If you are a new trader, it’s common to fall into the trap of developing bad habits and getting stuck in a prolonged losing streak. It’s easy to feel lost and overwhelmed, thinking that progress is too far away and will take too long to achieve.
If you find yourself in a trading rut and don’t know how to get out, this article is for you. Here, I’ll share ten valuable insights from my own experience as a trader that will help you rapidly enhance your trading skills.
9: Take a break from trading if you feel lost and are experiencing frequent losses
If you find yourself in a prolonged losing streak and feeling overwhelmed, frustrated, or even angry, it’s crucial to take a break from trading. This is especially important if you’re trading with real money and continuously losing it. It’s essential to stop the bleeding before your entire trading account is wiped out.
Stopping trading for a while is one of the quickest ways to improve your trading. By taking a break from trading with real money, you eliminate all emotional trading mistakes and gain clarity to recognize the errors you were making. It’s nearly impossible to fix your trading problems if you’re still in a losing streak and can’t get control of your emotions. You need to step back and gain an objective, clear perspective to identify the mistakes you were making.
8: Embrace the probabilistic nature of trading
To improve your trading quickly, you need to change the way you think about trading and success. Many people enter the trading world without a clear understanding of what they’re doing. Trading is all about exploiting probabilities, not certainties. There are no guarantees in trading, except that the market will move. It’s impossible to predict the market’s direction with absolute certainty before it happens.
Despite this, many traders make the mistake of trading as if they know for sure what the market will do next. This approach can be disastrous. As traders, we strive to find a strategy that gives us an edge in the market. An edge means a higher probability of one outcome occurring over another. It’s essential to understand that any trading strategy or edge will have a random distribution of winners and losers over a series of trades.
This means that you can’t know for sure which trade in a series will be a winner or a loser. However, if you’re using a high-probability method, over a large enough sample size or series of trades, you should come out profitable. After each trade, it’s crucial to remember this fact and not let the results of one trade influence your emotions or behavior in the market. Stick to your plan, trade with discipline and consistency, and keep a long-term perspective on your trading performance.
7: Eliminate the noise by turning off the news
Watching the news is a waste of time and can complicate the trading process. By tuning out the “expert” opinions online and on TV about the markets, you’ll gain an edge over the competition. Trust your instincts instead of relying on the opinions of others.
6: Master the art of placing stop losses
Properly placing stop losses can significantly improve your trading performance by allowing you to remain in many trades that you would have otherwise exited prematurely. Many novice traders make the mistake of placing stop losses too close to their entry price to increase their position size, which often results in unnecessary losses. By placing stops based on price action and market structure, traders can remain in trades longer and avoid premature exits.
5: Gain knowledge on position sizing
The size of your trade can make or break your trading experience. A comprehensive understanding of position sizing is crucial to proper trading. Without it, you may encounter problems ranging from procedural to emotional. Knowing how to properly size your trades will eliminate many unnecessary trading mistakes.
4: Lower your risk
When you’re losing a lot of trades and money, it’s time to re-evaluate the amount of money you’re risking per trade. Dialing down the risk will quickly improve your trading by protecting your trading account and mindset from unnecessary losses and losses that exceed your financial or psychological capacity.
3: Limit your focus on intra-day charts
To enhance your trading skills, it is recommended to refrain from using intra-day charts continuously. Instead, concentrate solely on the daily chart time frame until you become proficient in analyzing it.
2: Avoid overtrading
Although easier said than done, ceasing excessive trading is a quick way to refine your trading expertise. Overtrading is when you trade without a viable strategy or trading advantage, and it’s easy to get caught up in it. It’s even more straightforward to overtrade and not even realize it. To combat this, devise a trading plan and adhere to it with the discipline of an elite athlete.
1: Take a trading course
To avoid spreading yourself too thin, focus on one trading strategy instead of trying to learn multiple strategies at once. Many beginner traders suffer from confusion and inconsistent thoughts due to an overload of education sources, which leads to over-trading and gambling in the market.
To succeed in trading, you must become a specialist and trade with the precision of a sniper or the patience of a crocodile. This will require a proper trading education and hard work to excel in the highly-skilled profession of trading. Once you master this approach, trading will become less like gambling and more like a profession that requires specialized skills and knowledge.