Trading is a great business! You don’t need equipment, machines, or even an office. Today, you can practically trade from any place with an available Internet connection. You are not tied to a location, which means you can travel around the world while trading. And at the same time, you can earn a pretty good income, if you are good at it. There are so many things you can trade… You can trade on any capital market – currencies on the FOREX market, stocks on the NYSE, commodities on the CBOT,… you name it. Trading is almost the same everywhere and it will always be a good business. But how to become a successful trader? Statistics are not really encouraging… Around 95% of all traders in the world actually lose money. If you start right now, there is a pretty ugly outlook for your future as a trader. Yeah, it’s really hard doing it, but many people achieve it! 5% of all earn consistently. A smaller percentage earns really well. But what are the main factors that make the difference between the successful and the unsuccessful trader? There is no easy answer to this question. My experience show, that the main reasons for failure in trading are the lack of knowledge and discipline. There are some rules you need to stick to, to avoid zeroing your account. And here I will show you some of the most important ones. I came across a cool infographic where you can see some of the most important things and rules for being profitable in this field. The picture was created by “The Max Trading System” and contains some really good suggestions on the matter.
Some Rules That Will Make You A Better Trader
Although every trader is different and needs to develop their own strategies that suit their personal risk tolerance levels and goals, there are some basic concepts that will help anyone get started with day trading. Taking the time to become thoroughly familiar with these concepts will help ensure success.
Before embarking on any day trading journey, traders should make sure they are properly informed of the risks involved and have taken all the necessary steps to ensure they are fully prepared. This includes being well-versed in the stock market and familiarizing oneself with all the different trading strategies. Most importantly, a sound strategy for managing risk should be adopted and implemented.
When trading, it’s important to only take positions in stocks that you believe in and understand. As there is a high amount of volatility with day trading, it’s essential to concentrate on trading a limited number of stocks, so the trader can properly absorb market news and current events about the stocks they’re trading.
Having a set of criteria for identifying the best opportunities is very important in day trading. The criteria will differ depending on the individual trader, but should generally be focused on finding stocks that are currently undervalued, or have a chance to break out in the near future.
One of the most essential elements of success in day trading is proper capital management. Traders must always consider both the potential profits and trading losses when setting up positions. No trade should be taken without a complete understanding of the risk/reward ratio before entering a position. That way, positions can be completely evaluated before entering, and managing risk is much simpler.
Lastly, day trading can be an intimidating activity if done improperly, so traders need to remain disciplined and focused. Being able to stick to a plan, ride out the volatility, and exit at the right time is key. Once traders become more experienced and able to recognize different patterns in the market, they will be better able to accurately identify the best opportunities and avoid potential pitfalls.
Day trading is certainly not for everyone. But, those willing to dedicate the time, effort, and discipline to truly become an efficient day trader, can be rewarded greatly for their efforts.
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