The Ultimate Trading Checklist: Pro tips to save you time

“Novices tend to believe there’s some answer out there, that it’s a matter of finding the right formula, the single right technique… The truth is it doesn’t work that way. There is no single way that works continuously. If it did, it would stop working anyway because everyone would follow it,” says renowned trader and author of The Little Book of Market Wizards, Jack Schwager.

One of the most important things that differentiates a good trader from a great one is patience and discipline. This includes ensuring you do your market research. Experienced traders never trade based on gut instinct or hope, neither do they chase the market. Want to hear more from the pros to get started on your trading journey? Read on.

Trading Dos

Experienced traders continue to learn throughout their trading career. This is why they recommend that the first step should be choosing a broker like ADSS, who offers access to real-time market research and analysis, along with rich educational resources. Some of the other recommendations are:

Do Set a Budget

First, you need to decide how much money you can risk on trading overall. The next step is to consider how much you place in each individual trade. Top traders recommend the 2% rule which states that you shouldn’t open a position that is larger than 2% of the total capital in your trading account. Even the most successful traders see their fair share of wins and losses. The aim is to never risk too much in one trade, so you can recover losses with your profitable trades.

Practise, Practise, Practise

A demo account is a wonderful tool that will serve you well throughout your trading journey. Some pro tips on using a demo account for stock, forex, commodities or CFD trading are:

• Treat the money as real. The moment you focus on it being fake money in the account, you will tend to take bigger risks.
• Build your strategy. Try out different strategies, using various technical indicators and learn from educational resources to create your trading strategy.
• Maintain a trading journal. This will help you recognise patterns in your trading decisions, emotions and which strategies work best.
• Test your strategies. Use the real-world conditions offered by the demo account to try out your strategies and fine-tune them.
• Continue learning. Keep coming back to the demo account to try out new strategies, indicators, asset classes and more.

Implement Risk Management

Most traders know that stop-loss and take-profit orders are among the most popular risk management measures used by both beginners and advanced traders. However, experienced traders recommend that you set the stop loss at a level that proves your trading strategy wrong rather than at the amount you are willing to lose on that trade. Now, set your position size according to the stop loss, based on what you can afford to lose.

Also, don’t set your stop loss at or just below the support level for your chosen asset. It is best to give your stop loss some “buffer.” For this, use the Average True Range (ATR) indicator to determine the ATR. For a short position, add the ATR value to the support level to place your stop loss. For a long position, subtract the ATR value to place the stop loss.

Similarly, place your take profit a few pips below the resistance level or at the ATR value for a buy order.

Start Small

Regardless of whether you use leverage, start with smaller lot sizes. As you learn more about the asset and how the market moves, you can gradually increase position size. Don’t be in a hurry to make big moves. Patience wins the day!

Know When to Stop Trading

There are times when you need to take a break from the markets. Many traders remain on the sidelines before, during and immediately after market-moving events. For instance, the US NFP is released on the first Friday of each month. This report is a major market mover and usually leads to volatility, especially in the forex market. Staying away during this time can help you avoid falling prey to such volatility. Also, if you find that emotions are increasingly influencing your trading decisions, it is time to take a break and regroup.

Always Follow Your Trading Plan

A good way to keep emotions out of trading decisions is to build a trading strategy and stick to it despite strong temptations to make spontaneous decisions. A winning trade could tempt you to keep a position open longer than advisable, while fear of losses could make you cut a position short before you can earn any profits. Use the ADSS demo account to try out new trading strategies and once you have zeroed in on a strategy that shows promising results, stick to it. If it stops working, go back to the drawing board, but not mid-trade.

Trading Don’ts

The pros don’t get discouraged with bad trades. They use these experiences to learn and build their skills. Here’s what else they tell you not to do.

Don’t Constantly Check Your Account and Trades

As a beginner, you might be tempted to check your trading account multiple times a day, just to keep track of your account balance. You might also feel like constantly monitoring your trades, even checking your smartphone during meals to see how you’re doing. Part of this is driven by FOMO (the fear of missing out) – what if there’s a trading opportunity you miss out on while you weren’t looking?

Constantly monitoring your position or the markets can be as addictive as checking social media. Plus, it could tempt you to make spontaneous decisions, without being backed by robust research.

There’s an easy way to keep track of everything without impeding time with family or friends. You can set up alerts on your mobile device or choose to have your broker send out push notifications. This way, you stay informed of major market moves.

Don’t Overuse Leverage

Leverage is a double-edged sword. By giving you higher exposure, it increases potential profits, but also magnifies loss potential when the market moves the wrong way. Remember what we said about how much to budget for each trade? Don’t forget to calculate leverage into this equation. Make sure you understand the value of the pip movements which are magnified when using leverage and adjust your parametres so you are comfortable with any potential downside.

Don’t Bring Emotions into Trading

Emotional decisions are often neither objective nor very rational. They could lead you to overtrade or under-trade. Either way, you could end up with losses. Good ways to overcome emotions is to stick to your trading strategy and maintain a trading journal. Note down every trade in this journal, including why you made a particular decision and how you felt. This will help you identify unhelpful patterns and learn from your mistakes.

Key Takeaways

• Learn the trading dos and don’ts before you start your journey in the markets.
• Stay within a budget, practise on a demo account and start small.
• Don’t constantly monitor your account or trades.
• Don’t overuse leverage and keep emotions out of decisions.

Open a live account with ADSS to get the best-in-class trading experience for your first trade.