You’ve heard it before: “Buy low, sell high”. But despite this oft-repeated principle, most traders never learn how to buy low or sell high. Instead, they go through the motions of trading without really understanding why they’re doing and what they’re doing.
Although it may seem like you’re always behind the game – if you don’t understand what your trading style is all about, then you might as well be playing checkers with a monkey.
Trading Secrets You Need To Know
For most traders, trading is never easy. It is indifferent and complex. But to be the best at trading, there are some secrets that can help you work smarter and not harder. Here are the top 15 trading secrets to know.
1. Take Advantage of Your Emotions
Emotions are an integral part of trading. You can’t trade effectively if you cannot keep your emotions in check and understand them. After all, if you knew what scared you and why it scared you, it would be much easier to deal with your fear and control it instead of allowing it to rule your actions.
2. Know What Your Money Management is All About
We can break money management down into three major components:
Margin: Trading with borrowed money, and the amount of money you can risk per trade. Volume: The number of shares or positions you can open at the same time.
Winning percentage: The percentage of trades that make money for you, “win-rate”.
3. Know What “Reallocation” Means Before You Use It
Reallocation is a term that gets thrown around a lot in trading circles. If you close your losing trades and start fresh with your gains, you can’t lose all at once – since half of your total positions will be winners and half will be losers. You’ll eventually hit a streak of winners that pays for all the losses.
The problem with reallocation is that it may look like a get-rich-quick scheme, but it won’t work unless you’re an excellent trader.
4. When Trading, Don’t Set Your Orders with the Market in Mind
Selling when the market is rising is like selling (or closing out) a losing position. That’s why it’s called “selling low”. If you want to make money, you need to buy low and sell high.
5. When Trading, Don’t Set Your Orders with the Direction of the Market in Mind
This closely relates to point number four. It means that you should never set your orders based on what direction the market is going up or down. That’s because you’re not taking advantage of “churning “, which we can interpret as buying low and selling high.
6. Don’t Buy at Support, Sell at Resistance
Support is a level at which buyers usually buy because they think the price is trending down. Resistance is where sellers expectedly sell because they think the market is trending up. Mostly, the market trends establish according to time. Therefore, buying at support or selling at resistance will cause you to trade in a choppy fashion that will cost you money in the long run.
7. Use “Upside Targets” When Trading
A downside target is something like €0.17 (or any other price you want). When you’re trading, you want to trade in an upward direction. This means that if the price is currently at €17.04, you want to take some profits off your position and let your stop-loss run out. Chances are the price will move over €0.17 eventually, so it’s important to ride out any choppiness caused by stops getting triggered.
8. Understand the Psychology of Trading
If you don’t understand why people do what they do, then you’re going to be on the outside looking in and never truly understanding what’s going on. Bitcoin Era is one of the best platforms to get started with trading in Bitcoin.
9. Don’t Seek Advice from Others; Trust Your Own Instincts Instead
Some people will ask for advice and then ignore that advice and trade how they see fit. That’s fine as long as you know what you’re doing and you properly develop the trading plan.
10. Maximize Position Sizing
Position sizing is about balance. It involves taking your account balance and taking into consideration what you’re comfortable with in terms of risk in order to maximize your profits. You would do this by placing bids or asks that are in line with the price you’re willing to go long at or short at.
11. Always Take Your Losses Before You Take Your Profits
This is not rocket science; it’s common sense. If you’re trading, you will lose money. There’s no way around it. It’s just a matter of when and how much, and it all depends on your objectives, risk tolerance, and trading style.
12. Use the Stop Loss and the Take Profit to Protect Your Entire Position
Whenever you place a trade, you will probably want to protect both sides of your position using the stop loss and take profit to ensure that your wins are big wins and your losses are small- so that in the long run, you still come out with a profit.
13. Trust the “Universe”
This is a concept that works in most areas of life. If you want something, but you’re waiting for the “perfect moment”, then it’s never going to happen. If you’re not taking action when opportunities are in front of you, then they aren’t really opportunities, are they?
14. Trade What You Understand
If trading is something new to you, then start small and trade what you already know about. For example, if you like basketball or football, then trade what’s happening in those leagues. Maybe there’s some new information on these teams that the market has yet to digest.
15. Research, Research, Research
I’ve said it before and I’ll say it again: research is the most important thing you can do when trading. And here are some things to keep in mind when doing so:
-Read Trading Guides
-Learn About Trends
Trading is not rocket science, but it is a science with many commonalities to rocket science. It is a difficult endeavour. It requires a lot of work and a trader needs to be aware of a lot of things before they make the leap from a beginner to an advanced trader.
- Blogger by Passion | Contributor to many Business Blogs in the United Kingdom | Fascinated to Write Blogs in Business & Startup Niches |