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A PRESCRIPTION FOR A SUCCESSFUL TRADING BUSINESS

success

If you’re new to trading, you probably just want to know how to hurry up and make money”. 

But first, with the global environment we find ourselves in, we need to implement a few truths designed to help you achieve more crypto and forex trading success.

Each of the guidelines listed below is important, but when they work together, the effects are powerful.

Treat Trading Like a Business

To be successful, you must approach trading as a full or part-time business, not as a hobby or a job. If it’s approached as a hobby, there is no real commitment to learning. If it’s a job, it can be frustrating because there is no regular paycheck.

Trading is a business and incurs expenses, losses, taxes, uncertainty, stress, and risk. As a trader, you are essentially a small business owner and you must research and strategize to maximize your business’s potential.

Use Technology to Your Advantage

Trading is a competitive business. It’s safe to assume that the person sitting on the other side of a trade is taking full advantage of all the available technology.

Charting platforms give traders an infinite variety of ways to view and analyze the markets. Backtesting an idea using historical data prevents costly missteps. Getting market updates and alerts via smartphone or computer allows us to monitor trades anywhere. Technology that we take for granted, like a high-speed internet connection, can greatly increase trading performance.

Let’s talk briefly about charts. Charts are extremely valuable in the trading business. A trader who doesn’t use charts is the same as a doctor who doesn’t use X-rays, or any medical person for that matter who doesn’t use the advanced medical equipment available. No doctor would practice medicine without utilizing their equipment and neither should you trade without using advanced charts.

Using technology to your advantage, and keeping current with new products, can be fun and rewarding in the trading world.

Become a Student of the Markets

Think of it as continuing education. Traders need to remain focused on learning more each day. It is important to remember that understanding crypto and/or forex markets, and all of their intricacies, is an ongoing, lifelong process.

Hard research allows traders to understand the facts, like what the different economic reports mean. Focus and observation allow traders to sharpen their instincts and learn the nuances.

This along with world politics, news events, economic trends—even the weather—all have an impact on the markets. The market environment is dynamic. The more traders understand the past and current markets, the better prepared they are to face the future.

Risk Only What You Can Afford to Lose

Before you start using real cash, make sure that all of the money in that trading account is truly expendable. If it’s not, the trader should keep saving until it is. Traders must never allow themselves to think they are simply borrowing money from these other important obligations.

Losing money is traumatic enough. It is even more so if it is capital that should never have been risked in the first place.

Trust Your Indicators

Don’t try to out think the indicator and certainly never trade out of your emotions.

Study the tutorials on each indicator. Consider this, if you were to start a new career, more than likely you would need to study at a college or university for at least two to four years before you were qualified to even apply for a position in the new field. Learning can certainly be accomplished in less time, but always remember, learning about your indicators and rigorous training is a must to experience successful trading.

Always Use a Stop Loss

A stop loss is a predetermined amount of risk that a trader is willing to accept with each trade. The stop loss can be a dollar amount or percentage, but either way, it limits the trader’s exposure during a trade. Using a stop loss can take some of the stress out of trading since we know that we will only lose X amount on any given trade.

Not having a stop loss is bad practice, even if it leads to a winning trade. Exiting with a stop loss, and therefore having a losing trade, is still good.

The ideal is to exit all trades with a profit, but that is not realistic. Using a protective stop loss helps ensure that losses and risks are limited.

Know When to Stop Trading

There are two reasons to stop trading, at least temporarily; trading from emotions and an ineffective trader.

If you are not growing in the trading business, then over time you will become an ineffective trader.

Stay unemotional and businesslike. It’s time to reevaluate and make a few changes such as allowing the indicators to do what they are designed to do and staying consistent with the trades. Riding out the trades is critical, yes you will have some losses but in the long run you will be a winner!

You must create smart and profitable trading habits. External stress, poor habits, and lack of physical activity can all contribute to this problem. Take time out for walks, exercise, reading, playing golf, swimming, or whatever it takes for you to recharge. Getting away from trading, will allow you to start trading afresh!

Keep Trading in Perspective

Stay focused on the big picture when trading. A losing trade should not surprise us; It’s a part of trading. A winning trade is just one step along the path to a profitable business. It is the cumulative profits that make a difference. Time is your friend with trading. Overtime, you should make profit, not every time, but overtime.

Setting realistic goals is an essential part of keeping trading in perspective. Your business should earn a reasonable return in a reasonable amount of time. If you expect to be a multi-millionaire by Tuesday, you’re setting yourself up for failure.

What’s The Conclusion

Understanding the importance of each of these trading rules, and how they work together, can help a trader establish a viable trading business. Trading is hard work, and traders who have the discipline and patience to follow these rules can increase their odds of success in a very competitive arena.

HAPPY TRADING!

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