Many novice traders strive to become a regular trader. Unfortunately, only a minority of them can do this. If we want to start trading “on a permanent basis”, we must approach trading with maximum discipline and patience, these are the key parameters that significantly increase our chances of successful trading.
Be realistic and honest with yourself
The first thing to understand is to be realistic and honest with yourself. Traders who start with a capital of several hundred dollars often do not realize this. Here you need to understand that constant trading is unlikely. With a smaller initial capital, we should expect that our profit will be lower, unless we plan to risk too much capital on the transaction.
It makes absolutely no sense for us to risk a morally uncomfortably high amount for a business with the prospect of faster growth of our capital. Let’s focus on being good traders and the profits will come gradually. Traders who focus primarily on money often leave empty-handed.
Make sure you know the basics of Forex
It is often very surprising how many people rush into a real business without knowing at least the rough basics of business. Unfortunately, these people often succumb to the marketing campaigns of brokers promising fast and guaranteed earnings. He says that there can be nothing dizzyingly complicated in trading.
This is true, but without a complete foundation, this is a trap for a beginner. So make sure you have a basic understanding of how financial markets work and what it means to be a trader.
Hone your business strategy
For successful and consistent trading, we must find our advantage in the market and, thus, maximize our trading strategy. There is no need to trade multiple strategies, one will be enough for us, especially from the very beginning of our trading career.
The main thing is to find our business style that suits us perfectly. For some, for example, trading exclusively in the direction of the trend will work best, while others will be prohibited from trading against the trend, and someone combines both approaches in the conditions that the market currently offers.
Some have technical analysis, some have fundamental analysis. It’s about finding your approach and bringing it to perfection. However, it is often very counterproductive to change your trading style, mainly based on our emotions, for example, after a series of losing trades.
Write a business plan and follow it
The next step to profitable trading is to develop our business plan, in which we write down the rules of our strategy. Don’t know what such a plan should look like? For example, you may be inspired by this article. Creating your own business plan with rules should not be a complicated process, which, unfortunately, often happens.
The business plan is especially important from the very beginning because it serves as a guide and constantly reminds us of our rules, so we have to keep an eye on it during trading. The business plan should, among other things, help us in concentration, discipline, but it also should not allow us to open a large number of transactions based on emotions (excessive trading).
Create a business journal and keep business records carefully
In addition to the business plan, we will also need something that will give us an overview of our completed business and our results. This is what a business diary is, which perfectly performs these functions with careful management.
For example, every weekend when you analyze all your trades from the last trading week, you will receive absolutely invaluable information about what you are doing wrong and where exactly you have room for improvement. Usually traders create their own diary, but after a while they stop using it regularly, which is a pity.
This often happens at a time when the trader collects several losing trades. Suddenly, he has no desire to record his trades, and this is a big mistake, because he just fixes losses and finds out trading errors.This can lead to subsequent progression. A trader cannot expect that every trade will be flawless, and it is the mistakes that he has made that he must carefully write down so that he can learn from them correctly.
Without a business diary, the wrong steps will only last a few days, and over time we will forget about them. So why don’t we use it properly and develop in trading?
Observe money management
The management of capital and business risks should be one of the most important, if not the biggest priority of successful trading. In short, we cannot be a trader on a permanent basis if we cannot effectively manage risks.
It is absolutely necessary never to risk an amount for a transaction that would not be completely convenient for us in case of its loss. Other elements that a trader should master are the concept of RRR or potential profit versus risk, as well as determining the position size or determining the correct position size for a trade. Many traders believe that they are losing their money in trading due to a bad trading system, but often this is due to ignorance of the above concepts.
Conclusion: psychology decides
At the end of today’s article, we come to the most crucial point, namely, the psychology of the trader. Psychology is what distinguishes a successful businessman from a loser. Unsuccessful traders tend to view trading as a gamble, while experienced traders perceive trading as a serious business with clear rules.
It is easy to gain absolute self-confidence after a profitable transaction, just as it is easy to distrust one after a profitable transaction. If we feel these emotions, we must understand that they are illogical and are not part of our business plan. So we have to stay focused and continue to believe in our approach to doing business that suits us.
We are sorry that this post was not useful for you!
Let us improve this post!
Tell us how we can improve this post?