Essential Trading Wisdom

Today, we will discuss some key things that every trader should know from the beginning. Keeping these things in mind and avoiding common mistakes can save you a lot of money. And, In trading, saving money is no less important than winning a new trade. Most of the good traders don’t have a very high win percentage.

It’s usually between 50-60%, but they preserve their capital, which is how their portfolio continues to grow. After taking profits, a cooldown period is crucial for preserving capital.

We are going to discuss a few things that should always be on a trader’s mind.

1. To know when not to trade: Being able to sit on the sidelines and wait for a high-probability setup is a mark of a disciplined trader. This is a very important thing a trader should know. As a trader, it’s crucial to figure out when to trade and when not to trade. There are times when the market ruthlessly takes money from most people, regardless of whether you’re long or short. The price is ranging without clear trends or lacks liquidity. During these periods, trading becomes riskier, and the chances of successful trades decrease. In these unfavourable conditions, the best option is to stay calm, sit on your hands and observe what the market is trying to do at the moment. Let it chop and take the money from all the retail traders. Once you understand its pattern then make your move.

2. Avoid making impulsive decisions: Maintaining discipline and protecting capital is vital. Sometimes, emotions like fear, greed or excitement can cloud our judgement and this can lead to costly mistakes. Impatience can cause a trader to act without considering the potential negative outcomes. Panic selling and buying in FOMO are the two most infamous mistakes that traders repeatedly make even after gaining a lot of experience.

3. Stick to the plan: Most traders work very hard to create a trade plan. Each trader has their own unique strategy and approach to the market. If the strategy works then ‘stick to the plan’ is very important. There’s a famous saying, “Bulls make money, bears make money, but pigs get slaughtered.” This means that people who run around, constantly opening and closing their trades with any proper plan, often end up losing money.

4. Learn to walk away: Refreshing your mind is also a necessity for traders, as trading can be very exhausting, especially if you’re constantly monitoring markets and making decisions. When you’re fatigued, you may not be able to spot potential mistakes. To increase your chances of winning, you need a fresh perspective. After finishing a trade, take some time off to reset your mind and come back refreshed.

So, keep your cool, stick to your plan, and don’t forget to take breaks, because our brains need short vacations too! Reward yourself whenever you complete a good trade.

Happy trading pickles!