What most new traders fail to realize at the beginning is that trading is more than just setting up an account and rushing into a very first trading venture.
In order to be able to start off the right foot as you are only starting to learn what trading actually stand for, there are some basic rules that can be applied, like “buy when low and sell when high”.
However, a set of top rules combined and applied on real trading cases can surely help you sky-rocket your career as a trader, or at least introduce you to the right direction as you are starting off with your trading business.
In order to help out the traders that are only beginning and inspire more experienced traders looking to get back to basic, but golden rules, we are presenting the top ten rules that will help you start trading successfully.
Rule #1: Trading is Your Business
Many new traders are considering trading as a part-time job or a hobby in many cases, that way failing to give their maximum when trading while losing touch with commitment, while some traders consider trading to be their job, which is hardly manageable without a guaranteed monthly payment.
In order to be able to start off with trading in a proper manner, you need to consider yourself to be a business owner, of course starting out small at first.
Trading requires sacrifices and investments just like business, as well as posing the necessity of coming up with trading strategies and planning. Moreover, just like in business, at times you will be facing losses despite all calculations, just like with any business.
Rule #2: Create a Trading Plan. At all Times.
All proper traders who are actually earning money through their trades and investments usually have a trading plan developed before taking on the next step: actual trading.
A trading plan needs to be written under already determined guidelines that are being traditionally used, allowing traders to back-test their planned trades.
By testing the trades, a trader can determine whether the plan is set to become a successful trading venture or not, while it is required to strictly stick to the plan you have made prior to your trading move.
Rule #3: Monitor and Analyze the Market
Thanks to the modern technology traders are now able to follow with live trades on-the-fly, via their smartphones or computers, which allows you to follow up with the market currents.
Following up with the market means that you will be able to learn a lot about how trades as being made, as well as analyze drops and rises so you would be able to predict the next change in the market as accurately as possible.
Rule #4: Avoid Unnecessary Risks
Losing investments is a “healthy” part of trading, as there is not a single trader who didn’t lose some of the invested money at least several times during their trading career.
What is important when it comes to losing funds and trading risks is the fact that you must at all costs avoid unnecessary risks, that way protecting your trading funds.
Always carefully think over every investment even before you get to create a trading plan.
Rule #5: Learn More and Educate Yourself
It would be a lot easier to get a hold of the world of trading if you think about it as a way of learning more than you know, that way embracing more facts on how a successful trade is made.
Always try to keep up with the relevant and actual terms, while keeping up with economic reports.
Rule #6: Isolate Your Trading Funds
While one of the top 10 rules for successful trading advises not to take unnecessary risks, this rule suggests that you have your trading funds isolated from the funds you are using for different purposes like paying your rent, mortgage or bills.
That means that you need to be aware of the fact that by entering the market as a trader, you are at all times one bad decision away from losing your investment. Losing money is a risk that you should be aware of, so always keep your trading funds separately from other accounts you may have.
Rule #7: Create a Fact-Based Methodology
Your biggest allies are the facts. By learning the facts related to the market and not relying on your hunch or hoping to be lucky enough to earn some profit, you might already be on the right path towards starting out a successful trading venture.
Always choose facts and ratio over emotion and rumors.
Rule #8: Know Your Limits
Maybe one of the most important things in trading is to know when to stop. It is extremely important that as a trader you are able to determine when your trading plan or your strategy is not working.
In that case, you need to stop and come up with another plan before you lose more money and enter the higher risks.
Rule #9: Try Using Stop Loss
Stop loss is a neat technique often used by traders who want to minimize their loss and maximize their gains, which is after all the main objective of all traders.
Stop loss can be used for limiting the amount of your investment, in order for the trader to lessen the exposure to the risks in the market. Stop loss should be definitely practiced for minimizing the risk of trades you are making, while you can also use protective stop loss for more limited risk factors.
Rule #10: Stay Focused
First things first, you always need to be realistic when it comes to trading, which means that as a trader you must be aware of the fact that winning as well as losing money is just a part of trading.
What you need as a trader in order to keep in touch with realistic expectations regarding your investments, is to stay focused on your goal: minimize your loss and maximize your profit while keeping a close eye on your trades.
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