Trader’s Tips

Basic rules of money management

  1. You need to have a clear plan for speculation. You also need to remember that sophisticated technology is not necessarily the best. The most difficult thing in trading is the correct identification of entry and exit points. Entering a deal from a technical point of view is not difficult. Just click on the button and you are already in the market. But will such a deal be profitable? No one has the answer to this question. Therefore, it is important to know in advance the point of exit from the transaction. The practice has shown that being able to exit the market correctly is more valuable than entering the market correctly. How many percent of the transaction do you want to earn? How many percents are you willing to lose in one transaction? These questions must be answered in advance, “on the shore.” Some traders enter the trade and then act impulsively. Of course, such a trade is doomed to failure. And no matter what, how much the initial deposit will be increased. All the same, in the end, everything will end badly.
  2. It is necessary to speculate only with leading market assets – the strongest on the uptrend and the weakest – on the downtrend. This applies to both the commodity, stock, and foreign exchange markets. If you choose a strong currency, then you need to pay attention to the dollar, euro, yen. Weak currencies can conditionally include “exotic” currencies. For example, the Mexican peso, Turkish lira, Polish zloty, etc. Although it all depends on the specific situation. In some periods, the “third-grade” currencies demonstrate strength, and the popular currencies of developed countries devalue. If the Turkish lira, for example, has strongly strengthened against the American dollar, then it is quite possible that it makes sense to put on its devaluation. The following paradox is known on the stock market: the expensive one rises in price even more, and the cheap one decreases. This principle does not always work but in most cases. During a bearish stock market, you need to find those securities that will actively become cheaper. Typically, stocks of technology sector companies, stocks of financial institutions quickly lose value during a crisis. You can also trade indices, for example, the Dow Jones Index, or rather its CFD. Precious metals may even temporarily go up in price at the beginning of the crisis because traders are looking for assets to invest in. This was the case at the end of 2007 and the beginning of 2008, when gold and silver actively rose in price, despite the collapse of the stock market. True, this trend was only a few months. During a crisis, almost everything becomes cheaper. But gold began to grow among the first instruments. This does not mean that during the new crisis there will be a similar trend. which will actively become cheaper. Typically, stocks of technology sector companies, stocks of financial institutions quickly lose value during a crisis. You can also trade indices, for example, the Dow Jones Index, or rather its CFD. Precious metals may even temporarily go up in price at the beginning of the crisis because traders are looking for assets to invest in. This was the case at the end of 2007 and the beginning of 2008, when gold and silver actively rose in price, despite the collapse of the stock market. True, this trend was only a few months. During a crisis, almost everything becomes cheaper. But gold began to grow among the first instruments. This does not mean that during the new crisis there will be a similar trend. which will actively become cheaper. Typically, stocks of technology sector companies, stocks of financial institutions quickly lose value during a crisis. You can also trade indices, for example, the Dow Jones Index, or rather its CFD. Precious metals may even temporarily go up in price at the beginning of the crisis because traders are looking for assets to invest in. This was the case at the end of 2007 and the beginning of 2008, when gold and silver actively rose in price, despite the collapse of the stock market. True, this trend was only a few months. During a crisis, almost everything becomes cheaper. But gold began to grow among the first instruments. This does not mean that during the new crisis there will be a similar trend. Dow Jones Index, or rather its CFD. Precious metals may even temporarily go up in price at the beginning of the crisis because traders are looking for assets to invest in. This was the case at the end of 2007 and the beginning of 2008, when gold and silver actively rose in price, despite the collapse of the stock market. True, this trend was only a few months. During a crisis, almost everything becomes cheaper. But gold began to grow among the first instruments. This does not mean that during the new crisis there will be a similar trend. Dow Jones Index, or rather its CFD. Precious metals may even temporarily go up in price at the beginning of the crisis because traders are looking for assets to invest in. This was the case at the end of 2007 and the beginning of 2008, when gold and silver actively rose in price, despite the collapse of the stock market. True, this trend was only a few months. During a crisis, almost everything becomes cheaper. But gold began to grow among the first instruments. This does not mean that during the new crisis there will be a similar trend. But gold began to grow among the first instruments. This does not mean that during the new crisis there will be a similar trend. But gold began to grow among the first instruments. This does not mean that during the new crisis there will be a similar trend.
  3. You should speculate using strong pivot points. You can’t enter the market simply out of boredom. Beginning stock players can try to earn 2-3 dollars, so as not to sit idly by. Due to this approach to business, you can get into an unpleasant situation when there can be a huge loss on the account. How to identify turning points on a chart? Some traders look for them with indicators and oscillators. Others do not use them at all. Oddly enough, they both make money by using different approaches to this business. A strong turning point should be considered a new bullish stock market. But how do you know: is it another bounce up before the fall or a new bull market? This is already art. And not everyone will be able to master it, even in his entire life.
  4. Avoid too short positions. Of course, nobody canceled scalping, but there are very few successful scalpers in the world. It is much more reasonable to practice positional trading. Speculators can succeed in medium-term trading, but not everyone succeeds. Classics of trading advise taking profits no less than 10 times higher than commission expenses in one transaction. This means that entering a position is necessary only in the direction of a long-term or medium-term trend. Trying to make money on every market move is stupid.
  5. Buy low and sell high. At the same time, do not forget that the schedule can go anywhere. All market analysis only increases your chances of success but does not guarantee it. If someone tells you about the semblance of the Trade Grail – do not believe it. It simply does not exist, and if it were, then all trade would be nullified. And yet, from time to time, new trading methods appear that supposedly guarantee a profit. In any case, test these trading methods on a demo account, and then use them in real trading.
  6. The application of a stop-loss order is a condition for safe trading. Meanwhile, the presence of a stop order will not necessarily lead you to financial victories. You can constantly “catch moose”, that is, close by stop loss, and your account will quickly be reset to zero. Some exchange players put the stop loss away so that it is distant and relatively inaccessible. Others are in relative proximity to the entry point. Some speculators do not put a stop loss in one position during pyramidal attacks, but on all others, they put it without fail. This approach can be advantageous if transactions are carried out in small volumes.
  7. In successful transactions, you must allow income to grow. It is worth leaving a position if it is clearly visible that the trend will end soon. Beginners do the opposite: take a small profit and allow losses to grow for a long time. For example, they take an income equal to 5-10 dollars but do not cover losses of 50-100 dollars. Of course, such tactics cannot give a positive effect.
  8. The free margin must be large enough. No need to wait for the margin call to close (forced by the broker) – the position must be closed on time. But there is no need to make rash decisions in the confusion.
  9. Sometimes the use of risk diversification by opening different positions is an attempt to save funds. But this does not always happen. Often, instead of one problem, the trader acquires several. If you can find a way out of one problem, then usually it is impossible to get out of several. For example, in a powerful bull stock market, you can buy 3-4 securities and buy them more and more as the price rises. But in the foreign exchange market, this practice is almost always unprofitable. In the stock market, moderate diversification is useful, while excessive diversification is dangerous.
  10. It is unreasonable to make trading decisions before closing the auction. For example, on Friday before the weekend or at the end of the trading session in the stock market. Some traders, on the contrary, want to make a lot of money on a possible jerk of the market at the opening, but this approach does not carry an advantage over the market. Hence, it cannot be profitable.
  11. Luck in trading at 9/10 depends on the analytical ability of the speculator – so you need to learn, improve your skills in both technical and fundamental analysis. Most speculators use two types of analysis. There are traders who prefer only fundamental or technical analysis. Some stock players do not even look at charts. They only find out the price from their secretaries and then make a decision. The graphs, according to their assurances, confuse them.
  12. For profitable trading, fixing mistakes and successful decisions, an additional opportunity to analyze your trading, you can keep a diary of your transactions for the speculator. This is not necessary, because some people have a phenomenal memory. And for quietly keeping a diary is only a loss of precious time. You can describe only some interesting trading situations without daily note-taking. It has been noticed that traders who actively train novice speculators write books about trading are better at trading than those who do not share their knowledge with anyone. If a trader repeats hundreds of times that this cannot be done, then he himself will not do this.
  13. The higher the trading volume, the greater the profitability potential, but the higher the risks.

Professionals say that loss per day should not exceed 2% of the money, and per month 10%. It is quite reasonable to take smaller losses, for example, up to 1%. Of course, this rule only applies if you trade more or less large sums. If you work with ten dollars, then take a loss of 10 cents is not worth it. Yes, and there is a big doubt whether it makes sense to trade ten dollars at all.

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