5 ways to improve your trading

5 ways to improve your trading

In this article, we will offer you 5 tips to help your trading. Without further ado, let’s get started.

1. Get yourself educated adequately in the markets!

Many beginner traders aren’t focused enough during their learning process. They tend to overcomplicate things by delving into multiple trading strategies or systems when they don’t even know the basics. This can only lead to mistakes. Some examples: overtrading, jumping into numerous markets at the same time, or attempting to recover some of the losses from previous trades (revenge trading).

What you can do instead is concentrate on one or several strategies you like the most and feel most comfortable with. Avoid trying everything at once. Before you decide what type of trader you are, consider your individual strengths and weaknesses, plus your desired ambitions. After that, you build a fitting trading plan and develop a system to support it. The strategies come at the latter stage of this entire process. Usually, they rely on your already established goals and objectives.

2. Never forget that trading is a game of probabilities, not certainties.

Investors can fall into the trap of believing that trading is a sure-thing recipe for success. They forget or ignore the very essence, the core, the unspoken truth about the markets: they are unpredictable. No matter how confident you’d be about a particular trade, you can never be 100% certain it will turn out the way you predict. And this mistake can cost you a lot, should you make it as well.

Look for opportunities to take advantage of probabilities. Your quest is to discover something to give you an edge in the markets. Because you can never be sure whether where the markets will go, you must try to obtain what skilled traders aim for: more profits than losses. Keep this in mind after each trade, as it could help you look at the big picture when things appear to be moving in the wrong direction.

What matters is the amount of money you get when you're successful and the amount of money you lose when the markets move against you. George Soros said that in one of his famous trading quotes.

3. Get your risk management and position sizing spot on

Learning how to place a stop loss can improve your trading. Why? Only because it can mean you stay in those trades that you otherwise may have been removed from. However, be careful not to place stop losses too close to the entry price in your attempt to trade a more prominent position size. This can lead to significant losses that you could avoid.

Also, learning how trailing stops works can extend the benefits. According to babypips.com, “a trailing stop allows a trade to continue to gain in value when the market price moves in a favorable direction, but automatically closes it should the market price suddenly move in an unfavorable direction by a specified distance." So, more control of your positions at the touch of a button!

Position sizing can also be life-saving in your trading career. Having a comprehensive understanding of how to properly size your trades is crucial if you want to progress. Understanding position sizing will quickly eliminate many unnecessary errors you might be making. We’ll cover more in-depth the position sizing topic in a future featured article.

4. Keep logs of everything you do

Monitor and review every trade you make. Take print screens of your trades with useful notes about your trading activity, so you can quickly review them later. Screenshots are the best option for this because they show exactly how you handled specific market conditions. This will also save you time.

How often do you need to prepare these logs? The answer depends on what type of trader you are. If you're a day trader, it’s advisable to review your activity at the end of every week. If you fancy long-term position trading, you could perhaps consider your journal review once a quarter.

By carefully reviewing your trading activity, you will clearly see what kind of mistakes you are making and what seems to be working best. Thus, you will have the possibility of correcting and improving your strategies.

Learn more about why you need a trading journal.

5. Get used to a routine.

Trading is all about discipline, and routine is a vital part of it. From the moment you start your trading day to the moment you finish it, sticking to a routine is advisable. The biggest mistake you can make besides not getting ready for trading is letting your mental state deteriorate as a direct result.

So, what do experts say about routine? Generally, your trading day should unfold like this:

- Begin by scanning the markets – this could involve checking the news & the economic calendar.

- Get your trading platform ready for the action – make sure you tailor it according to your style with the indicators and charts you're using day-in and day-out.

- Take a look at your Daily Trading Setup & Goals. This step is crucial, and it involves reviewing your trading checklist before getting ready for action.

- Set Up Take Profit and Risk Management Targets for your trades

- Evaluate your day’s performance – after market close, don’t forget to quickly go through what you did right and what you did wrong.

Are you looking to improve your financial market knowledge? Visit CAPEX.com Trading Academy and learn to trade easier and faster!

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