Getting into the trading world has always been a challenging adventure. Every new trader goes into a self-discovery journey in which they learn about their discipline, innovation, the ability to control emotions, and their commitment to succeed. As such, many people who have failed or succeeded as day traders often mention getting out from their trading journey with insights into their personalities.
Make no mistake; trading is hard work. And only those who are willing to work hard and achieve their goals will eventually succeed. And it takes time. When I was working at a proprietary trading firm, we were told by our managers that we have a practical training program of six months to one year. As part of the program, we could have a negative account balance for the entire year - all we had to do was learn and improve our trading skills, the same as any other profession you can think of.
So, with that in mind, if you are making your first steps as a day trader, there are numerous ways to help you expand your knowledge and develop trading skills.
7 Ways to Become a Better Trader
Below, you can find seven tips that will help you become a better trader:
- Take an Online Trading Course
If you have no background in finance and trading, then the best way to learn about the markets is to take an online trading course. The internet is full of so many online courses you can take, and some of them are even offered at no cost (even though it’s better to pay a fee to get the best mentors, etc.).
- Attend Webinars
Fortunately for traders, many brokerage firms often offer free webinars on various topics - from making the first steps as a trader and opening a trading account to getting familiar with advanced trading strategies and techniques. So all you need to do is to search for trading webinars and sign up. It’s a great way to learn the trading jargon and different financial terms and get trading tips from professional traders.
- Paper Trade
Paper trading is a way for new traders to learn how to use a trading platform, read quotes, and place orders. Also known as a demo account, paper trading is simply a form of simulated market environment where users get access to a trading platform with real-time market quotes and virtual money. Luckily, most online brokers offer paper trading accounts where you can test the platform and your trading strategy before risking your own money on a real live account.
- Expand Your Knowledge
Successful traders always strive to learn more about trading and the markets, even when they successfully generate consistent profits. So, if you’re serious about becoming a top-notch trader, you need to read trading books, take online courses, visit forums, and
- Focus on One to Three Instruments
Many traders tend to follow too many instruments, which often creates confusion and unnecessary losing trades. This is especially true for beginners and day traders. Instead, choose one market (stocks, forex, commodities, indices, etc.) and focus on 1-3 assets. Then, learn everything you can to become an expert on the chosen assets: the time of economic announcements, earning reports, important growth data, stockpiles for commodities, etc.
Fortunately, if you follow this rule, nothing can really surprise you, and you can develop techniques to predict future price movements. For example, if you focus on the gold price, you already know the all-time high price and certain crucial support and resistance levels. This could be extremely beneficial to succeed in trading - knowing exactly what is about to happen.
- Use Risk Management Tools
Managing risk is perhaps the most challenging part of
Some of the widely used money management tools include stop loss per trade, daily stop, trading week stop loss, using the correct leverage ratio, and risk-reward ratio. Remember, becoming a better trader is about being able to manage your risk rather than being correct in most of the trades. This is what differentiates successful from unsuccessful traders.
- Find a Reliable Economic Calendar and Financial News Source
Finally, you must know what’s going on in the market at any given time. And that’s the hard part of trading. Even if you are working at an institutional trading firm, you can’t predict all the developments that occur in the markets. Nevertheless, it would be best if you got all the right tools to stay informed about economic and political events. Such tools include an economic calendar and several financial news websites.
Furthermore, it’s essential to understand the implication of each headline and price movement. For that purpose, you should use a demo practice account and take several weeks to months to know how to interpret the current news and economic data releases.
Final Thoughts
To sum up, trading is a zero-sum game where one side profits and the other loses. Much like many other things in life, you need to put in the effort and dedication to become the best trader you possibly can be. If you want to be on the winning side for a long period of time, you need to create your own trading plan and complete all or some of the tips above.