At first glance, seems to trade does not have to be so difficult: you can either buy or sell. At the same time, the potential profits become unlimited, especially when leverage is added to the equation. If you combine these two factors, you can create the perfect pair of smart marketers and dubious handelsannonsörer.
Many people are becoming interested in trade because it seems quite simple and if you just choose between your buy and säljknappen, it can’t be that difficult, right?! But when you begin to understand the whole concept, you will notice that you on a particular day must respond to a variety of complex issues and make decisions that determine whether your trading strategy will win or lose.
The first decisions about your trading strategy
All financial markets differ very from each other and each requires a completely different skills and attitudes. Do you want to trade less any delivered shares where a larger account is required, compared with the 24/5 forex market, where leverage makes it possible for the traders with only a couple of hundred dollars to make big profits? Are you interested in the more complex options and futures? If you have taken these first decision you have to choose which instruments should go in your watch list and what you want to specialize in.
Time and time horizon are the main factors if you want to combine trading with your daily life and it connects you directly into the questions about your trading strategy. The question if you want to be a ”daytrader” or a long-term ”swing-trader” is linked to the timeframes you want to trade and it also determines the length of your holding time. If you are not a full-time, you also need to find ways to combine trade with your normal life. In addition, you must select your trading tools, namely indicators and/or means of pricing measures. It’s a personal thing what you prefer, but remember that there are thousands of self-proclaimed handelsgurus trying to sell you ”the best and easiest” handelsstrategin out there and this is a major reason that so many in the retail sector can never find the road to profitable trading.
When you have answered the above questions, you are ready to proceed to the next step. Once you have found your trading strategy, you should be very clear about the criteria, the importance and the priority of simple criteria and on various criteria that affect your trading.
Then, ask yourself honestly, if you really have an advantage. Have you tested your trading strategy but to cheat and lie to yourself? You have used the demo account and treated it as if you were to trade real money? Are you ready to adapt to the changing markets?
And of course you need to come up with a structured and thought-out risk management. Account size is a significant impact on your handelsresultat. Your trading will be very sloppy if your account is too small, and if your account is too large will your trading decisions to be ruled by fear and greed. Secondly, what is your positioning strategy? Do you use an arbitrary percentage amount on each trade or vary positionsstorlekar based on the quality of the settings? And finally, what is the maximum exposure you are willing to accept on all of your open positions and you affect the correlation when you open new positions?
Trading decisions when you are in the trade
When you’re finished with all those previous questions, then you’re ready to jump into a trade. But when you are in a trade, you must deal with a completely different set of problems while you are under the pressure of the genuine exposure on the market. Therefore, it is important that you honestly answered all the questions before you go in so that you are ready to implement your trading plan without having to think too much.
The issues surrounding the risk involves the concepts of money and risk management to scale in and scale out, increase the risk and to be able to handle similar trading decisions if you opened positions in correlated instruments. The way to deal with obstacles as news events, unexpected political and geopolitical events and keep business over the weekend will also depend on your riskhanteringsmetod.
Riskbegreppen is also very closely linked to the issues of handelshantering. The main concerns about the handelshantering is related to stop losses and take vinsthantering. Move aktivstoppsordern when the trade moves in your favor? If you answer yes, instead of randomly moving around, keeps you up with a sophisticated and tested stoppstrategi. The same applies to your vinstorder. Most of the traders take profits too soon because they suspect a less return with a trendbyte. Therefore, write your rules for stoppavbrott and vinsthantering, test them, and analyse its performance.
A solid trading plan in which you negotiate out handelsscenarier in advance and planning your business it is that distinguishes a professional from a consistent loss of amateur. The second most important tool for a trader is handelsdagboken. A handelsdagbok is the place where a dealer keeps records of all their previous business with the goal to find ways to be more sharp in the handling and identify weaknesses. The reason so few traders do not have a handelsbok is that it requires a lot of discipline and work but it will make the difference between consistently losing and make constant profit.
A trader must manage a variety of complex problems on a daily basis and need to come up with sophisticated and tested way to manage their business before, during and after they occurred.
The goal of this article is not to scare you, but to make you more aware of trade’s complexity.