As a novice trader, it’s easy to start on the wrong foot and have your positions closed by your broker at a loss for being too risky. Here are some tips that can help you trade like a professional positions trader. For more resources on becoming successful with trading, check here!
Professional Trading Tips:
1. Use stops
It’s important to remember that every position has an invisible stop-loss placed on it, so let’s say you buy stock XYZ at 10 dollars; there is a good chance the price could fall back down to 8 or 9 dollars. The point of using stops isn’t necessarily because you think this will happen, but rather an insurance policy in case something goes wrong with your trade, such as bad news involving the stock.
2. Use limits
You can’t predict where exactly a stock price will be after a certain period, but you can use limits to set your sell order at an amount that suits your risk tolerance. For example, if you bought 1000 shares of ABC at 10 dollars per share, why not place a limit to sell 500 shares for 13, which is less than you bought it for?
3. Limit orders are better than market
A market order is an immediate order which means that once placed. It does not have any type of control over where the actual price per share is filled. In contrast, a limit order gives you full power to decide what price and how many claims per transaction you are willing to buy or sell per trade.
4. Research is key
Don’t dread research, and it’s one of the best parts about trading because more knowledge means better decisions for your investments. There are free resources on Google Finance and even Yahoo Finance that feature stock information such as price data, volume by day/month/year, events related to the company (ex. acquisition news) and even technical analysis. Review this data before you make a trade!
5. Keep an eye out for earnings
When mentioned in the news or on your favourite investing websites, you will often see words like “expected” or “reported” earnings per share. Earnings are typically released every quarter, so if you want to keep track of when they’re coming up, sign up with a service like Google Alerts to get an email notification.
6. Do your research
Before you start trading, it is essential to do your research and learn as much as you can about the markets. It includes learning about the different types of trading strategies, understanding the risks involved and studying the historical performance of various stocks and indices.
7. Start small
It is essential to start small when you are first starting. Don’t invest too much money into trading until you understand how the markets work and what strategies work best for you.
8. Use a demo account
When you start, it is a good idea to use a demo account to practice trading. It will help you get comfortable with the process and build your confidence before investing real money.
9. Develop a strategy
A successful trader has a plan and sticks to it. Develop a trading strategy that suits your personality and risk tolerance, and be sure to stick to it.
10. Stay disciplined
An essential trait of a successful trader is discipline. Don’t let your emotions get the best of you, and always stick to your plan.
11. Have patience
It can take time to become a successful trader, and it is essential to be patient and stay the course. Don’t give up if you experience some setbacks. Just keep learning and practising until you are ready to trade for real.
Hopefully, these tips will help you trade more confidently in the professional positions trader market! For more in-depth information and strategies, check here.