For several of the numbers, charts and ratios, trading is more art than science. Just like in artistic endeavors, there is talent involved, but talent will only take you thus far. The most effective traders hone their skills through practice and discipline. They perform self-analysis to see what drives their trades and discover ways to keep fear and greed out from the equation. In this essay we will look at nine steps a novice trader may use to master his / her craft; for the experts on the market, you might just find some suggestions that will help you make smarter, more profitable trades, too.
Step one. Define your aims and then choose a style of trading that is suitable for those goals. Be sure your personality is a match when it comes to type of trading you select.
Before you lay out on any journey, it is imperative that you’ve got some notion of where your destination is and how you get there. Consequently, it is imperative that you’ve got clear goals at heart as to what you want to achieve; afterward you must make sure that the trading method is capable of achieving these goals. Each type of trading style requires an unusual approach and each style has an alternate risk profile, which requires another type of attitude and approach to trade successfully. For instance, if you can not stomach going to sleep with an open position in the market then you might consider day trading. Having said that, when you have funds that you think may benefit through the appreciation of a trade over a period of some months, then a posture trader is what you wish to consider becoming. But no matter what design of trading you select, make sure your personality fits the model of trading you undertake. A personality mismatch will lead to stress and certain losses.
Step two. Choose a broker with whom you feel comfortable but additionally a person who offers a trading platform that is appropriate for your look of trading.
You will need to choose a broker who offers a trading platform that will enable you to perform some analysis you require. Choosing a professional broker is of paramount importance and spending time researching the distinctions between brokers will be really helpful. You need to know each broker’s policies and just how she or he goes about making an industry. For instance, trading into the over-the-counter market or spot marketplace is not the same as trading the exchange-driven markets. In choosing a brokerage, it is important to browse the broker documentation. Know your broker’s policies. Also ensure that your broker’s trading platform would work for the analysis for you to do. For instance, if you want to trade off of Fibonacci numbers, make sure the broker’s platform can draw Fibonacci lines. An excellent broker with an undesirable platform, or an excellent platform with a poor broker, may be a challenge. Ensure you get the best of both.
Step three. Choose a methodology and then be consistent in its application.
Before you enter any market as a trader, you have to have some idea of how you will make decisions to execute your trades. You have to know very well what information you’ll need to make the correct decision about whether to enter or exit a trade. Some individuals choose to go through the underlying fundamentals of the company or economy, and then use a chart to determine the best time and energy to execute the trade. Others use technical analysis; because of this they will only use charts to time a trade. Understand that fundamentals drive the trend in the long run, whereas chart patterns can offer trading opportunities for a while. Whichever methodology you select, be sure you be consistent. And be sure your methodology is adaptive. One’s body should keep up with the changing dynamics of an industry.
Watch out for this blog and I will share with you further steps.