Guest post by Sarah Potter, author of How You Can Trade Like A Pro.
Most people want to trade in some form or another but just don’t know where to start. As a trader who did not come from a finance background I am just like you. I want to share what helped me in my trading journey, and feel that the simple tips below are what helped me most. My book is written in the same easy to understand manner using simple language that I know readers will relate to and understand. Among the countless tips and strategies in HOW YOU CAN TRADE LIKE A PRO, here is a taste of a few.
1.Trading Doesn’t have to be complicated
Trading doesn’t have to be complicated, but it seems that everyone makes it sound that way. You are capable of learning to trade, trading is a skill that can be learned like any other skill. Starting with a few basic concepts any trader can begin to make money in the markets. Trading is really just like following a recipe, and just like a recipe, complicated doesn’t mean that the food will taste better.
2. You need a trading plan
All traders regardless of what they trade need to know what they want to achieve and how they will do it. Don’t over think the plan, just make sure you have one. A trading plan helps traders stay focused and gives traders a means to evaluate their results, and know what strategies are working and which ones are not. In the book HOW YOU CAN TRADE LIKE A PRO, you will find my template that you can use to build your own trading plan.
3. Reading charts doesn’t have to be difficult
Charts give traders a visual representation of what is happening in the markets they are trading. While there are many patterns that technical analysts use when they are analysing charts, traders will be well served by following a few basic rules. Charts are just a visual picture of what price is doing at any point in time, this is what matters to traders.
4. Manage your risk and reward
Trading is about placing many trades and at the end of the week, month or year, making more money than you have lost. One fallacy of trading is that to be profitable you have to be right on all of your trades. This simply is not true, you can be wrong on many trades as long as you make more on your winning trades than you lose on losing trades. Managing you risk and reward, ie. what you make on your winning trades and lose on you losing trades is very important, to become profitable you will need to lose less on your losing trades than you make on your winning trades.
5. Know when to take your profits
Professional traders know that it is what they do after they place a trade that is most important. Knowing when to exit a trade is a skill overlooked by most traders, they blame poor results on their entries and try to become ever more precise with when they get in to a trade, when in reality it is knowing when to get out that makes you a profitable trader.