Account

New to ADSS? Open an
account now to get started.

OR

Already have an account?

Add funds to your ADSS account

Account

New to ADSS? Open an
account now to get started.

Add funds to your ADSS account

Trends & Analysis
News

Oracle shares spike despite FQ4 earnings miss

News

EUR/USD plunges after parliament elections

News

Is a big move coming for AMD?

News

Gold loses shine after US NFP data release

News

Week Ahead Preview: 10th of June

News

Lululemon’s shares jump on earnings beat

Trends & Analysis
News

Oracle shares spike despite FQ4 earnings miss

News

EUR/USD plunges after parliament elections

News

Is a big move coming for AMD?

News

Gold loses shine after US NFP data release

News

Week Ahead Preview: 10th of June

News

Lululemon’s shares jump on earnings beat

Learn

Golden Rules for Advanced Trading

Are you looking for tips from expert traders? Here are some golden rules followed by the pros to take your trading to the next level.

Disclaimer: This article is an educational guide to CFD trading and the financial markets and should not be considered as advice. Trading CFDs is high risk. Always ensure you understand the potential risks and rewards associated with trading before you trade.

 

Long-term success can be achieved with perseverance. However, this alone cannot guarantee profitability through the market’s bull and bear runs. Expert traders follow techniques and strategies that can be quickly adapted to changing market conditions.

Did You Know?

50% of S&P 500’s best trading days occurred during bear markets from 2010 to 2020, and about 34% of its biggest trading days were in the first two months of a bull run.

 

Expert tips help identify opportunities in all market conditions. Here are the top 7 golden rules trading pros swear by.

1. Capital Protected is Profit Made

 

Protecting your capital does not mean you never have a losing trade. It means taking calculated risks. Advanced traders start by evaluating the risk involved in an asset, ensuring that it lies within their risk tolerance limits and then deciding the position size. There are two benefits of doing so:

  • Better trading psyche, as you recognise that the risk is under control.
  • Capacity to take more positions and improve the probability of success.

To assess your risk appetite, consider the following:

  • Time Horizon: Scalpers tend to take lower risks than day traders. The longer your time horizon, the greater the risk you can take.
  • Financial Goals: Trading success is about meeting specific goals. Focusing on earning the highest returns may lead you to take undue risks.
  • Portfolio Size: The larger and more diversified your trading portfolio, the more risk tolerant it is.

2. If It’s Not Booked, It’s Not Profit

 

A common mistake traders make is not taking profits on time. Even if the trend is following your prediction, remember to book profits. You can exit a part of your open position once the target is achieved and leave the remaining to benefit from further market moves. Capitalising the profit secures your capital and prevents overshooting losses should the market reverse.

Taking profits at regular intervals:

  • Boosts confidence and backs it with numbers.
  • Enhances money churn and allows you to use it when the market corrects itself.

3. Trailing Stops over Hard Stops

 

Hard stops are great, but trailing stops are even better. Pros use a combination of the two. Trailing adjusts the exit price at a fixed percentage of the market price in the direction of the trend. The stop remains fixed, when the market reverses. It gets executed if the reversal exceeds the set percentage.

Trading Tip

Trailing stop prices rely on trigger pricing, which tends to get compounded during periods of high volatility. Traders must accommodate these factors during risk calculation.

4. Your Trading Strategy Should Reflect Your Trading Personality

 

Many traders practise multiple trading techniques to figure out what works for them. Expert traders build a strategy that complements their character and emotional disposition. Make sure that your trading strategy is reliable, trackable, tangible, and well-defined.

A common practice is to make a list of yes/no questions to help you make trading decisions without emotions clouding your judgement.

Trading Tip

Always practise on a demo account when you have to update your list. Hitting the books is key to ensuring that you do not make avoidable mistakes.

5. Keep Your Head High While Remaining Humble

 

Healthy self-criticism is crucial for traders. Professional traders do not wait for a stop out to force an exit when they realise they’ve made a mistake. Realising that you have opened a losing position and exiting it as soon as possible saves time and money. You could minimise the loss and use that capital for another trade.

6. Don’t Trade Assets, Trade the Charts

 

Many traders feel hopeful about assets based on news and social media posts. The market euphoria surrounding cryptocurrencies attracted many traders to open positions. Posts on Reddit have encouraged traders to go long on particular stocks. While it’s important to stay abreast of market sentiment, the focus needs to be on what the charts and your technical analysis is telling you.

No trading instruments are good or bad, and no time is good or bad for trading. Your trading strategy determines which opportunities you should target and which ones to pass. Professional traders tend to group assets that perform in a similar manner. Also, knowing when to sit tight and when to dive in is critical for navigating the global financial markets.

Did You Know?

Paul Tudor Jones, George Soros and John Paulson, three of the most celebrated traders of the 21st century, made their best trades by recognising upcoming trend reversals and shorted assets at high leverage.

 

7. Always Be a Student of the Markets

 

Traders reach excellence only after recognising that learning never stops. Although the basics may remain the same, the global financial markets respond differently to events over time. This is because the psyche of market participants change over time.

Moreover, one asset class can impact others. The growth of the cryptocurrency market has changed the degree of correlation between assets. Cryptos started being used for hedging inflation and geopolitical uncertainties. You need to keep refining your trading strategy with the evolving financial markets and trading instruments.

Tip

Keep a trading journal and record your trades, especially the ones that didn’t work well. Analysing what went wrong gives you an opportunity to correct mistakes.

Key Takeaways

  • Consistency is key to becoming a successful trader.
  • Experienced traders know their risk appetite and protect their capital.
  • Regularly taking small profits can protect the overall profitability of your portfolio.
  • Using trailing stops can improve your profits and lower losses in trending markets.
  • Develop a trading strategy that aligns with your trading persona and risk tolerance.
  • If you realise you’ve made a poor trading decision, exit before the stop loss forces you out.
  • Trade the charts and not the hype.
  • Never stop learning, as the financial markets never stop teaching.

 

Open a live account with ADSS.


Site by Pink Green
© ADSS 2024


Investing in CFDs involves a high degree of risk that you will lose your money due to the use of leverage, particularly in fast moving markets, where a relatively small movement in the price can lead to a proportionately larger movement in the value of your investment. This can result in loses that exceed the funds in your account. You should consider whether you understand how CFDs work and you should seek independent advice if necessary.

ADS Securities LLC (“ADSS”) is authorised and regulated by the Securities and Commodities Authority (“SCA”) in the United Arab Emirates as a trading broker for Over the Counter (“OTC”) Derivatives contracts and foreign exchange spot markets. ADSS is a limited liability company incorporated under United Arab Emirates law. The company is registered with the Department of Economic Development of Abu Dhabi (No. 1190047) and has its principal place of business at 8th Floor, CI Tower, Corniche Road, P.O. Box 93894, Abu Dhabi, United Arab Emirates.

The information presented is not directed at residents of any particular country outside the United Arab Emirates and is not intended for distribution to, or use by, any person in any country where the distribution or use is contrary to local law or regulation.

ADSS is an execution only service provider and does not provide advice. ADSS may publish general market commentary from time to time. Where it does, the material published does not constitute advice, or a solicitation, or a recommendation to a transaction in any financial instrument. ADSS accepts no responsibility for any use of the content presented and any consequences of that use. No representation or warranty is given as to the completeness of this information. Anyone acting on the information provided does so at their own risk.