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Tricks of the Trade: What I Wish I Knew Before I Started
They say that hindsight is a gift and it certainly is a principle that applies to trading. Learning how to trade is a journey and the lessons along the way make it more fulfilling. However, this doesn’t mean that we can’t pick up a tip (or ten) from more experienced traders. So, read on if you’re a beginner trader and you want to learn more about the common pitfalls that pro traders wished they knew about when they were novices.
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1) Learn, learn, and then learn some more
Knowledge is power and the more you know about forex trading, the better equipped you are to make informed choices. We cannot emphasise how important it is to dedicate time to learning before kicking-off your trading journey and keeping it up even once you are a more experienced trader. So read articles, watch tutorials, or sign up for an online trading course.
2) Plan, plan and keep planning
An accurate trading plan is one of your best allies along your trading journey. In a nutshell, a trading plan can be described as the framework that guides all the strategies and actions that the trader takes. Having a well-thought out trading plan is essential for any trader but it is especially important for novice traders. Think of your plan as the map for your trading journey. So, spend as much time as you can to create a trading plan that reflects fully your trading needs and goals. We have blogs that delve deeper on this topic (check them out here and here).
3) Take notice of your gut feeling…but be careful!
It is normal to assume that instinct has no place in trading, especially after reading point 2 above. Nonetheless, a well-trained gut feeling can be a great tool to have in your trading toolbox. The key, however, is to train your instinct and use that gut feeling judiciously. We have a whole blog dedicated to this topic here if you’d like to know more.
4) Losses are part of the experience
Losses will always form an integral part of the trading experiences. That is why it’s always a good idea to start with smaller amounts that will not create major repercussions if lost. So, take these losses in your stride and remember the lessons learnt for future trades.
5) Hard work and elbow grease are not optional
It’s important to keep in mind that trading is not a quick-fix option but a process that requires dedication and commitment. Keep in mind that you will need to put in consistency and effort before seeing results.
6) Income diversification is key
Ensuring that your income is diversified and not solely dependent on your trading activities means that you are not putting excessive pressure on yourself to succeed. This in turn gives you the necessary clarity to make judicious trading decisions.
7) Don’t follow the rest blindly
It must be the right way to go if everyone is doing it, right? Wrong. Just because everyone is doing something does not mean that it’s the best course of action to take. Do your research, analyse the data and take the action that you deem best for your personal trading goals.
8) Be realistic
The key takeaway is to not expect overnight success. As we have stated above, consistency and hard work are both part of the trading process. In a similar vein, being realistic means that you will not be disappointed when success does not materialize abundantly or quickly.
9) The big events do matter
Nothing happens in a vacuum and this couldn’t be truer when it comes to trading. The markets are sensitive to world events and they will fluctuate accordingly. Being in the know will help you to stay on track and take the best decisions. So, in a nutshell, follow the news and trading resources every day.
10) Choosing the perfect broker for you
Not all forex brokers are created equal and finding the ideal broker for you can make all the difference when it comes to having a fulfilling trading experience. OspreyFX offers you tight spreads, 1:500 leverage and a dedicated 24/7 support service.
In trading, just like everything in life, the journey is as important as the destination. It always helps to have the best pointers from those that have undertaken the journey before you. However, your journey is unique to you and that’s what makes trading exciting. So, learn as much as you can and get started.