Everyone depends on a specific trading system to find the best trade signals in the market. You will not find a single trader, who is trading the market without having any trading system. A trading strategy allows retail traders to find the best possible trade signals in the market and let them trade with confidence. But do you know that majority of the investors have flaws in their trading system? Due to this reason, people keep on losing money even after investing a big amount of money.
So, is there any way by which we can overcome such flaws from our trading system? Well, we are going to give you some tips which will help you to identify the weakness in your trading system. Based on that, you should be able to bring positive changes to your existing trading system.
Preferred time frame
You need to check which time frame you are trading the market. If you take the trades in the lower time frame, chances are very high that you are making some silly mistakes. The signals generated in the lower time frame are not that accurate and you will keep on losing money from the best possible trade signals. So, to avoid such critical problems, you may bring change to your trading system. Never think you can make significant progress by selecting 1 minute or 5-minute time frame. Try to trade in the hourly time frame as it gives you a better overview of the market.
The direction of your trade
Are you trading the market with the major trend? If so, you are on the right path. If not, you do not bring significant change to your trading system. You need to check your trading journal and assess the direction of the trend. If you take the trades against the major trend, you are lucky not to blow up your trading account. Before you find the trade setup, you need to find the direction of the trend. And this should be done in a higher time frame.
People might say that many professional traders are using the reversal trading technique to earn money. But this is not the way by which they always take their trades. You might trade the key reversal in the market but for that, you must learn a major chart pattern trading strategy. If required, take help from the smart investor at Saxo markets. They will give you powerful guideline to improve your skills.
No one should trade this market with more than 2% risk. But the rookie traders keep on increasing the risk factor just to earn more money. They think it is the most effective way to become a professional trader. But if you carefully assess the past trades of a professional trader, you will realize that they are trading with less than 1% risk.
They know the outcome of any trade is completely random and they don’t have any control over it. So, to keep your fund safe, it would be wise to trade with a 1% risk at the initial stage. As you become good at trading the market, you may increase the risk factor to 2%.
Trade with discipline
The rookie traders keep breaking the rules and try to earn a big amount of profit in the retail trading industry. They think it is the best possible way to earn money in the trading industry. But to become a full-time trader, you must maintain strict discipline. Develop a simple trading routine so that you can trade the market without breaking the basic rules. By following the trading routine, you should be able to overcome many silly problems. For instance, you will never overtrade the market or become addicted to this profession. So, focus on developing a well-balanced trading routine from the starting of your career. Never start trading with real money unless you become confident with your trading approach.