There are successful and unsuccessful traders. If you take successful traders, one thing is common in all. And that is they have an edge. They have the same information, see the same TV channel, read the same magazine as others do. The difference lies in knowing how to act when the signal shows on the screen. A stock trading techniques that should be followed religiously.
Beginner or unsuccessful traders take a decision on an impulse. Trading every now and then. A successful one will act only when the signal shows on his screen, otherwise, he will wait patiently.
Successful traders know what to do and when to do. For a beginner trader, it is a huge hurdle. They do not have the patience to wait and have no self-control.
Stock trading techniques that should be followed
Certain principles and rules have to be followed for successful trading. Below here are given five techniques.
- Prepare your trading plan in advance.
Like any exams or competitive sports, need regular effort. Though an exam is for three hours, it takes a year of preparation. Similarly, sportsmen/women train for years for the event, which hardly takes few hours.
Same thing applies to trading. You may be trading for few hours, maybe twice or thrice in a week, but the preparation takes a lot of time. You have to make a definite plan for your trading. As during trading prices move very fast, you have to have your plan handy. If you make a plan during trading, it will lead to confusion, what to buy, what to sell, and things like that. This will lead to losses. This will lead to decreased self-confidence.
- Traders approach towards trading
A successful trader has the passion for trading. Trading is his love of life for him. It is a business. How one approaches trading decides how one will succeed. A relaxed approach to trading will result in ordinary results. If one has businessmen like approach, that is giving thought to all aspects of trading. Then he can be assured of the ideal result.
Businessmen like approach mean giving attention to every small detail. Writing each and every transaction minutely and in details. They take complete responsibility irrespective of the outcome.
Unsuccessful traders blame event or person in case of loss. Successful traders own the loss, as if, winning and losing is the part of the game. It is the winning attitude that is a differentiator. He moves on to next trade. Knowing it fully well that is one of the thousands of trades that he will be doing.
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- Continuous improvement
Successful traders keep on improving their performance. They keep minute details of their every transaction. They keep track of all their strategies which have made a profit and which has made a loss. This helps them to pinpoint their loss-making strategies. They improve upon it. They also learn the strategy of trading and psychology aspect of it. This they incorporate in their future trades.
A successful trader is always a student of learning the market uncertainties. This helps him to be prepared for future uncertain that market can throw up. And is prepared to face it and knows how to react to the situation.
- Simple strategies
Successful traders have simple strategies. And they stick to it. Unsuccessful traders keep on jumping from one strategy to another. If they see they are not making enough profit.
Since unsuccessful traders have complex entry and exit strategy and jumping here and there, they mix up their strategies. This results in loss of faith in the strategy which he makes.
Successful traders have few and simple rules that he follows and trades. He has very clearly defined sets of rules for entry or exit. His chart patterns are simple.
Successful traders have a solid money management rules. He reduces his position in case of series of losses. Uses stop losses for all his trades. And has an idea of most gain he can get.
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- Taking losses in the stride
Successful traders are emotionally neutral in profit/loss situation. Though, not reacting to loss consumes more time and energy, than to search for right strategy. Being emotionally neutral in any situation comes after years of practice and hundreds of trades.
Successful traders follow a trend. For every ten trades, they assume that six trades will be a loss. An unsuccessful trader will be depressed by such a ratio. He will abandon the strategy immediately. He cannot take these losses in his stride.
Taking losses and learning to digest loss is an important part of trading.
Trading in a consistent manner, along with disciplined approach. And making minor required changes to the strategy after learning from losses. This will help in overcoming uncertainties in a long run.
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