Friday, April 19, 2024

9 Deliberate Things to Do to Improve Your Trading

If being in the trading business hadn’t been stressful and uncertain enough, the circumstances of the last couple of years really put the nail in the coffin for many traders – newcomers and seasoned alike. 

The state of trading is affected by ample powers beyond your control. From political events and entrepreneurs’ investment decisions to companies’ internal and external affairs, and the public’s views, there’s simply too much of the unpredictable to rely solely on you burning the midnight oil.

Of course, your trading skills will improve as you’re putting in the work analyzing the market occurrences and charts and studying expert books. Yet, the vast knowledge you’ve acquired and your trading intuition may not always be enough to make the most profitable choices.

To help you make smarter trading decisions, we’re bringing you the top 9 habits to develop to become a successful trader.

#1 Draw Upon the Experiences of Both Winners & Losers

When you want to cook the most tender filet mignon, you’ll probably search for recipes by Gordon Ramsey or Jamie Oliver. Similarly, you’ll read Elon Musk’s or Bill Gates’s success stories when you want to learn about wise trading decision-making.

And while by following a professional’s recipe, you will probably make the most delicious steak ever, you also won’t know what cooking practices cause a filet mignon to taste bad. 

The same applies to trading – if you don’t learn about the trading stories that went south, you might never possess the knowledge to predict a potential failure of your own.

Read about and talk with traders that experienced losses, contemplate alternative scenarios, and try to draw conclusions from every trading win and loss story you hear.

#2 Learn From Your Own Experience

The best way to leverage your trading experience is to keep track of and review your every trade. Take notes of your stop-loss levels, targets, and other valuable technicalities you can easily examine later.

Keep a trading journal to monitor your decisions in those specific market conditions and review your trades at your established time – weekly, monthly, quarterly or semi-annually. 

Monitoring your trades carefully and regularly will help you identify your common trading mistakes and improve good practice.

#3 Discuss with Others, Decide for Yourself

Expert traders encourage talking about trading strategies, discussing performance, and seeking general advice from others. However, it’s best to avoid asking other traders to share their opinions on specific trades. 

To entirely rely on your expertise and intuition, you need to create and adhere to your trading plan. Constantly altering your mind based on other people’s opinions, the latest news or “expert” analyses will cause anxiety and subpar performance. 

Prior to making any crucial decisions, avoid discussing your plans and second-guessing your trading strategies. 

Examining your trade decisions with others is always better done once everything’s over. Then, use those talks to learn about other traders’ perspectives and leverage their experience.

#4 Practice Clearing Your Mind

Daily errands, family responsibilities, social media, market reports, fellow traders’ news – all affect your focus when trading. Therefore, you must ensure you’re feeling clearheaded, concentrated, and present in the moment when making trading decisions. 

Focus means different things to different people – thus, find the best method for you, and practice it daily, even when you don’t have any trades to make.

These atomic habits can save you a lot of money and nerves, and they only take a few minutes a day. 

So, foster maintaining a state of mental clarity, both when trading and when conducting trade analyses.

#5 Be Cost-Conscious & Efficient

Becoming a successful trader means making cost-conscious decisions and leveraging opportunities at the lowest possible cost. For your trading business, even a slight increase in costs can yield your trade unprofitable. 

Suppose you face difficulties transforming your trading into a more profitable business or believe you can make more cost-efficient trading decisions. In that case, it’s a good idea to seek a partner in a brokerage firm. 

NY-based Trade Securities offer Triad prime brokerage service based on your business needs, not asset size. They offer robust middle and back-office help and multiple custodian and broker relationships to support your every unique account structure.

#6 Be Involved in Trading Every Day

As Morgan Housel, the author of The Psychology of Money, puts it: “Things that have never happened before happen all the time.”

A strategy of keeping yourself involved in trading may seem like a simple quest. Still, to completely leverage this method, you should monitor live market conditions, trends, and pullbacks – every day.

Trading events are always slightly different, and no two occurrences look the same as they did in the textbooks. Thus, to get proficient at implementing a trading method, you need plenty of practice.

Market conditions transform fast, but if you have a tried-and-tested strategy, you’ll be able to use your skills and knowledge at the perfect moment. 

#7 Find Balance In Optimism & Confidence

Blend your optimism with realism and have faith that the next day is the day when you’ll trade profitably. The truth is, you cannot afford to lose hope, but, at the same time, you have to be realistic about your trading expectations. 

Achieving a series of winning trades can boost a false sense of self-confidence, as those wins are results of luck rather than finely-tuned trading skills. However, genuine confidence and optimism come from proper trading habits. 

In other words, trading with patience and discipline, following your trading plan will help you nurture positive habits.

#8 Manage Your Risks

Trading is a way of earning that balances being disciplined and not taking uncontrolled risks. Managing your risk is one of the most crucial trading tips as it helps you stand firmly on the ground even during your worst-case trading scenario.

As a trader, you are trading with finite capital, so you need to be clear on how much money you are willing to lose on each trade.

Record everything you do to ensure you have definitive feedback you can use to continuously and consciously improve your trading methods. 

#9 Take Your Time to Learn

Starting out any activity requires implementing a “fake it till you make it” approach from time to time. The same goes with trading, as even in your first trades, you’ll have to act confident enough.

At the very beginning, you may find it hard to do trading activities without really knowing all the finesses of the market, but over time, you’ll learn your way around and start believing in your trading skills.

To Sum Up

Growing into a profitable trader is not a destination but rather a mental state created by deliberate and practiced choices. 

Following these deliberate and practiced actions helps you avoid the common pitfalls. The success stories of the most prolific traders might seem esoteric to newcomers to the market. Yet, in reality, it’s all about the plain and boring discipline, hard work, and perseverance.

Avoid being influenced by the opinions of others, stay focused on every trade, keep notes of your every trading action, and use your instincts and knowledge to improve your trading methodologies and strategies.

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