Trading the financial markets has substantial rewards for anyone willing to take the risk of trading their own capital. However, it may take years to develop the skills of a professional trader. Learning how to read news events such ECB minutes, reviewing Euro currency news forecast sites, and learning how to use trading software are all skills that professional traders need to develop.
If you are new to the exciting world of trading, then here are ten tips you can use to reduce your learning curve and get on the way to placing your first successful live trade.
#1. Don’t Gamble, Educate Yourself.
Knowledge is power, without the right knowledge of trading and the markets, you are doomed to fail. Blowing up your trading account because you didn’t know what you were doing is not a valid excuse. There are thousands of educators that are willing to teach you the skills you need to trade the markets safely and profitably. Without a trading education, you are merely gambling with your money and as we already know; in the world of gambling, the house always wins. Don’t let this be you, trade from an empowered vantage point that allows you to analyze the risk and reward of every trade you make.
#2. Join a Trading Community.
Trading by yourself is possible, however; it’s a lot easier when you have a community to rely on for support. Join a trading forum or a subscription service that gives you daily insight on the potential moves in the market. Being armed with the right knowledge and receiving the proper support will make a huge difference in your trading performance.
#3. Learn How to Create a Trading Plan.
Never place a trade without a clearly defined trading plan. Your trading plan should establish rules that need to be met before you put your trade on. Plan the trade and then trade the plan if you want to succeed in your trading.
#4. Know When its time to Cut a Loser.
There are times in the market when a trade just goes sour on you. Learning to cut a loser off short can be a painful experience to master. However, if you let your loser run, it could blow your account up while you wait for the price action to turn.
#5. Don’t Trade Outside of Your Plan.
Never trade outside of your trade plan. Traders are always trying to balance the feelings of greed and emotion that come with seeing lost opportunities and potential trades. Don’t give into greed and fear, execute your plan and ignore these emotions.
#6. Stay Connected to the Market.
Sign up for a news service that keeps you updated on events in the markets. There are services for FX that include Euro, USD, and Pound Sterling news. These services will give your trading the edge it needs to be profitable and successful.
#7. Never Trade Money You Cannot Afford to Lose.
Trading should only be done with money that you are comfortable to lose. Watching your life savings slip away when a trade goes bad will be devastating, so never trade with money that you cannot afford to lose.
#8. Watch the Money.
Money management is one of the most important skills you can learn as a trader. Never trade on margin, or using leverage that exposes your account to a massive loss. Be prudent with your money management and keep an eye on your account balance at all times.
#9. Reward and Risk.
Do you know the risk in the trade that you are about to place? If you do not explicitly understand the risk and reward profile of your next trade, then stop trading right now. Never enter a trade that has a risk-reward profile of less than 1:1, and never trade outside of your risk profile as you could end up blowing up your account.
#10. Start Part-time.
Trading does not require you to be at an office, you can do it from the comfort of your own home. Start part-time with your trading and as your skills and account balance grow, make the move into full-time trading when you are ready.