7 Tips to Trade the Markets like a Pro

FX, commodities, stocks, and bonds are all traded on the global financial markets every day. The advent of technology has now enabled anyone with a passion for trading the markets the ability to do so, right from the comfort of their home. If the thought of trading the markets excites you, then here are seven tips you can use to get your career as a solo trader underway.

#1 Educate Yourself

Every trader needs to be educated on the markets and the tools they need to trade them. Learning this by yourself could take years of intensive research before you get started. Take a short-cut and benefit from the experience and knowledge of a teacher that actively trades the markets. Without the knowledge needed to trade, you are just gambling with your money, and the house will win every time. Empower yourself with the knowledge you need to trade successfully and profitably by signing up for a trading course before you get started with your own money.

#2 Join a Support Group

Every trader needs some support. There will be times in the market cycle where you need to reach out for advice. Joining a research group, or a live trading room will help you navigate the markets with the help of others in the group.

#3 Do Your Research  

Traders don’t place trades every day of the week; there are some times when the market just isn’t performing the way you want it to, and it’s better to leave it alone while things consolidate. Use your downtime to study the markets and your trading tools. Register with an online news service to find out crude oil price news latest developments as well as movements in FX, stocks, and bonds.

#4 Design a Trade Plan and Execute it

Without a plan, you are like a ship lost at sea with no mast and no motor. Every trader needs a trade plan that they can execute for the expected results. A trade plan encompasses criteria that are pre-determined to define your rules of engagement with the markets. If your rules of engagement are not met, then it’s best not to place the trade and let this one pass you by. Too many traders respond to fear and greed, causing them to throw caution to the wind and trade outside their plan. This strategy is the fastest way to blow up your trading account. Plan the trade and trade the plan.

#5 Where is the Risk?

Learn how to identify the risk in every trade. How much could the next move make you if it goes right? How much could it cost you if things go wrong? Understanding the risk involved will help you close off a losing trade, preventing you from taking a large financial hit.

#6 Avoid Trading Before News Events

A common practice among traders is to trade news events such as FED or ECB meetings. These news events can have a massive impact on the price movement of the markets. Placing your trade before the news is a calamitous mistake that could cost you everything. Getting the call wrong on an important news event like NFP (Non-Farm Payrolls) could see your money evaporate in a matter of seconds. Always wait for the news announcement, watch the price action and then place your trade when your rules of engagement are met.

#7 Money Management Tips

Keep a watchful eye on your brokerage account balance at all times. Never risk more than five percent of your total capital available on any one trade. Make sure that you do not use excessive leverage on your account, or trade with margin. These are expert techniques used by professional traders that have access to large capital accounts. Be prudent with your trading and never risk more than you can afford in the market.

Wrapping Up

Trading can offer you financial freedom if you do it right. Empower yourself with the education and tools necessary to make yourself a profitable trader. Avoid diving into the markets without any preparation, while it may seem like a good idea, you will end up losing more than you expected.