No doubt, trading can be one of the most profitable investment methods. However, you can get wrecked as fast as you can increase the value of your portfolio

Trading is a highly volatile and risky practice that requires a good understanding and steel nerves to protect your account. In order to turn the odds in your favor, we have gathered the top 10 tips that will help you in achieving the desired goal of consistent profits.

These are the top 10 trading tips that you should know about:

  1. Open a demo account.
  2. It might be too soon to dive in deep and start trading for real. Open a demo account or get a free trial to test the platform, get a feel for technical indicators and try out your potential strategies.

    Do not start trading with real funds immediately until you see your account becoming profitable over an extended period of time. Practice, backest, fail and repeat. Once you have done it, check the next point.

  3. Start trading small amounts
  4. If you got through the demo stage of your trading career, congratulations! it means that you should have already acquired enough knowledge to open a small trading account.

    Now, why not trying to make a living out of it? Even though you have been consistent and profitable in your demo account, trading with real money, and especially with lots of it, can trigger emotions, causing you to make trades that aren’t thought through and ruin your account instead of increasing its value.

    Trading small amounts at the start allows you to make rookie mistakes while keeping the financial loss to a minimum, which is part of your learning curve as a trader.

  5. Set goals
  6. Becoming a trader is a long and harsh road, as with every journey, it has different stages. As stated in the previous points, the path to becoming a good trader requires certain steps. And, what is going to make you move from one step to the other one? Goals.

    Commonly, some of these goals are:

    • Profitable for X amount of weeks with virtual money to open a real account.
    • Having achieved a X amount of return to increase the amount of money invested.
    • Being profitable for X amount of months to increase your leverage;
    • Having backtested a new strategy for X months to start trading with it.
  7. Backtest, backtest and backtest
  8. Whether you trade manually, automatically or a combination of both, backtesting your strategy for the asset you want to trade is always, the first thing in the to-do list of a trader. To illustrate it, trading a non-backtested strategy with your real money is like riding your bike with blindfolds on, you might arrive safely to your destination, or a get hit by a truck.

  9. Don’t risk too much per trade
  10. It is widely accepted that a trader shouldn’t risk more than 2% of his/her account in a single trade. Why 2%? Normally, traders have a risk/reward (loss/profit) ratio of at least 1:1, which means that they take profit at 2% per trade and risk 2%, a normal target for day traders.

    Also, having a max loss of 2% per trade, means that you should have 36 negative trades in a row in order to burn your account. Which, is very unlikely to happen.

  11. Create a trading plan
  12. he stock market is open 8 hours a day, 5 days a week; the forex market 24 hours a day, 5 days a week; and the cryptocurrency market never closes, you need some organization. You need a trading plan.

    What assets are you going to trade? When are you going to trade them? What are your weekly and monthly profit goals? How many trades per day do you want to make? These are key components of your trading strategy that should be predefined, and will help you to avoid making important mistakes like overtrading.

  13. A clear open and exit strategy
  14. A well-backtested strategy normally shows how to open a trade. However, what many people miss is having an accurate exit strategy. There is no such thing as having the patience to wait until your setup shows up, or your automated strategy signals a sell.

    Having the ability to close a position at your take profit, and even to cut loses on time, is a key aspect that has to be to extremely clear-cut in your strategy.

  15. Follow professional traders
  16. There is a saying that says: “In order to learn a specific field in-depth, you need to have a good professor to learn from, and a pupil to teach”. Focusing more on the professor part of the saying, learning the strategies and psychology from experienced traders will make you take your trading to another level.

  17. Keep track of all your trades
  18. Your trading record will show whether you are profitable or not. But not only that, it will tell you which assets and which time frames are more profitable for you, as well as teaching you about how to reduce your negative trades.

    All in all, you can analyze the development of your trading results along short and long periods of time, which is extremely useful to know how if you are a consistent and profitable trader.

  19. Get in touch with the community

Trading, unless you make use of trading bots, can be emotionally exhausting and time-consuming. Sharing insights with other traders and creating a community can be more powerful than trying to find the perfect indicator or setup.

It will allow you to find the right contacts within the sector, receive help to solve your mistakes and get informed of everything going on in the market.

Every professional trader mentions most of these points in order to get consistent trading results and not letting overtrading or emotions sabotage your trading.

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