Tips to Improve Your Trading

Testing Your Strategy

Always test out your strategies on a demo account to see if they are profitable. Although many traders will not trade in the same style you need to be sure that your strategy works. Some traders will prefer to open a tiny account to practice their strategy as at least then real money is on the line and you are more likely to trade realistically. If you are using EA or easily programmable trading strategies you can then back test these on historical data, although this does have limitations due to past results not necessarily implying future results.

Selecting the Correct Broker

Make sure you have selected the correct broker. Many brokers will offer wide spreads which will eat into your trading profits and other costs such as slippage and swap costs.

Know your Trading Tools

Make sure you know the platform you are using inside and out. Too many times I have heard traders open a trade with no idea how to even close it or how to work their platform. They open trades with no idea of the positions sizes they have taken and how it will affect the Profit and loss. This should be one of the most basic principles which are why demo account can be great for testing purposes and should be used whenever you are looking for a broker with a different platform.

Creating and Sticking to your Trading Strategy

One of the key principles of trading is to create a strategy and stick to it. Too many new traders will start on their strategy and midway through, switch to another one or try to trade multiple at the same time. This is normally a receipt for losses for new traders as they will not be able to analyze and use multiple strategies and can lead to over trading. Some more professional traders will use a couple of strategies or more but for new traders, I would recommend on trying one at a time and not trying to take on too much.

Risk Management

One of the biggest mistakes traders use is not to use any risk management on their trades. This can cause a massive problem on leveraged trading account as losses can quickly add up. Most traders will predefine their risk before any trade is enter such as a 1% or 2% loss per trade. Using this sort of risk management stops you from losing the whole account on any one trade. I have spoken in my strategies about some stop loss levels that you can slightly vary and some stop losses that you can push slightly further out but you will always want to make sure you are still trading within your risk levels.

Chasing the Market

Another key mistake made by traders is they chase the market; they can enter positions prematurely before the technical analysis has confirmed the pattern or the breakout. Many strategies call for a retracement before the entry point but many traders will ignore this and enter as soon as the pattern is broken.

Overconfidence can damage any new trader especially if the first few trades are profitable. Beginners luck can occur anytime but this does not make you a great trader, great traders are not born in an instant but trained over many years honing their skills. New Traders will often double down on a losing trade to get a better average entry price but this can lead to a snowballing effect that can wipe out an account.