Learn Swing Trading Strategies - Top Trading Tips
I wanted to put a list of rules together for traders who want to become profitable and learn swing trading strategies that will help them earn money.
I cannot promise you that you will become a profitable trader, even if you learn swing trading strategies that are profitable, this is entirely up to you but I can promise you that if you follow these rules you will become a better trader. These rules are based on years of actual trading experience and years of teaching traders what not to do.
1. Always Have A Trading Plan
Many traders who are starting out begin trading based on a whim or a guess and don't have a trading plan. Remember that trading is not to be taken lightly and you need to have a basic road map that has all the important parts like your risk level, your entry level, your stop loss and your profit target. There are other things that your plan needs to have, but these are a good place to start.
2. Treat Trading Like A Business
Trading is a business, when trade you either lose or make money. Treat your trading like a business; know what's coming in and what's going out. Know how to calculate your expectancy so you know what your risk is for every dollar you trade. These are basic principles that every business should know. If you sell widgets you have to know what your cost is and what your mark up is and trading is no different. This is a good way to develop and learn swing trading strategies that work.
3. Invest In Good Tools
Don't be cheap when it comes to good trading tools, you will ultimately save much more money by having the best and quickest trading tools available than by trying to save 10 dollars on cheaper equipment. You need ultra fast internet connection and good execution, your software needs to be reliable and quick. I have seen people lose over 100,000 dollars in a few minutes because of computer or internet problems that could have been easily prevented. Always have some back up or emergency system to place orders, and see quotes as well. Many traders who contact me who are interested to learn swing trading strategies don't realize that equipment is vital to compete with other traders in this advanced technological day and age.
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4. Always Use Stop Loss Orders
Never enter an order without simultaneously entering a resting stop loss order at the same time. Many traders argue that orders get picked or they can do it later, yes you can but most don't. People have a way of talking themselves out of stop loss orders after the fact and cause tremendous damage to their account as a result. Place your stop loss order at the same time you place your entry and prevent these problems; you will be glad you did and will sleep better at night as a result. Always remember to cancel these orders if they don't get filled.
5. Know Your Target Exit Before Placing Orders
This is similar to the problem with stop loss orders. Many traders get greedy and don't take their profit when they are supposed to but even more traders get scared and take their profits too early. This is a major problem that can also be prevented by placing target orders simultaneously with your entry orders and your stop loss orders. This is not as crucial as your stop loss order but it will help you keep disciplined and organized which is a big problem with traders who trade many different positions at the same time. Always remember to cancel these orders if they do not get filled.
6. Trade With Risk Capital
One of the biggest reasons why traders can't control their emotions while trading is because they cannot afford to lose the money they are speculating with. When you are not trading with risk capital, you are making it much harder on yourself to deal with trading emotions. This is very hard to control when you are using risk capital but when you are trading with money you cannot afford to lose, you are making it that much more difficult for yourself, don't do it period. Many traders who ask me questions and want to learn swing trading strategies ask me if it's acceptable to use their IRA account or their savings account for trading. Don't do it, you will regret it later, I promise you that.
7. Know When To Stop
Another biggest reason for traders losing is burn out. Trading is very difficult psychologically and takes a great toll on your mind and body; you need to trade in moderation. Don't let burn out affect your trading, take plenty of time off and get rest. Make sure you don't have stress coming from other places, this will influence you as well. You could learn swing trading strategies better than anyone but if you are under stress, you will not be able to execute your trading strategies properly.
8. Keep Everything In Perspective
Trading should be part of your life, not make up or define your life. Make sure you understand that and keep things in perspective. When I started trading I was pretty much locked up in a room all day trying to figure out what's what. I needed to step back to really understand what I was doing wrong and how to stop doing it. My best trading ideas come to me when I'm at the gym so take some time to reflect and write down what you are doing. You will begin to notice patterns about your behavior.
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9. Have Good Support System
Have good friends and family who support what you do. Most professional traders have a great support system or had one when they started trading. Trading is hard on the nervous system and on family members, especially during losing periods. Make sure your family understands your trading plan and understands that losing periods are part of the process. Take this into account when creating your trading plan. Have your family be part of your trading so they know what to expect as time goes on.
10. Never Stop Learning
Some traders learn a few techniques and trade them for the rest of their lives. Others keep searching and searching for the Holy Grail. Education is important because markets change and technology does to. You want to make sure you know what's going on and what changes are occurring so that you can make better decisions. You also want to make sure you learn swing trading strategies that are not outdated.