To trade in Stock market Many people have left high-flying careers to become full time traders.Sadly, many of them have lost their fortunes and bankrupted themselves in the same market. So what makes the difference between successful traders and failures?
There are a few essential things that successful traders live by to achieve and retain their long term success and achieve financial independence.
Study the Market
There are very many success stories on the internet about people who made it big on the market. Some of them never went past high school, some started with a account of just a few thousand or even hundreds of dollars.This may lead some beginner traders to think that trading on the market is easy. Well, they are right it is easy, and it is just as easy to lose all your money.
However, making good profits sustainably on the market is NOT easy at all. It involves a lot of study and patience.
It involves gaining knowledge and going through varied experiences. Part of a trader’s experiences is suffering losses. To minimize the effects of such experiences and avoid wiping out your account, a trader has to learn all the intricacies of the market.Learn what makes the market tick, the common terminologies used by traders, and how to make the best trades with the highest possibilities of profit.
Learn the Trade
Trading in the market takes continuous education. One has to learn what strategies are profitable. Learn how to conduct accurate market analysis and how to generate market signals.Get yourself a mentor who can teach you and learn to pass the school of hard knocks with ease.
Manage Your Risks
Every successful businessman and trader knows that one should always know what s/he stands to lose before counting any expected profits.Calculate your risks before you make any trade orders and only enter into trades with a favorable risk to reward ratio.
One thing you should learn very early as a trader is that you may be the best trader in the world, with 99.9% of your predictions being accurate and making you huge profits.
But if you do not have a practical and reliable risk management strategy then all it might take is one losing trade and your whole account is wiped out.A poor risk management strategy can not only wipe out your currency trading online account but can land you in debt and financial ruin.
Accept Your Losses
Pride comes before a fall, and that is why you should not stubbornly stick to your pride when trading .
You need to accept your losses and move on. Every trader should realize that some of the trade s/he makes will come to a loss. Do not hold on too long to a losing trade in the hopes of a price reversal.Price movements indeed do reverse at times on trades that you would previously have thought to be loss-makers.However, if your trade strategy determines a point for placing a stop order, you should not shift your stops in the hopes of some miracle to rescue your trades.That is simply the way the market works. You will not be profitable on every trade you enter into and the earlier you realize and accept that the better.
Master Your Emotions
Human beings are emotional beings and that is a good thing, most of the time. However, when it comes to trading, there is no place for emotions. Emotions such as greed, fear, and hope are the primary enemies of beginning traders.
Greed is an especially strong emotion for traders and the hardest to fight. It is what makes traders lose focus and chase profits that are beyond the trading strategy or even go against it. Greed makes a trader hold a winning position too long till it turns into a losing position.
Fear is the second worst emotion for a trader. It makes most currency traders develop inertia and the result is the trader missing many advantageous opportunities for profits.
Fear also makes a trader exit a winning trade too early in fear of losing what has been gained. To be highly successful and gain financial independence through trading, one should learn to rein in all emotions and trade on facts only.
Master One Strategy and Stick to It
If you want to gain your financial freedom by trading in the market, you need to have a plan for each and every trade you enter.The best way to do this is to use a demo account extensively and develop a profitable working strategy.With time, you will find a strategy that works well with your individual currency trading style. Once you have developed a strategy that works well for you, trade it on your live account. Do not let greed or fear sway you from following your strategy. Be very careful when making any changes to your chosen strategy.