Professional stock traders are very keen on their trade execution process. They rely on simple trading logic and take the trades with very low risk. To them, trading is more like art where they have to take the trades in a very professional way. Being a new retail trader in the investment industry, you might be thinking that you know a lot about the market. But once you start trading the market, you will realize that you have a lot to learn to become good at trading.
Trading is often considered a tough business as most people lose money. But if you follow certain rules, you should be able to avoid the big losses with a high level of precision. In this article, we are going to give you some classic tips which will help you to avoid losing trades.
Table of Contents
1. Learn to filter the bad trades
You should have the skills to filter out the bad trade signals in the market. People often become confused and they think filtering out the bad trades requires extensive use of indicators. But in reality, you can do so without even using the indicator. Just by learning to do the proper multiple time frame analysis, you should be able to find reliable trade signals and make consistent profit with a high level of accuracy. Never expect that you will be able to eliminate the false signals 100% of the time. You should have the mentality to accept the losing trades and only then you will survive as a trader.
2. Study the major trend
You should be very skilled in analyzing the major trend. The professional traders at Saxo capital markets love to trade with the major trend as it helps them to make a big profit most of the time. You may think you know a lot about the trend but if you do the proper analysis in the demo trading account, you will realize that don’t even know what retracement is. To become a good stock trader, you should have the skills to find the endpoint of market retracement. Once you become good at that, you will slowly learn to execute high-quality trades and thus you will be making a big profit with a great level of ease.
3. Trade with discipline
The best way to avoid losing trades is to follow a proper trading routine. You should not be taking the trades in a random way because if you do so, you are going to lose money most of the time. The rookie traders often think they know a lot about the market. But after doing some in-depth research, they realize the fact, trading is not about aggression or making a quick profit. In fact, it’s how well you find the good trade setups.
At the initial stage, you may follow the rules very strictly but after losing a few trades, you will start breaking the rules. Things will get worse when you will start revenge trading the market. So, to protect your trading capital, you should be taking the trades with extreme discipline and only then you can expect to become successful in this market.
4. Learn to avoid the news
You should not be trading the major news to make a big profit. Trading the high-impact news is one of the key reasons for which people keep on losing money. Analyze the news data and relate it with the technical factors. Based on that, you should take the decision in the market. Never take any trades with confusion. You may have in-depth knowledge about the technical and fundamental analysis, still, it would be wise to avoid taking any trades right after the news release. By doing so, you will become much more confident with your actions and thus you will be able to earn more money with a great level of confidence.