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No matter what you trade, some basic rules and principles will help you do well. Stock, crypto, futures, and even forex traders can use these similarly. It doesn’t matter what you trade; what makes you successful or not is how you trade.
1. Adhere to Your written trading strategy
If you didn’t guess that this was the first rule, you haven’t been reading our blog long enough. This is why traders fail more than anything else. It’s in our nature to want to change or break the rules, and it takes discipline to keep doing things as they’re supposed to. If your plan seems simple, write it down and stick to it.
2. Learn new things every day
Every day, the markets change, so the strategies you used five years ago might not work now. It would assist if you kept learning new things every day. Read an article or watch a video tutorial, and over time you’ll build up a lot of knowledge essential for trading success.
3. Trading Discipline: Don’t Let Losses Compound
According to your trading plan, you should already know when and where to stop losing. It doesn’t matter if the risk comes from a technical failure or a percentage change as long as you have something in place to reduce it. Some traders can’t stand to lose even less than you can, which is fine. The important thing is to have set points (stop loss) within the range of how much loss you can handle.
4. Never make a price target
Listen to me out. Don’t set a price target that makes you leave good trades automatically. If you own a Call and the stock reaches your “target,” don’t just sell it off. Let the money roll in. Put in a trailing stop loss order and see how high it can go. The truth is that neither you nor I can ever pick tops, so why leave? Never think that a stock has gone up too fast and too high.
5. Trading well is part of a well-balanced life.
Being a good trader is not the only way to be successful. You can’t forget:
- Health
- Wealth
- Family
- Love
- Lifestyle
- Spirituality
The best traders find a good balance between these six things because they know that focusing on just one of them won’t lead to success. But keeping a good balance isn’t easy. Sometimes you’re focused on something else and forget about trading. Set goals in these areas to become the best trader you can be. This will give you a direction for your life as a trader.
6. Master a single tactic at a time.
Don’t switch from one way to trade to another. Mastering one style and strategy first is better than getting good at a few. Focus on and work hard to learn everything there is to know about, say, Credit Spreads, and then move on to Iron Condors. Don’t try to be a master of all things when it comes to trading options until you’ve done it for a while.
7. Get out of the game if you think you’re wrong.
This rule is easy to forget or not follow for some reason. You can’t always be right about how to time the market. If you’re wrong, you should leave. Listen to that little voice in your head telling you that you’re wrong. I’ve heard traders say, “I know I’m wrong,” even as they keep their position and lose money.
If you’re wrong, you should leave. Listen to that small voice impressive you that you’re mistaken. I’ve heard traders say I’m wrong, even as they keep their position and lose money. I’ve heard traders say, “I know I’m wrong,” even as they keep their position and lose money.
A lot of money is made by sticking with a trade for a long time. Most of the time, you should get out of a trade as soon as things start to go wrong. Do not hang around hoping and wishing. In the meantime, there are always new situations with high edges. GET OUT as soon as you think something is wrong.
8. Do Not Risk More Than You Can Afford to Lose
Never trade with money you’ve borrowed. It must also go without saying that you shouldn’t use the money in your trading account to pay off loans, bills, or other important obligations. You should be ready to lose all your trading account money.
9. Pay attention to what’s on the charts.
You can’t change the market if you don’t already know that. You just can’t. Sorry. Even if you pray, beg, and even give up your first-born son, it won’t help. So stop hoping and wishing!
Regarding technical analysis, everything is shown in the price and volume. This is why I like it better than any other method. Learn the charts well and use them as guides.
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