Most beginners who are interested to make a career out of trading are misguided by the ocean of misinformation available online on how trading is easy to make money from by just understanding how to read few charts and statistics.
To be a successful trader, you need more than that, for starters a person can become a successful trader only if he/she is good with numbers and has a really good instinct on analyzing the way the market will rise or fall. Also, a good trader needs to be disciplined and stick to a set of rules.
No matter what you trade, you can become successful if you follow certain basic trading rules. We have listed the most important trading rules below.
#Rule 1: Write Your Trading Plan and Stick to It:
The first step of trading is to write down a plan which you think might work for you and follow it religiously till you are absolutely convinced that this is the best plan, or you need a change of strategy. Whatever may be the outcome, be absolutely convinced that the plan is a success or a failure before you move to your next plan.
#Rule 2: Learn Daily:
Market changes every day hence you should also keep yourself updated every day. Be wary of the statistics and the latest global trends. Building a huge knowledge base is the fundamentals of becoming a successful trader.
#Rule 3: Take Affordable Risks Only:
Making money through trading may take some time. If you plan on using real cash, remember not to spend all your savings.
Make sure you have your own personal and emergency funds saved before investing as you should be always ready in case you lose all the money allocated for trading.
When beginners have some luck with a few trades, they start putting more money into trading than they cannot afford to lose. An effective trader knows that trading is subjected to market risk and puts in the capital which he/she is ready to lose in the worst-case scenario.
By keeping a tab on the capital, you are assured not to become bankrupt and have spare money to continue trading and earn profits to make a comeback.
#Rule 4: Follow One Strategy at A Time.
As we have mentioned above, stick to one trading strategy and work hard in understanding the risks and rewards involved in following the strategy before you move on to the next. Becoming a jack of all trades will not help you till you master one.
#Rule 5: Keep Trading and Emotions Separate:
A trader must be prepared for any outcome, positive or negative. A positive outcome can excite you, but a negative outcome should not make you lose your perspective to stay focused on the bigger picture. Winning and losing is a usual part of the trading business hence do not associate your emotions with it.
#Rule 6: Take a Break:
You will find many traders constantly fixed to their gadgets as they analyze the market. You really cannot change the market hence watching the charts for hours will only stress you out more without really bringing in any profits. It is essential to clear your mind by taking constant breaks.
#Rule 7: Analyze Trading Failures:
If your trading is constantly failing, it is either because of ineffective trading plans or the fact that you are not really a trader material.
If the failure is due to the current plan, then try to use a different strategy and do a trial and error. But if the failure is because of your trading inefficiency, you need to understand when to stop and move on to a different career option or make it a point to become a master in the field of trading.
#Rule 8: Do Not Become Greedy:
Set a profit objective for each trade and as soon as you achieve it, take the profit and exit as the table can turn at any time. Do not become greedy and stretch the trade assuming you will earn more profits. A clever trader understands that the market is volatile, and trends may reverse at any point in time.
#Rule 9: Avoid Over-trading:
Many beginners do the mistake of trading all times in a day which is something an effective trader would not do. It is not advisable to trade when the market is not trending. You need to slow down in such sloppy times. Wait for the market to pick up the pace and when it does, you can increase your trading volume.
#Rule 10: Use Trading Technologies:
Trading is an extremely competitive field hence the use of multiple analytical tools, indicators and charts can be very useful to get historical data and market updates. Start with the best trading Platforms to take full advantage of the trading technology and stay ahead of your competitors.
Trading is a tough job which needs a brilliant sense to analyze the market and a good presence of mind to be able to compete with the bests in and around the market. Traders who abide by these basic rules with utmost discipline can increase their chances of success in this competitive industry.