Welcome To Street Investment
By Admin
Posted on August 10, 2024
Have you ever felt a lot of regret while trading? And then thought, “I wish I had held on,” or “I wish I had exited“? Do you know why most traders feel this way?
Even professional traders have gone through these phases, but they started following certain trading rules. Initially, they couldn’t apply these rules 100% directly, but they learned gradually. Those who eventually followed these rules 100% became profitable traders in the long run.
So, what are these rules that can make you a profitable trader if you follow them? Let’s find out.
Trading rules are certain guidelines that a professional trader creates for themselves, which help them become profitable in the long term. These rules develop within a trader through experience. These rules include controlling emotions, avoiding overtrading, using stop-loss orders, managing risk according to your capital, and much more, which you are going to learn today.
Trading is not difficult today because of advanced technologies like automatic trading bots, which can handle trading without manual intervention. However, many new traders are still randomly trading and depleting their accounts because they don’t understand the best trading rules. Following these rules is crucial for becoming a profitable trader.
Also Read: What is the Psychology of A Successful trader
There are many new traders here who may have created some trading rules for themselves, yet they still experience losses. This is often because they forget to follow the most important aspect, which is the trend. In trading, it’s said that “the trend is your friend,” so following the trend is crucial for traders.
The more calmly you enter trading, the better it will be. To start trading, begin with a small account. This way, you can minimize your risk while learning as much as possible. Starting small is very important for this reason.
A good trader never risks their main capital. Protecting your trading capital is one of the most important trading rules that every new trader should follow.
If a trader knows what their financial goals are, they can trade much more effectively. A Professional trader trades according to their short-term and long-term goals, and these goals help them stay focused.
Trading is a business, so would you invest all your money in a business without any plan? A profitable trader never invests all their money in a single trade. This is because risk management goes out the window, and if a loss occurs, it could wipe out the entire capital. Therefore, never putting all your money into one trade is one of the important trading rules.
Create a solid trading strategy with a favourable reward-to-risk ratio, and you’ll be set. You may manage your capital, but without a trading strategy, you’ll end up making losses overall.
Also Read: All Option Trading Strategies You Can’t Afford to Miss Before Trading in 2024
The simpler you keep trading, the easier it will be for you. If you use multiple strategies and indicators in a single trade, you’ll end up confusing yourself. So, keep trading simple.
By taking calculated risks, you can better protect your capital. Most professional traders take calculated risks, which not only ensures better risk management but also helps in following trading rules effectively.
Professional traders closely follow economic news, and this is a crucial rule for them. The best opportunities in the market often arise during economic news releases. If you follow these news events and apply them to your trades, it can significantly help you in trading.
Accepting your losses can prove to be the best decision because if you exit trades in the middle, you will always exit before reaching your take-profit point and will end up with overall losses. Therefore, accepting losses can be better for you. This is a rule from professional traders because, when they enter a trade, they either take a stop-loss (SL) or a take-profit (TP) target.
To maximize profit in the market, you need to let your take-profit (TP) target extend further. Many professional traders have an exit strategy that allows them to maximize their profits and minimize their losses, so you should also develop an exit strategy, such as:
A trading journal greatly helps a trader improve, which is why traders always maintain a trading diary and record every trade in it, whether good or bad. You can similarly create your trading diary.
Professional traders never engage in overtrading. They have a fixed number of trades they will take a day, and even if all those trades result in losses, they still don’t resort to overtrading to recover their capital. They understand that only if they have money left will they be able to cover their losses in the future.
Trading psychology is very important. If a trader’s psychology is preventing them from holding a position in a trade, then the first thing the trader needs to work on is their trading psychology. This is a crucial rule if you want to become a profitable trader.
So guys, these were the 14 Essential Trading Rules to Transform You into a Profitable Trader. You just need to consistently follow these rules. Many traders haven’t realized their full potential because they lack discipline. If they follow these trading rules, they will become profitable traders.
