Everyone thinks that they can become super successful traders without learning about the market basics. But they don’t realize the fact, trading is one of the most complex tasks in the world. If you want to survive as a trader, you must work hard and learn about the critical market dynamics. By using advanced knowledge, you should curate a professional trading strategy. But having a professional trading strategy is not enough. You need to follow some cardinal rules and only then you can succeed as a trader.
In this article, we will give you four simple rules which will help you to create a better trading strategy. Read this article as it will change your life within a short time.
Trade with the core trend
You need to identify the core trend in the market. Usually, novice traders take their trades in the retracement phases and lose money. To avoid such problems, you have to rely on the higher time frame data. Once you study the higher time frame data, it will be an easy task to improve your trade execution process and you will start doing better. The lower time frame often shows the retracement phases of the market. For instance, the daily time frame might show a strong uptrend but in the lower time frame, you might see the price is falling down. This is due to fact that the market is in the correction phase.
Those who don’t have the basic knowledge of trend trading strategy, may learn things from the best Forex broker. Thousands of smart traders have developed their basic knowledge by accesing the free resources at the top brokers like Rakuten. So, you can do the same.
Learn to analyze the news
To make a regular profit in the trading industry, you must learn to take the trades based on fundamental analysis. Without doing the proper data analysis, you will never find reliable trade signals in the market. Things might seem tough but you do have the options to use a paper trading account to learn the basics. Once you learn to analyze the high, medium, and low impact news, you should be able to take the trades with much more confidence. At times, it will be tough to make the right decision even after analyzing the news data. These are the critical moments in which you need to stay out of this market. Never take any trades when you are not certain about the market condition.
Study the major chart pattern
The novice traders often think that by increasing the lot size, they can earn more money. But this is not a valid way to make a big profit in the investment industry. Instead, you should be learning about the major chart pattern as it will give you a better opportunity to secure big profit in terms of pips. So, with a small lot size, you should be able to earn more money. But learn about the continuation chart pattern at the initial stage. Avoid taking the trades against the major trend until you become comfortable with the continuation pattern trading method. Once you become good at it, you should be able to earn more money. You may also learn about the reliable harmonic patterns in Forex market. By doing so, you will be able to improve your decision making skills to a great extent.
Study the advanced risk management technique
Managing the risk factors in the trading profession is the most vital part to become a profitable trader. If you want to succeed as a retail trader, following the 2% rule of risk management is not enough. At times, you might have to take less than 1% risk based on the market condition. Due to different volatility and complex price movement, the trade signals are not always accurate. You must have the skills to evaluate the important market dynamics in a systematic way and learn to analyze the market sentiment. Once you master this technique, you should have the skills to vary the risk exposure in the trades. By doing so, you should be able to manage your trades much more effectively.