The world of commerce has long been the activity of a privileged group of people. But not anymore. Everyone can trade thanks to the internet and widely accessible trading platforms. If you are thinking of investing some money in stocks, cryptocurrencies, or maybe commodities, here are some tips to help you choose your wealth.
Make a trading plan
Would a businessman think of starting a business without first drawing up a business plan? Of course not! Your trading plan should allow you to set achievable goals. First of all, a new trader should only have one goal: not to lose. If you can do it, try to aim for a small goal. If you can achieve it, you can try to aim for greater achievement.
Be careful with the leverage
Leverage is a double-edged sword indeed. Often times, you will only think of profits when you take a position. Remember, if you can make $ 8,000, for example, by taking a position in the market, you can see them go up in smoke just as quickly.
To avoid mistakes, a novice trader should never exceed a leverage of 2 or 3, and an experienced trader should limit himself to 5. Try to take a small position. Then double it up if you are on the right trend.
Also note that the best brokers are not the ones who will give you the highest leverage. Many other factors determine its quality. For example, if you want to trade foreign currencies, choosing the right forex broker based on certain criteria is of paramount importance to the success of your trades.
Apply the rules of money management
Some beginners are not shocked when they expose 15 or 20% of the capital to a trade. The ultimate rule of money management is simple. You should never risk more than 1 or 2% of your account on any transaction.
Know how to reduce losses
Before you can learn to win, learn not to lose. It is important to always protect your capital with a so-called stop-loss order. You also need to use a stop loss to protect your capital.
Common mistake: accumulating losing positions without wanting to reduce them. As long as the position is open, there is no loss (the famous saying “not sold, not lost”). However, a latent loss is a very real loss at time T.
It is therefore preferable to quickly reduce a losing position. And the sooner the better, because the bigger the loss, the harder it will be to close the trade.
To become a good trader, stay cool
Be patient in looking for the right opportunity and being able to wait until market conditions are favorable for the strategy being used.
You shouldn’t let your emotions take over, but neither should you ignore them.
Trust your judgment. Many traders do not analyze the markets and have no opinion. You only read reports and analyzes published by professionals. Is this the right way to learn to trade? No, obviously. And when you copy the advice of others, you are vulnerable because you cannot spot potential mistakes. Trust your reasoning.
Trade with money that you don’t need right now
Whenever possible, trade with money that you don’t need to make a living. On the one hand because there is a possibility that you may lose it and on the other hand because by trading the money you need to live, you will not be able to properly manage your emotions and they will necessarily take it Power over your rational thinking.