How To Become a Better Trader?


Trading and the stock market offer endless opportunities for making money. These 10 ideas will help you to be a great trader. Here you go:

#1 Partial Purchases and Partial Sales

Many traders think of trading as one buy and one sale of one stock. For example, they might purchase 1000 shares here and then sell 1000 there. This approach places a premium upon precision. A good trade opportunity can turn out to be poor if your timing is not perfect. You have a better chance of making a significant trade if you build your position incrementally, then break it down into smaller pieces. Although it is impossible to predict the exact lows or highs of any given day, you can likely achieve better overall results if you average out your efforts.

#2 Differentiate by Time Frame

The great thing about the incremental approach to trading tip one is its ability to serve as a form diversification. While you can diversify your portfolio and reduce risk by owning many stocks, it is also possible to trade in different time frames. You can reduce your risk through incremental trading by using a variety time frames. You don’t need to own as many stocks if you can trade the ones that you love both short-term and long-term.

#3 Pressure When You’re Right

The incremental approach to trading has another advantage: it allows you be more aggressive when a trade works and less aggressive when it doesn’t. A trader who isn’t well-positioned will often spot a profitable trade, but end up making very little profit. George Soros said that the important thing is not whether you are right or wrong, but how much money are you losing when you’re wrong and how much money are you making when you’re right.

#4 Make a decision

Inertia is the biggest loss that traders experience. Inertia is the biggest reason traders lose their most valuable assets. A mental trick that can help is forcing yourself to make a decision when a stock drops by a certain amount. Decide to buy more or to sell it. It is not possible to act inaction. Are you confident enough in the trade to increase shares? If you don’t, why would you keep it? Sell it if you don’t wish to buy it.

For more advice look for Gary Fullett article here

#5 Selling is Your Most Powerful Tool

Your most powerful strategic tool is the ability to instantly sell a position. It’s your insurance against large losses. There is no reason to stop you from buying back stock that you have already sold. You can think of it as an insurance policy, which kept you cash-safe for a while even if you end up paying more. Selling is the best way to manage risk. It is your best friend, and it is the key to protecting your capital.

#6 Reactions are more important than predictions

Market experts are full of predictions about the future. Sometimes they are correct. But most of the time they are completely wrong. How many “experts” predicted a pandemic, and how would the market react over the next year? None, zero, zip. Reacting to changing conditions is the only way to make money. Although no one can predict the future, if you are able to react quickly to changes in conditions, your chances for making money will increase dramatically.

#7 Keep Your Accounts Close to the Highs

Warren Buffett would say that compounding is the key to becoming rich. Compounding is the act of holding one stock for a long time and seeing its price rise. Active traders who keep their accounts at the highest possible levels of profit can also benefit from compounding. A trader who continues to produce returns even as their accounts reach new heights, will benefit from the same dynamic as someone who holds Apple ( /AAPL) for many years.

#8 charts are your best management tool

Charts can be a very useful tool but not for what most people believe. Charts can be used to manage trades. Charts can be viewed as predictive tools that show you the direction of a stock’s movement. While they are useful for short-term movements, their predictive power quickly erodes and charts become less reliable. Once this happens, however, they can be used to help you decide when to make gains, lose, or add more. Trade management is the best option.

#9 Be Worried More About Positions than the Indices

Many traders spend too much time worrying about indices and macro-level matters than they do the stocks they own. 2021 is a good example of how indices may not always reflect the reality of the majority of stocks. Instead of trying to predict the market through analyzing indices, manage the stocks that you own. You can sell them if they behave badly and raise money. This is the best timing.

#10 Stay Positive

Trading and the stock market offer endless opportunities for making money. You can make money as long as you have patience and capital. Markets will experience ups and downs. We need to accept that fact. But if we persevere, then trades will work. It is difficult to find great trades if you are pessimistic and negative. While pessimism can be great for preserving wealth, it will not help you build it.

I plan to eventually publish a new book that will include all these tips and more.

+ There are no comments

Add yours