10 Tips and Tricks To Improve Trading Skills
TREND IS YOUR FRIEND
“The trend is your friend” is a very well known and very useful trading advice. A swing trader or a day trader everyone needs a trend. 95% of the job should be to recognize the trend you trade and align yourself on the correct side of the trend. The rest is just details of what and when to trade and how to become proactive. If you trade 1-2-day swings or you are a day-trader, it does not matter what the bigger trends in the market are. You get in and get out fast and your broker is delighted to have you as a customer. If you trade the intermediate trend, then it is relevant to explain it and fix levels where the trend will change. And then comes the real challenge of aligning the risk on each position by choosing between its trend reversal point, or defining how much you can lose, whichever is less painful. Try as you may, you can’t win an argument with a bending trend. Trade well. Trade wise.
MANAGER YOUR TRADE WITH MILITARY DISCIPLINE
Indicators sometimes mislead traders and due to this, they end up with huge losses. Compensate for the limitations of indicators by applying high risk-management control. It is not fair enough to lie about your track record. Examining losses is the best and easy way to stop future losses. Inspecting profits may disclose some personal and hidden talent on which you can build.
DO NOT TRADE AT ALL IF YOU CAN NOT ACCEPT LOSSES
Everybody has to deal with loss at some point in life. Whether it’s the loss of a dream or loved one, we have to face in order to move forward. When we face a big financial loss in Forex market, we go through the same grief and suffering, but it’s better to acknowledge that it is a part of life. Efforts must be done to preserve capital from further losses. The main cause of loss isn’t bad indicators; it’s failure to acknowledge your indicators which are sometimes wrong. It is always a good idea to trade with a stop-loss order.
PLAN EVERY TRADE AND NEVER TRADE WITHOUT A TAKE PROFIT
Don’t assume trading as a savings plan; it’s a track to build capital. Establish your worst-case loss and best-case profit as well. Investing and trading aren’t gambling — they are a business, with probable outcomes that you can judge. Take your money off the table once in a while and keep it safely somewhere. Capital allocated to trading is always at some risk, not “savings.” when it is actively placed in a Forex market.
BEWARE EXPERT ADVISORS
You can’t evaluate an advisor unless you can judge both trading rule regime and the indicator system, and you will be able to do that only if you have initially tried to do some designing yourself. Every trader uses the same indicator on the same security a different way, and no one way is the correct way.
DO NOT TRADE FOR AMUSEMENT OR TO PASS TIME
The Main motive of trading is to earn money, not to lose money. If you’re trading to prove some philosophical, political point or for entertainment, you’ll surely lose your shirt.
CHOSE A LONGER TIME FRAME
Choose a shorter time frame to time entry or exit and longer time frame for direct analysis. Most of the traders become unable to think clearly because of conflicting information that appears while analyzing at charts in different time frames. What shows up as a selling opportunity on a daily chart could, in fact, show up as a buy signal on an hourly chart. Therefore, if a trader is taking his or her basic trading position from a day chart and using an hourly chart to time entry, be sure to synchronize the two. In simple words, if the daily chart is indicating you a sell signal, wait until the daily chart also confirms a sell signal. So keep your timing synchronize.
DIFFERENCE IN EQUITY MARKETS AND FOREX MARKETS IN TECHNICAL ANALYSIS
One big difference in technical analysis between the equity markets and the forex markets is that the equity markets are affected by individual company’s microeconomic factors while forex markets are affected more by macroeconomic factors. This thing is very useful for technical analysis because macroeconomic principles may influence a certain industry that a company’s share is trading in but it may not affect a company’s specific share. Likewise, macroeconomic factors will influence a country’s currency and can make a currency’s value fall or rise against another currency, though the effects may not be instant.
TECHNICAL ANALYSIS AND FUNDAMENTAL GOES TOGETHER
We all know that It is not that much easy for a trader to make profits in forex trading by utilizing either technical analyses or fundamental analyses. However, it may become easy to increase your earning, being a trader you need to use some degree of both types of analyses. Using one strategy to make your forex trades profitable, is like entering into a boxing tournament while using only one arm. You may get a few lucky punches in and you may still be able to win, but chances are less because it’s better to use two arms. The same thing applies to the Forex market.
TRADING ON PRIDE
Regardless of which method or technical tools or you may select to sink your teeth into, our right advice would be to put pride away and stay disciplined. Greed and pride will put a very fast and horrible end to any investment plan. We think that this is expectedly one of the difficult lessons a trader will have to ingrain into any investment idea. However, technical analysis and discipline will not only offer you the opportunity to earn better, but it can also actually give you a feasible lifeline in successful trading.