19 Sep The 5 GOLDEN NUGGETS of Trading Profitably
Hi Readers, today I am going to share with you one of the most critical things about trading. Almost anyonce I know can trade, but NOT everyone can trade PROFITABLY.
Rule No.1 : Always Use a Trading Plan
A trading plan is a written set of rules that specifies a trader’s entry, exit and money management criteria. You can easily create your own one in a simple booklet or create a WORD or Excel file on your computer to track these.
Although time-consuming, this will be one of the most important tools available to you as a trader. With today’s technology, it is easy to test a trading idea before risking real money. Backtesting, or applying trading ideas to historical data, allows traders to determine if a trading plan is viable, and also shows the expectancy of the plan’s logic. Once a plan has been developed and backtesting shows good results, the plan can be used in real trading. The key here is to stick to the plan. Taking trades outside of the trading plan, even if they turn out to be winners, is considered poor trading and destroys any expectancy the plan may have had. Click HERE up for a FREE trading account with IQ Option today.
Rule No.2: Treat Trading Like a Business
In order to be successful, one must approach the act of trading as a full or part-time business – not as a hobby or a job.
As a hobby, where no real commitment to learning is made, trading can be very expensive. On the otherhand, as a job it can be frustrating since there is no regular paycheck. Trading is a business, and incurs expenses, losses, taxes, uncertainty, stress and risk.
As a trader, you are essentially a small business owner, and must do your research and strategize to maximize your business’s potential. The key to remember is how you can be a PROFITABLE trading business at the end of the day.
Rule No.3: Use Technology to Your Advantage
Trading is a competitive business, and one can assume the person sitting on the other side of a trade is taking full advantage of technology. Charting platforms allow traders an infinite variety of methods for viewing and analyzing the markets.
Backtesting an idea on historical data prior to risking any cash can save a trading account, not to mention stress and frustration. Getting market updates with smartphones allows us to monitor trades virtually anywhere. Even technology that today we take for granted, like high-speed internet connections, can greatly increase trading performance.
Using technology to your advantage, and keeping current with available technological advances, can be fun and rewarding in trading. Using tools and the FREE charting tools on IQ Option is one of the ways you can leverage this to your benefit.
Rule No.4: Protect Your Trading Capital
Saving money to fund a trading account can take a long time and much effort. It can be even more difficult (or impossible) the next time around.
As such it is important to note that protecting your trading capital is not synonymous with not having any losing trades. All traders have losing trades; that is part of business. Protecting capital entails not taking any unnecessary risks and doing everything you can to preserve your trading business.
Your trading capital is the LIFE of your Trading Business.
Rule No.5: Keep Trading in Perspective
It is important to stay focused on the big picture when trading. A losing trade should not surprise us – it is a part of trading. Likewise, a winning trade is just one step along the path to profitable trading. It is the cumulative profits that make a difference. Once a trader accepts wins and losses as part of the business, emotions will have less of an effect on trading performance. That is not to say that we cannot be excited about a particularly fruitful trade, but we must keep in mind that a losing trade is not far off.
Setting realistic goals is an essential part of keeping trading in perspective. If a trader has a small trading account, he or she should not expect to pull in huge returns. A 10% return on a $10,000 account is quite different than a 10% return on a $1,000,000 trading account. Work with what you have, and remain sensible.
I wish you the best in your trading endeavors!