Trading isn’t easy. If it was, everyone would be doing it.
However, just because something can’t be mastered in minutes, that doesn’t mean you couldn’t or shouldn’t try your hand at it. In fact, time and effort is the price you have to pay for success.
Indeed, with more than $5 billion being traded on the forex markets alone, it is, undoubtedly, a respectable industry. But, and this is important, success, doesn’t always come easy.
If you want the rewards, you’ll have to work for them. Of course, you also have to accept that nothing is guaranteed. Even with all the knowledge and experience in the world, there’s no such thing as a guarantee in trading.
If you look at average success rates, even the experts don’t get it right all the time. So, whatever you do, it’s important to always do it with an air of caution.
Naturally, this doesn’t mean you’re going to lose money. In reality, it’s simply an illustration of how tough of an industry it can be.
Fortunately, there are things you can do to improve your chances of success. With the right experience, knowledge, and timing, anything is possible.
So, if you can focus on upping your skills in the following five areas, you’ll stand a much better chance of turning a profit when you trade online.
1. Self-Education – Learn if You Want to Earn
The first thing you need to do as an aspiring trader is to learn, learn, and learn some more.
Today, there’s more information out there than ever before. Whether it’s guides on AvaTrade that breakdown basic terms and concepts or social media updates and news articles, there’s a wealth of material out there.
Your job is to digest as much data as you can.
Naturally, quality always trumps quantity. A quick tip for finding the best information possible is to use respected online trading platforms and follow noted experts on social media.
A successful trader will often post their results. Once you’ve verified that someone is successful, find out what sources they use. Simple.
2. Keep Track of Trading Performance
Keep track of your performance by starting a trading diary.
Next to your bankroll, a trading diary is perhaps your most valuable asset. Despite what you might think, you’re not as good at tracking and assessing your performances as you think you are.
As humans, we have a tendency to ignore the negative and focus on the positive, even if we don’t mean to. In trading, this can be a problem as you’ll often forget about losses.
Because we’re bad at being databases, you need to keep a diary. This can be a manual record of your results on each trade or a digital diary.
Whatever medium you choose, make sure all the salient points are recorded e.g. what you bought, the price, how much you invested, what made you buy/sell, profit/loss.
Additionally, journals will give you space to include your trading rules, goals, plans, and strategy.
Read also: Investing for The First Time: 6 Ways to Double Your Money
3. Understand Technical Indicators and Graphical Analysis
If learning the basics and recording your activity are steps one and two, then analysis is step three.
As well as analyzing your own results to find weaknesses, you need to master technical indicators and graphs. The life of a trader is essentially guided by these two things.
Yes, market reports, news, and public opinion can help refine the choices you make. However, most things start with technical indicators and/or graphs.
Learning how to find, interpret, and use both takes time. As a starting point, though, it’s important to understand what they are:
- Technical Indicators: Technical indicators can be used to predict future market movements. By analyzing historical data, technical indicators are formed. These indicators essentially state that XX will happen based on YY (events in the past + current market conditions).
- Trading Graphs: Trading graphs basically track the price of an asset/instrument. By analyzing the price movements, traders aim to find patterns and/or anomalies that can provide some insight into the market.
4. Try Copy Trading
Imitation is the sincerest form of flattery in life, and that’s also true in trading. Thanks to the wonders of modern technology, it’s possible to copy the trades of experts.
Using copy trading software, you can tailor the investment parameters to suit your circumstances and follow successful traders.
Each trade will be executed after a leader has made their move. The hope with this strategy is that an expert’s success will rub off on you.
5. Use Expert Advisors
Similar to copy trading, expert advisors (EA) are programs that allow you to automatically execute trades based on pre-set rules.
EAs are available on the MetaTrader 4 platform and basically take the form of trading bots. These robots have the ability to analyze trading signals and make moves based on a predefined set of conditions.
As well as paid for EAs, you can get a free expert advisor online. As a beginner, it’s worth using the top-rated packages as first.
Once you gain some experience, you tailor the software and choose market conditions based on your preferences and knowledge. For the advanced, it’s also possible to create your own expert advisors.
Whichever option you choose, EAs are a great way to make unbiased, data-driven trades.
When you combine this with the knowledge and experience gained from our other tips, you’ll gradually become an all-round trader that’s capable of adapting to and, hopefully, thriving in all market conditions.