Tuesday, 1 January 2019

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Top Rules for Successful Trading:

To be successful in trading, however, one needs to understand the importance of and adhere to a set of rules that have guided all types of traders. Each rule is important, but when they work together the effects are strong. Trading with these rules can greatly increase the odds of succeeding in the markets.

Rule No.1: Always Use a Trading Plan
A trading plan is a written set of rules that specifies a trader’s entry, exit and money management criteria. Using a trading plan allows traders to do this, although it is a time consuming endeavor.
With latest technology, it is easy to test a trading idea before risking real money .Back testing applying trading ideas to historical data, allows a trader to determine if a trading plan is viable, and also shows the expectancy of the plan's logic. Once a plan has been developed and back testing shows good results, the plan can be used in real trading. The key here is to stick to the plan.

Rule No.2: Treat trading Like a Business
In order to be successful, one must approach trading as a full- or part-time business - not as a hobby or a job. As a hobby, where no real commitment to learning is made, trading can be very expensive. As a job it can be frustrating since there is no regular paycheck. Trading is a business, and incurs expenses, losses, taxes, uncertainty, stress and risk. As a trader, everyone is essentially a small business owner, and must do their research and strategize to maximize their business's potential.

Rule No.3: Use Technology to trader’s Advantage
Trading is a competitive business, and it's safe to assume the person sitting on the other side of a trade is taking full advantage of technology. Charting platforms allow traders an infinite variety of methods for viewing and analyzing the markets. Back testing an idea on historical data prior to risking any cash can save a trading account, not to mention stress and frustration. Even technology that today we take for granted, like high-speed internet connections, can greatly increase trading performance. Using technology to trader’s advantage, and keeping current with available technological advances, can be rewarding in trading.

Rule No.4: Protect Trader’s Trading Capital
saving money to fund a trading account can take a long time and much effort. It can be even more difficult or impossible the next time around. It is important to note that protecting trader’s trading capital is not synonymous with not having any losing trades. All traders have losing trades; that is part of business. Protecting capital involves not taking any unnecessary risks and doing everything you can to preserve trader’s trading business.

Rule No.5: Become a learner of the Markets
Think of it as continuing education - traders need to remain focused on learning more each day. Since many concepts carry requirement knowledge, it is important to remember that understanding the markets, and all of their intricacies, is an ongoing, lifelong process. 
Hard research allows traders to learn the facts, like what the different economic reports mean. Focus and observation allow traders to gain instinct and learn the gradations; this is what helps traders understand how those economic reports affect the market they are trading.

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