By James Bentley & Samuel Fuller
Becoming a successful trader is completely viable if you take the time to learn how the industry operates, understand what your own goals are and commit to fulfilling them in a disciplined manner.
Financial Markets Online co-founders, James Bentley and Samuel Fuller, are experienced traders who train students around the world. On this post, they’re sharing with us 5 ways to become a successful trader.
1. Stay risk managed – risk management helps reduce losses. A trader who has generated substantial profits can lose it all in just one bad trade without implementing a proper risk management strategy. Set a stop-loss and know what you are willing to risk before you trade.
2. Stay disciplined – resist the temptation to flout your own rules; you set them for a reason whilst in a calm and balanced mindset. Always adhere to the strategies that have been working for you and follow your own trading plan. Common mistakes include refusing to accept when things have taken a turn for the worst, letting losses mount, following other people and not doing enough research.
3. Stay emotionally in control – adrenaline is a powerful drug, and the rush of a good trade – and making money – can prompt you to want to keep going. Realising you’re losing money and wanting to reverse the situation can have the same impact. Keeping your emotions in check, remaining focused and in a correct state of mind is critical to consistently trading successfully.
4. Bank your profits – successful and seasoned traders know that the market can be unpredictable and, when it starts acting differently in the future, their profits will stop pouring in and there might even be periods of losses. So, take profits from your trading account and stow them away in a separate account.
5. Compound your account – compounding is the process of generating more return on an assets’ reinvested earnings. To work, it requires two things: the reinvestment of earnings and time. Compound interest can help your initial investment grow exponentially and for beginner traders, it is one of the greatest strategies.
These are 5 essential tips when starting to trade that all traders should bear in mind. Because in those first steps it is easy to let go when some profit is achieved or, on the other hand, when some falling into some losses. As usual, the best tip is always that of using the common sense when trading.