how to get out of your comfort zone. But in the beginning, focus is everything.
4. Maintain self-discipline
Trading success comes from experience, and experience comes from time. Of course, the time you spend trading is not the time you spend lying on the couch watching TV. Unfortunately, discipline and hard work cannot be avoided. Only through continuous firm operation can a habit be formed.
Successful traders spend hours trading every day, even if they want to do other things, well, it's half your job and it has to be taken seriously.
It can be difficult to maintain momentum in trading, especially after losing money. But don't give up, I promise, you will see progress.
5. Be patient
You feel your fingers itching to make a deal, but nothing seems to happen. Our advice is, don't trade for the sake of trading.
Traders often have to wait for market opportunities. Sometimes a situation may feel like an opportunity, but if you watch the market closely, you'll see that it's better to wait a little longer.
So, if you're not sure about something, don't rush into a deal, wait until you figure out the situation. If you miss an opportunity, it's no big deal, there will be more soon.
6. Recognize Common False Emotions
People are naturally too easy to think about money. When you're on the verge of making a fortune, it's easy to let emotions take over.
Here are some of the most common emotions that can lead to bad trading:
Anger - There is a pattern called "Revenge Trading". After suffering huge losses, some traders dive headfirst into the game without analyzing their mistakes. They try to recoup their losses, but often they lose more.
Overconfidence - The opposite is when a trader has a string of good luck and feels like it will never end. Unfortunately, it will. If it makes traders careless, they may make mistakes.
Fear of missing out - Information OCD is one of the reasons why traders lose money. For example, a trader heard some rumors about a digital currency and rushed to buy it. Without proper analysis, the potential for error is high.
Panic Selling - This happens when the price of an asset falls rapidly. It makes traders sell in a hurry without thinking about cause and effect.
Greed - Although greed is the main driving force in this world, it is a difficult emotion to control. This is a major threat to rational trading.
Denial of Mistakes - Some people are unwilling to confront mistakes that have been made, even when the market is clearly against them at the moment. This is a recipe for disaster.
7. Record transaction log
Write down every transaction you make. Write down where you got in and why you got in. And other important information, including how much you made or lost, and what happened to the market afterwards.
It might feel boring at first, but get in the habit of documenting and stick to it. When you get a lot of information, you see how much insight you have in your trading journal about your mistakes and right moves.
Hope this trading guide can help you!
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