Each trader will have their own strategy that works for them - but when you’re first starting out, it can be difficult to know where to begin.
In this blog we’ve compiled some of the most successful traders’ strategies and techniques to give you some ideas to get started…
Successful traders’ strategies: 5 top tips
So - what advice do successful traders have for others just starting out? Read five pieces of advice from a handful of the most successful traders.
1. Make sure you have a strategy
“Trading without a proven strategy is the biggest mistake I see. The stock market is a very competitive place and there are many sophisticated participants who are ready to take your money.
Traders and investors need to put the odds in their favour if they want to stand a chance of success. The first thing any investor or trader should do before putting their money on the line is to find a strategy that has a positive expectancy.”
2. Be prepared for some ups and downs
“By going through a learning curve of repeatedly losing and winning, my trades finally became more consistent and more profitable [...] By 2008, the hard work paid off. I turned my $50,000 trading fund into well over $1 million in profit by trading market leaders.
Over the years my trading journey has had many ups and downs. But I am a trader who likes to pick myself up after a fall, who aims high after winning, who loves to keep learning, and who always strives to get better.”
3. Don’t let greed get in the way
“The biggest mistake I see traders make is dollar signs in their eyes and thinking that a few hundred bucks profit isn’t a good trade and they need more, more, more. And in the end they turn a winning trade into a losing one.
You need to start somewhere and you’re not going to hit a home run every time. Second mistake is disconnecting from the reason of the trade, ie: day trade turning into a swing trade and why this now losing trade is worth holding despite being wrong.”
4. Give yourself room to fail
“Eight out of ten trades failed for me. That was fine because when I hit a winner it won big. But if you’re averaging eight out of ten trades failing, then it will be common to fail 20 times in a row. I’ve gone through streaks of 40 failed trades in a row. You’ve got to be able to survive those.
My recommendation would be to risk 1% (or less) of the money you’re willing to lose on each trade. That gives you 100 chances for failed trades before you go bust. It shouldn’t happen.”
5. Know when to cut your losses
“I see far too many traders/investors refuse to cut losses. They delude themselves into believing the stock will come back their way for fundamental reasons, or simply are too proud to admit they were wrong and take a loss.
No matter what the reason, the end result is usually one bad trade taking them out of the game. You could be short a near worthless company (like some were with CYNK) and still blow up your account if you refuse to cut a loss quickly. The market is always right, you have to be humble and respect the market, or the market WILL humble you!”
Want to know how to use a candlestick chart to trade? How do you read the candles on these charts?