You have obviously decided to become a trader in order to succeed. But, it will not take you long to realize that trading is not as easy as it is touted to be. If it was, everyone would be raking in millions. The fact of the matter is that only a small percentage of traders actually make money through trading and continue with it. This number is less than 10%, which shows that becoming a successful trader doesn’t really depend on luck. There is a learning curve to begin with and if you don’t do your research and don’t have enough startup capital, you are already at a disadvantage. You need to remember that successful traders are disciplined and they also follow some easy tips in order to achieve success. What are they? Check them out below:
- Always begin with sufficient capital
The first thing you need to remember when you want to become a successful trader is to have sufficient capital. It is never a good idea to invest money when you are in debt. Increasing your debt would be a mistake because there is no guarantee in trading. This means that you can make more losses than profits and this could lead to further problems for you. However, this doesn’t mean that you cannot begin trade with a small sum. If you want to make small trades, you don’t need to have more than $1,000 to get started. Starting with a limited capital is not recommended because this could lead to emotional trading, which in itself is a recipe for disaster.
- Trading is not as easy as you may believe
If the only reason you are thinking of becoming a trader is because you think it is easy money, you need to think again. Never get into the trading world because you want to make some quick money or you think it will help you get out of debt. As mentioned above, emotions are going to get in the way and you will be tempted to trade even when the risks are very high. Doing so can lead you to more losses so you need to be smart. Yes, trading can be profitable, but it takes time to master. It doesn’t happen overnight and this is something you need to accept.
- Use leverage cautiously
Online trading platforms, such as StsRoyal, give you the opportunity of using leverage while trading. This is an advantage because it allows people to make bigger trades, but this doesn’t mean that you should get carried away. It is true that with leverage, you can just use $100 for making a $3,000 trade. But, you should also bear in mind that it is not necessary that this trade will be a profitable one. If it turns into a loss, then you would have lost more money than you had in your account. Therefore, you have to be very cautious with leverage because it can also lead to significant losses. It is best to start leverage trading only when you have had some experience and not use it in your first few trades.
- Understand everything about risk management
If you haven’t already learnt everything there is to know about risk management, it is time to make it a priority. There are inherent risks in every trade and it is up to you to make these trades while keeping the risks in mind. The key is to protect your capital because profits would become irrelevant if your capital is wiped out. How will you make profits if you don’t have any capital to trade with? Therefore, they are secondary. There are several ways you can go about risk management. Putting stop-loss orders is one of the best ways to go about it.
This refers to a predetermined amount of risk that you are willing to accept with a trade. It can either be a percentage or a dollar amount, but either way, it can limit your exposure in a trade. Moreover, when you use a stop loss, it can also be effective at eliminating the emotion out of trading because you know exactly what amount you will lose from a trade. It is bad practice to ignore a stop loss, even if it results in a winning trade. The important thing is to keep things realistic because it will not be a winning trade every time.
- Don’t let your emotions get in the way
You did some research and made a trade. You were expecting the asset to go up, but things are not going your way. In fact, you are getting very close to a loss. This means it is time for you to pull out of a trade, but the problem is that many traders become emotionally attached at this point and never leave the trade. You need to understand that if you get emotionally attached to any investment, you will increase the risk of losing money. It is vital for you to leave emotions behind and only use trading for investment purposes. When an investment doesn’t make sense any longer or starts losing money, it is time to exit.
- Come up with your own success strategy
There are trading systems available that can be used, but you should remember that they will never be 100% accurate. When you are depending on someone else’s system, you could achieve success, but there is also a possibility that you are stuck with a losing system. Therefore, instead of depending on others’ systems, it is better to come up with your own strategy to see what works. You will come across many people selling systems, but most of them don’t work. Rather than wasting money, you can experiment with a couple of strategies until you find one works for you. It is better to learn from your mistakes and achieve success rather than relying on others to help you.
With these easy tips, you will be on the road to success in the trading world.