5 Golden rules for successful trading

Many sites would offer you ways and tips to plan the trade; different tips that promise you quick profits, and so on.

Such searches on the internet can be a little overwhelming for new traders and most probably distract them from honest advice. 

Each of the trading rules that we will discuss below is essential to facilitate sound trade. When these rules are implemented together, the impact created could not be estimated. 

So, here are the golden rules for successful trading 

• Always implement a trading plan 

 A trading plan is a mix of strategies and rules defining details like exit and entry points of trade, money management practices for various trades in the portfolio. 

At the same time, it is crucial to have your ideas or plans tested before you go live with them. With technological advances or sheer hike, it has become very easy to test your trading plans before you put money in.

The practice of backtesting can do wonders. It allows you to test your idea or plan backed up by past data and history to see if it is feasible or not. When the plan is designed and backtested, the results are optimistic, and the trader can move ahead with it. 

Here, one thing to always remember is to go with a plan you have mapped out. But there are times when trading plans might not work; it is important to get away from it and start again. 

• Make the best use of technological advances. 

 Trading is one of the most combative and zealous businesses. Therefore, all traders all around the world tend to take the benefits offered by ever-advancing technology.

Technologies like backtesting help in reducing risks by testing the trading plan. Various advanced charting platforms provide a wide range of methods to analyse trade and trends.

You can get updates regarding the market and your trade wherever you are through tablets and mobile phone applications offered by different brokers. All such technologies can prove to be a great advantage to traders. Using new and updated technology can be fun as well as rewarding for the trader or investor.  

• Act as a student and focus on learning

 Think of entering the trade market as you are continuing your education even further. Traders need to learn from their trade and others' trade and market each and every day. No matter how much time a trader is trading.

Remember, understanding the tactics of market and trade is an ongoing trip that never ends. If you think you have learned everything about the market and have become an expert, you are probably delusional.

Of course, with time, you will polish your trade practices, but there will always be something to learn every day. 

Trading markets are pretty dynamic in nature. It is better if traders precisely research the past and current scenarios before jumping in with investments. 

• Do not base your trade on emotions.

 Never get emotionally carried away whilst trading. Trading should be done being mentally sound, looking at risks, pros, and cons of each trade or instrument. Letting emotions get in the way of toned decision making can blur the lines of a successful trade. 

Do not get tempted by meaningless offers that promise zero risks and great returns. Risks in trading are inevitable; one can only reduce and mitigate them.

So, such schemes are mostly hoaxed as scams are all around the internet. The inspiration behind your trading actions should be facts and precise methodology, and not emotions or greed. 

Develop your trade based on research and facts. Traders who take their time and patiently analyse and learn about the market have a greater chance of being successful in the market than those who skip such crucial steps. 

• Know when to stop 

 When your trading plan is not working, think nothing but stop trading. An ineffective trading plan will reap you no good results, but instead, extend your losses.

The cause of an ineffective trading plan can be an increase or decrease in market volatility, economic changes, or anything else. 

At the same time, while getting into any trade, never forget using a stop loss. Stop loss is the maximum amount of risk a trader is willing to take on a particular trade. When the limit comes, the trade must pull out. 

Conclusion

The five trading rules mentioned above will help you go about trading efficiently. It is crucial to understand the working of these trading rules and how helpful implementing them in the trade can be.

Taking your time and thoroughly researching the market, mitigating risks through practices like stop loss or backtesting are the core concepts behind these trading rules.

If you are a fresh trader and are inquiring about a regulated broker to facilitate trade, we recommend T1 Markets. T1 Markets is an authorised online broker dealing with various trade instruments like stocks, forex, indices, commodities, ETFs, and more.