4 ways to become better at stock trading
Finance

4 ways to become better at stock trading

Stock trading has always been a challenging task for rookies. The elite stock traders in Hong Kong often say that stock trading is not designed for aggressive traders. The statement is true because trying scalp in the stock market will always result in a big loss. If you intend to make some serious profit, you have to become a position trader. Read the stories about the top stock traders in the world. Think about Warren Buffet’s investment career. Do you think he has made billions of dollars by investing money on a short term basis? If you think so, you have a tremendous lack of knowledge.

As the title of the article says, we are now going to discuss the top 4 tips which will allow you to become a professional stock trader. Let’s get into the details of this concept.

Try to invest in the long term

Investing money in the short term basis is not going to work. The experienced currency trader often thinks they can take advantage of the market volatility and make some serious profit. But if you dive into the details, you will know investing money in the short run is not the solution to become a professional stock trader. The moment you start taking the trades in the lower time frame is the moment you lose the grip in the discipline. Instead of analyzing the minute or the hourly chart frame, use the daily or monthly chart. Taking the data from a higher time frame always gives you the added advantage of making a serious profit from your investment business. Though it will be a little tough at the initial stage, once you learn to deal with the investment, you can change your life.

Stop trading against the trend

If you ever talk to the professional traders at Saxo, you will find one common suggestion. All of them will tell you to trade in favor of the trend. Taking the trades against the major trend is one of the key reasons why rookies are always loosing money in the stock market. In the currency market, you might be able to make some profit but in stock trading, it is safe to assume you will lose money if you trade against the trend. Find the trend in the higher time frame using the simple trend line tool. You can also use the 100 and 200-day moving average as it will give the dynamic support and resistance level. Once you learn to take the trades along with the trend, you will feel the change in your trading performance.

Stop using an unregulated broker

Many traders trade the stock market with an unregulated broker. Even after knowing the fact, they stick with an unregulated broker because they think they are cutting down on trading costs. But if you ever manage to make a big profit, the broker can freeze your account without any explanation. On the other hand, a regulated broker will never freeze your account since the trades are really executed in the global market. Most importantly, they want you to make a profit since they earn money from the commission of each trade. So, if you lose money, they are at high risk of losing a customer.

Use protective stops

The best way to improve your stock trading performance is to use protective stops. The use of a protective stop can improve your performance to a great extent. It will help you to maximize the profit since the losing trades will be closed early. Those who don’t use the stop, always take big losses. In fact, they don’t know the importance of risk to reward ratio in each trade. To survive in the stock market, you must follow the tips. In fact, it is one of the basic rules that you can’t ignore in the investment business.