By Sheikh Refath Zaman
Updated May 30, 2024
If you’re at all curious about making big money trading stock, then I’m sure that by now. You’ve been saturated with the same rhetoric as we have over and over (like “plan your trade; trade your plan” or “keep your losses to a minimum”). These phrases will do the early-stage professional little good outside of adding to their feeling that there are too many things in tech that can only be learned through osmosis. But the regulations below are all tailor-made to complement each other and increase your chances of success in the markets.
Key Takeaways
Trading is not a hobby, nor is it simply a way to earn money; instead, consider trading your business.
Develop strategies and educate yourself.
Overcommitting: instead, be realistic about expectations for the company.
Rule 1: You must always have a trading plan.
A trading plan details a trader’s entry, exit, and money management criteria for each trade. Backtesting is when you test a trading idea with modern technology before going in and putting real money on the line. The moment the backtesting confirms a good result, it is possible to start applying this strategy in real trading. Follow your plan; do not trade impulsively, as it may get you to win a particular trade only, but it’s no more than a bad strategy.
Rule 2: YOU TRADE AS A BUSINESS.
Trade as if you had a company, not simply like it was your hobby. Trading is costly, losing, taxable, and stressful. You are a business owner (in this case of your trading endeavor) and therefore need to do some homework on how you can make the most of it.
Rule 3: Leverage technology for your benefit.
The highly demanding environment in trading means technology must be utilized. There are platforms that you can use to chart the performance of your trade, backtest, and receive real-time market updates on your smartphone, along with many other tools useful in building an efficient trading campaign. Keeping up-to-date on the latest and greatest tech gadgets can be something of a blast.
Rule 4: Preserving Your Trading Capital
It is not even a quick process to build your trading account. Preserving your trading capital means you don’t take stupid risks and do everything possible to keep your trading business alive. It does not mean you will never experience a losing trade.
Rule 5: BECOME A STUDENT OF THE MARKETS
Today I want to explain why trading is not like riding a bike and why continuing education is important for traders. The markets are ever-changing, and practicing due diligence every day is not only important but in fact necessary. Everything from world politics and news events to economic trends can have an impact on the markets, not forgetting the weather. Knowledge of this information helps you prepare for the future by knowing where we have been and how it will influence (fingers crossed, not repeat) what may happen next.
Rule 6: Trade what you can risk (loss).
Make sure that the money in your trading account is expendable. It should not be money that you need for obligations like tuition or a mortgage. You can take enough of a hit to lose money without risking the dollars you must have.
Rule 7: Build a Factual Base Endpoint
Having a strong trading plan that is based on data, not emotions or hope, The requirement is extensive research and market knowledge. I tell my readers it should be no different than putting in 6 years, or whatever it takes, you get prepared for a new trade, but on the high side—I mean, really study.
Rule 8: Set a Stop Loss
Stop loss is a specific amount of money that you are going to risk on each trade. This way, you limit your exposure and anxiety levels. A stop-loss essentially enables traders to keep trading by confining losses, should there be any.
Two reasons to trade are not enough: a) An ineffective trading system; b) A trader with an incorrect attitude.
If the trading plan is not working as planned, perhaps it has to be reviewed and redone. If you are a trader who wants to trade as planned but is stressed out or has bad habits, you cannot follow your plan.
Rule 10: Trading is not the end.
Focus on the big picture. Losing as well as winning trades are part of trading and must be accepted. These services help with reasonable goal setting, real-life perspective, and keeping you motivated. Trading is a marathon, not a sprint.
The bottom line
The majority of the rules listed above highlight risk management and limiting costly mistakes. Profitable traders also understand this, and some even bring in their winning trades at a loss; others wait it out, while many, if not most, already have strategies for winning trades until everything goes downhill. By adhering to these rules, traders can increase the odds of longevity in the markets.
