Few would disagree that trading has become significantly more mainstream over the last few years, and there are more and more so-called bedroom traders than ever before.
Of course, the “professional” element still exists, but overall trading has become much more accessible. Technology is the main driver behind this as well, particularly when you see the likes of MT4 now so easily available.
However, there is “trading” and then there is “successful trading”. Falling into the latter group is harder than you might imagine, which is where today’s guide comes into play. We will now take a look at some of the best tips you can implement in a bid to put together a winning trading formula.
What Are Your Strengths?
Particularly if you are new to the trading game, there’s every chance that you won’t be aware of your strengths. However, anyone with at least a small bit of experience will know what type of trading they feel comfortable with. Sometimes it might be currencies, while on other occasions it might be stocks.
If you are at the start of your journey, you can assess your skill level with paper trades. For those unaware, this involves trading without real money – to get used to how the market works. You can quickly gauge how well you are performing with these, before progressing to the big, bad real world of trades.
Are You Mentally Prepared?
Next on the list is your mental preparation. This is often underestimated, but the so-called little things of getting enough sleep and even being hydrated can make the difference when you start your day.
If your brain is clouded in any way it is going to affect your success rates and ultimately, cost you money.
What Are You Willing to Risk?
There might be occasions where you come across a seemingly “perfect” trade. Everything seems to be set, and you feel as though you can invest a large chunk of your portfolio onto it due to your increased confidence levels.
Suffice to say, this is asking for trouble. There’s no such thing as a perfect trade, and there’s no guarantee that any trade is going to make you money.
The best advice is to set appropriate levels of risk. Never invest more than 5% of your portfolio on a single day (or 1% if some sources are to be trusted), which can at least mean that you still have plenty of it left if things do take a turn for the worst.
How Will You Analyze Your Performance?
First and foremost, this final point isn’t just calculating your profits for the day. This is instead more about finding about why these profits, and potential losses, have occurred.
Let’s not forget that not every trade is going to be a successful one. The important thing is that you can see why certain trades have failed, so you don’t repeat the processes in the future. Or, in the case of the successful ones, so you can find out the recipes for success going forward.