đź“Ś7 Key Tips to Improve Your Trading
âś…1. Predictions and Forecasts Are a Waste of Time
It's not about how many of your predictions were accurate, it's about when you was right and predicted correctly ,how much money you have gained !
Actually Predictions and forecasts are interesting and can help us prepare for volatility ahead, but it is the reaction to changing events that is the most important. Moving to the sidelines as a downtrend emerges will protect you better than any prediction or forecast. It is reacting decisively that works far better than predictions and forecasts.
Don't focus on anticipation and predictions. Focus on vigilance and reaction.
âś…2. Compound Your Profits by Keeping Your Accounts as Close to Highs as Possible
Nothing is more counterproductive than making up losses. If you lose half of your money, you must double it to just return to even. If you are zealous at keeping your accounts near highs, you will outperform over the longer term.
Long-term buy-and-hold investing is often promoted because it allows you to compound your money and that it is what makes investors such as Warren Buffett so successful. but take it in mind Compounding fails to work when you suffer big drawdowns and losses.so The key is to address it and not just sit there.
âś…3. Profits Occur Sporadically
The market is, and always will be, cyclical. It goes through ups and downs of various magnitudes on an irregular basis. Newer traders likely have a very unrealistic view of the bigger market picture. The style of trading that is working right now will not last forever and if you do not appreciate that fact, then your career in trading will be short-lived.
Traders should be mindful of the 80/20 rule. Most traders will typically produce 80% of their profits in 20% of the time. The other 80% of the time they make little progress. New traders that have immediate success will have a tough time dealing with this fact as the market shifts. Many have been spoiled recently by a fantastic market and they will give back much of their profits and eventually give up in defeat because they are not prepared for the inevitable shifts the market will undergo.
âś…4. Use Charts
Charts are often dismissed as voodoo by the same people who are confident of their ability to predict macroeconomic events, but they miss the main point. Charts are useful because they provide a framework for discipline. There are millions of ways to use charts, but at the heart of every method is cutting losses and letting profits run.
Don't think of charts as a way to predict the future. Think of charts as a way to manage your existing trades. The charts will help you when to buy and when to sell, but they won't tell you what is going to happen in the future
âś…5. No Trading Approach Is Inherently Superior
The best approach to the market is highly subjective. Some people do very well with trend-following and momentum. Others do equally well with value plays and fundamentals. What works best will depend on how you view the market and the methodology you use to protect capital and find new stocks to buy.
âś…6. Trade Incrementally and in Multiple Time Frames
Most people think of the trading and investing process as being a single buy and then an eventual sale. They decide that this is a good stock, buy it, and then sit there and hope that it works out well. There is no strategy involved in this sort of market approach. You lose your power to control the situation when you trade in this manner.
The better approach is to move incrementally
âś…7. Trading Is Hard, Which Is Why It Can Make You Rich
If you read social media, it is easy to develop the impression that thousands of people make a huge amount of money with a steady diet of great stock picks.
The reality is that trading is tough and that even the best traders have substantial losses along the way. The very best traders are those that embrace the inevitable of poor trades and make them part of their process. No matter how good you are at trading, you will have losing streaks and be hit by tremendous bad luck at times. It is the nature of the beast.
Work on developing a style that makes sense to you. If it doesn't work as well as you'd like, keep modifying it. The market is constantly changing, which means what works best will shift all the time. Just make sure you keep in mind the discussion about how profits tend to occur sporadically.
It's not about how many of your predictions were accurate, it's about when you was right and predicted correctly ,how much money you have gained !
Actually Predictions and forecasts are interesting and can help us prepare for volatility ahead, but it is the reaction to changing events that is the most important. Moving to the sidelines as a downtrend emerges will protect you better than any prediction or forecast. It is reacting decisively that works far better than predictions and forecasts.
Don't focus on anticipation and predictions. Focus on vigilance and reaction.
âś…2. Compound Your Profits by Keeping Your Accounts as Close to Highs as Possible
Nothing is more counterproductive than making up losses. If you lose half of your money, you must double it to just return to even. If you are zealous at keeping your accounts near highs, you will outperform over the longer term.
Long-term buy-and-hold investing is often promoted because it allows you to compound your money and that it is what makes investors such as Warren Buffett so successful. but take it in mind Compounding fails to work when you suffer big drawdowns and losses.so The key is to address it and not just sit there.
âś…3. Profits Occur Sporadically
The market is, and always will be, cyclical. It goes through ups and downs of various magnitudes on an irregular basis. Newer traders likely have a very unrealistic view of the bigger market picture. The style of trading that is working right now will not last forever and if you do not appreciate that fact, then your career in trading will be short-lived.
Traders should be mindful of the 80/20 rule. Most traders will typically produce 80% of their profits in 20% of the time. The other 80% of the time they make little progress. New traders that have immediate success will have a tough time dealing with this fact as the market shifts. Many have been spoiled recently by a fantastic market and they will give back much of their profits and eventually give up in defeat because they are not prepared for the inevitable shifts the market will undergo.
âś…4. Use Charts
Charts are often dismissed as voodoo by the same people who are confident of their ability to predict macroeconomic events, but they miss the main point. Charts are useful because they provide a framework for discipline. There are millions of ways to use charts, but at the heart of every method is cutting losses and letting profits run.
Don't think of charts as a way to predict the future. Think of charts as a way to manage your existing trades. The charts will help you when to buy and when to sell, but they won't tell you what is going to happen in the future
âś…5. No Trading Approach Is Inherently Superior
The best approach to the market is highly subjective. Some people do very well with trend-following and momentum. Others do equally well with value plays and fundamentals. What works best will depend on how you view the market and the methodology you use to protect capital and find new stocks to buy.
âś…6. Trade Incrementally and in Multiple Time Frames
Most people think of the trading and investing process as being a single buy and then an eventual sale. They decide that this is a good stock, buy it, and then sit there and hope that it works out well. There is no strategy involved in this sort of market approach. You lose your power to control the situation when you trade in this manner.
The better approach is to move incrementally
âś…7. Trading Is Hard, Which Is Why It Can Make You Rich
If you read social media, it is easy to develop the impression that thousands of people make a huge amount of money with a steady diet of great stock picks.
The reality is that trading is tough and that even the best traders have substantial losses along the way. The very best traders are those that embrace the inevitable of poor trades and make them part of their process. No matter how good you are at trading, you will have losing streaks and be hit by tremendous bad luck at times. It is the nature of the beast.
Work on developing a style that makes sense to you. If it doesn't work as well as you'd like, keep modifying it. The market is constantly changing, which means what works best will shift all the time. Just make sure you keep in mind the discussion about how profits tend to occur sporadically.
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