$7 rules of successful trading
Rule 1: Limit your losses
A successful trader always follows a trading plan, so when entering a trade it is necessary to have a clear understanding of the level of loss locking. Properly set stop losses keep not only from losses, but also from uncontrolled actions that can affect the outcome of the trading session.
Rule 2: Trend is your friend
Do you want to trade profitably? Then you should not “fight” the market and stand against the trend. In a rising market you should open a long position, and in a falling market - a short position and fix your profit in time. Therefore, before you start trading, analyze the asset and determine the direction of the trend.
Rule 3. Buy on rumors, sell on facts
Every trader has probably noticed how charts change as news is released. Even a rumor can cause a wave that directly affects all market players. After the news has played out, the market freezes waiting for a new trend. Therefore, for successful trading you should always be aware of the news and adjust your trading strategies in time.
Rule 4: Play the downside wisely
If you spend a lot of time analyzing, you may have noticed a situation when on a downtrend the price tries to rise to a new level, but in the end continues its decline. This pattern is called “Dead Cat Leap”. After a slight increase, the price returns to the area of the previous minimum and in case it did not break below the previous level, you can open a deal.
Rule 5. Do not average a losing position
Even if you can't accept the fact that the trade was unprofitable, you should not add volume and try to average the position. This mistake is made by many traders who do not give up the hope that sooner or later the market will turn around and the trade will be profitable. As a result, you can lose much more than if the exit from the deal was made in time.
Rule 6. Turn off emotions
There is no place for emotions in profitable trading. After all, having problems with psychology a trader makes deals rashly. For example, because of excessive greed you can overhold a position, which will lead to serious losses. But if in the current trading session there was a losing deal, you should not rush into the market again to take revenge. It is better to wait for some time and analyze your actions. After that, you can make new deals, having previously analyzed the previous ones.
Rule 7. Be consistent
Consistency is important in trading. Anyone who acts “at random” is doomed to failure. If you want to make trading your main source of income, it is important to have in your arsenal trading strategies that will help you to earn at any period of the market.
