Trading tips from professional traders

We have asked six professional traders what advice they would give novice traders. Every trader provided his personal top three of rules and advice ...

TRADER 1

1.       Pick a time frame for your charts and stick to it. The time frame determines all other relevant choices you must subsequently make.

2.       Pick your technical analysis indicators with care. Hundred indicators are available. Make a selection. Technical indicators look very similar but they vary greatly in quality and serve different purposes.

3.       Combine indicators. All indicators are cyclical. Successful periods alternate with periods prone to errors. Avoid this by combining indicators.

TRADER 2

1.       Risk management and money management are the key. Never accept a loss of more than 5%. You need to know your risk and you need to be clear how you are managing it.

2.       Make your own trading plan. A trading plan must be precise and realistic. Markets change, adapt your plan.

3.       Master the art of managing yourself. Focus in particular on emotional detachment. Develop all possible scenarios in your mind so you have a solution ready when your position evolves.

TRADER 3

1.       Never maintain an open position which is not protected by a stop order. The potential loss must be small compared to the size of your account. Many trades with small losses are preferable to betting everything on one card. The big winning trade will come, you have to stay in the game until it does.

2.       Never increase the size of a loss making position. In order to improve their average price (average down) naïve traders double or triple the size of their position. It makes no sense to increase the size of a position which is currently doing the reverse of what you expect it to do.

3.       Take a pauze after every trade which results in a loss. It is the only way to avoid being drawn into quickly opening a new position with the idea of instantaneously recuperating the loss.  Avoid rash decisions by adhering to the rule of an obligatory pause after a trading loss.

TRADER 4

1.       You need a defined, tangible trading strategy.

2.       Your trading strategy needs to correspond to your character and emotional disposition. For example, if you are not capable of refraining from placing orders you need a strategy which only gives signals at a particular point in time. Or, if you cannot emotionally cope with numerous losing trades, you need to use a trading strategy based on the concept of frequent small profits.

3.       You must stick to solid, reliable risk management rules.

TRADER 5

1.       Stay calm. An experienced trader never rushes into a position. He prefers to wait for the right moment. Missing a trade opportunity should not be a frustration.

2.       Stay your course. Do not jump from strategy to strategy, indicator to indicator and pattern to pattern. Pick a combination you are interested in and hone it to perfection until you are a master.

3.       Stay disciplined. Being disciplined implies being in control of an open position and implies an iron discipline in limiting losses and optimizing profits.

TRADER 6

1.       Master your trading methodology and your emotions. Human emotions and reflexes do not usually lead to the right decisions in trading. Eliminate doubt. Plan ahead so you have a response ready for every event.

2.       Without fervour there can be no success. You must solely be motivated by the faultless implementation of your trading methodology. Profit cannot be your motivation. Profit is merely the outcome of a perfectly executed method.

3.       Build on your strengths. Do not try to remedy your weaknesses.


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