Every trader has been in the exact same spot at one point in their career. Where they are just an aspiring trader who is starting in the markets because they want to become successful traders. You may be just looking into your first trading articles, or you may have already been studying chart patterns and basic trading methods. Either way, this video for aspiring traders will help you miss some of the common pitfalls, and problems new traders face.
As and aspiring trader you need to have your guard up when entering the market. Without knowing some of the basic pitfalls because you are still learning, you are more open to unnecessary losses. Keep these 5 tips in mind when you start trading.
5 Key Points for an Aspiring Trader:
Trading Tip 1:
Never add to a losing position or average your trades down. When you do this, you average all of your positions down, and cause a snowball effect with losing trades. You take what would have been an isolated, small trading loss, and blow it out of proportion.
Trading Tip 2:
Use hard stop loss levels when you are a beginner trader and still learning how to trade. When you are still learning to trade, you need these hard stop loss levels as “set in stone” marks for if your trade was successful, or not successful. Don’t attempt to wait the market out. Your trading strategy must have hard stop loss levels in place, so that you can be done with any losing trades and ready to move on to the next profitable trade.
Trading Tip 3:
Understand that trading is a long plan game. You will have losing trades, and that these losing trades are best to be limited. We all will have losing trades, and we all will have winning trades. You need to understand that losses will happen, and that it’s just important to keep them separate from your winning trades.
Trading Tip 4:
Trade with 1 to 2% of your trading account’s capital. That will prevent you from blowing your account up with one single faulty trade.
Trading Tip 5:
Back test every strategy that you want to implement in the market. back testing is such a key factor when you want to test a new strategy as it allows you to take zero risk, outside of your time, to see if a strategy that you are working on will be possibly profitable. The more time you back test a strategy, the more value you will get out of that trading strategy. For every minute you spend back testing, you will get that value back out in money saved or money spent.
Summary on how to trade for an Aspiring Trader:
Don’t be worried to enter the market as an aspiring trader. If you take some simple and easy precautionary steps, you can prevent unnecessary losses. With time comes familiarity with the market therefore it is important to start as soon as you can with tip 5 where you are testing each strategy you form. This will make you more accustomed to the market, and 10x your trading.
Remember to keep learning with trading. Even though I’ve been trading for almost a decade at this point, I still learn new aspects of trading every week. While you are here why not check out a video about Tick Charts Trading, or Multiple Time Frame Analysis?