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8 New Year's Resolutions for Traders in 2021

Posted by BluFX

 

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No matter how much you have accomplished this year in the financial markets, there are still plenty of ways to excel in the coming year. This includes risk management, trade management, and discipline, just to name a few. Taking a chance with one - or more! - of these new year’s resolutions will turn your trading around in 2021. 


Read 3 Best Forex Trader YouTube Channels ⟶

New Year's Resolutions for 2021

1. Let go of a trade that isn’t profitable

Sometimes even the best-laid trades don't go your way. So, it's good to know that there are ways to get out of losing trades before they become a severe financial drain. While it is possible to salvage some winning trades, bear markets and weak trading opportunities can leave even the savviest trader frustrated and eager to cut losses. 

Without a doubt, every trader wants to avoid bad trades. When getting into the position, some traders can lapse into wishful thinking or let their feelings about the market sway how they trade. For example, a trader has a good bit of cash on deposit and can only lose a small amount, so they take a long trade on an overbought stock. However, if trading against their method, they end up losing most of their account. So make a new year’s resolution for 2021: let go of any trade that isn’t profitable, and reap the rewards.

Read our 4 Essential Risk Management Tips>>

2. Keep it simple: trade exactly what you see

One of your new year's resolutions should be about simplicity and transparency. Trade to enjoy what matters most to you, not against someone else's schedule where making a profit is more important than winning in the markets. 

Trading precisely what you see cuts down on time spent looking for perfect trades, which wastes your time. You can make money with simple trading. With just a 15-minute price chart, you can monitor the market and identify the right price to buy or sell once you've caught a trade. Use volume bars and candlestick patterns to guide you through to your target.

In short, when you see a trade, trade it. No hesitation, no second-guessing – just trade it. If you're confident in your money management rules, it will work for you more than any other method you've ever tried.

See which trading strategy suits you here: Which Trader Personality Are You?

3. Improve on your risk management strategy

No matter what your trading style, you can benefit from improving your risk management strategy. Whether you're a systematic or discretionary trader, you can use Double Up, Rollover, and Early Close features to help develop consistent rules to guide your trading.

Double up on all winning trades (subject to pre-determined monetary and price thresholds), rollover long positions to capture additional price movement, close a position early (if price targets are met).

Forex trading platforms also offer facilities for managing your risk by controlling the number of pips you have as a stop loss level. These rules are based upon an investment of 100 pips to fully execute the trade using several entry techniques such as pin bar, gap trade, and any other technical trade that you like. 

For example,10% of your total trading account is applied to the preplanned trade on only a very tight stop loss. That means that if you are using 20% of your entire available payout plan, your effective return rate will increase by 75% (3:1). You place the stop loss at two pips less than your expected entry price resulting in 200 pips as a worst-case scenario.

Debunking the myths: how much do traders REALLY make? See What is the Average Trader Salary?>>

4. Take more online courses to improve your stock trading skills

Whether you're a beginner or experienced stock trader, it's never too late to enroll in good stock market courses. You see, all the best traders and investors in the world have a continuous interest and are willing to learn from others.

The stock market is so much more than just stocks. Before you invest your hard-earned money, make sure you start with the right foot by taking a stock market course. There are many things that you could still learn and improve on even if you have been trending. 

Stock market courses help you get better at your game. Once you prepare and are properly educated, your chances of success in the stock market can increase drastically.

Your ability to spot trends and make smart trades is the difference between a profitable and unprofitable investment portfolio. That's where good stock market courses come in.

Many of the best businesses are built from scratch. Read our Q&A with entrepreneur Nick here>>

5. Work on your charts and technical skills

For traders or investors, the most important new year’s resolution is getting a good understanding of technical analysis. It helps to plan for the investments and trades confidently. Ensure that you can understand technical indicators clearly, so they match your expectations.

It can be tempting to skip the prep work when you're under pressure, but any worthwhile endeavor takes diligence and discipline. Spend more time learning technical analysis indicators. You will not only trade with a plan but also focus on what is essential in each stock.

Also, make it your new year resolution to commit to a longer time horizon. Trying to make a quick buck on one trade can cause problems if it's not working out. Trading with a longer time horizon lets you see the bigger picture without getting caught up watching prices tick by tick.

Struggling to concentrate while working from home? Find yourself overtrading? Here are our tips on focusing during lockdown

6. Diversification is the secret to investing success

Trading is a numbers game. The more positions you have in the market, the greater your potential profit. In other words, adding diversity to your trading portfolio always increases your odds of success. And though diversification is not an investment strategy, investing across a broader range of currencies does help stabilize your investment portfolio. It protects you from the risk of a single currency losing value while simultaneously boosting your investments' overall return.

Speculative investors can also turn to forex and the commodities markets for diversification. The correlation between these markets has changed dramatically over time, making them unique hedging instruments. For example, a low correlation in 2015 made them ideal for investors looking to cut risks.

See 4 psychological traits shared by all successful traders>>

7. Plan your trade

Traders tend to go on auto-pilot and instantly react to what's going on in the market. If you don't give much thought to the underlying rationale behind their trade, you fall into bad habits that lead to costly mistakes.

Investors should plan their next trade based on the fundamentals, not just the charts. Don't become overly optimistic because you had a chance to strike in your latest trade. Focus on getting back to the basics and trading to profit.

"Take your financial future into your own hands." - read our Q&A with trading expert and psychology coach Mandi Rafsendjani here>>

8. Keep track of the warning signs

When you're trading, there are bound to be warning signs that keep you out of the market or warn you to get out. The more alert you are to these signs, the better you'll be able to manage risk.

Don't let a disastrous market event ruin your hard-earned profits. By knowing the warning signs, you can make informed trading decisions before it's too late. A Capital Trading Services study of professional traders determined that losses on trades stemming from a sudden market move are much more likely to exceed initial company forecasts than those planned. 

The study also found that those who have increased their ability to stay in alignment with the markets by absorbing real-time market insights increased their likelihood of profitable results during extreme volatility. 

Read the 8-Step Ultimate Trading Plan Checklist ⟶

Tags: Trading Tips

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