How tools can take your trading to the next level

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How to Become a Professional Trader

Take Your Trading to the Next Level

To become a professional trader, you must learn trading basics and advanced basics. Once these are mastered, you can learn proven strategies and gain experience in implementing them.

Also, it’s important to be realistic about this profession. There is no perfect method of trading that consistently produces only winning results. However, if you practice learning to discriminate accurate information from that which is incorrect or misleading, you can spend most of your time focusing on information that will make you a more efficient and profitable trader.

Trading Basics

One of the most efficient methods for learning to trade is learning market and trading basics. A solid understanding of the basics provides the foundation that will support your entire career. This first level of knowledge is required before more advanced trading information can be successfully implemented.

Books on trading found at your local bookstore or reputable trading websites can provide you with all the trading basics you need at a relatively low cost or no cost. The basics include all of the factual information about trading, such as:

  • What markets to trade
  • How prices move (bid and ask prices)
  • Order types and how to place them
  • Risk management
  • Trading hours
  • How to monitor trading performance
  • How much capital is required to trade efficiently

Trading basics are typically factual in nature, and there isn’t much subjectivity. One information source may say to start currency or forex trading with at least $500, while another source may say to start with at least $1,000. One source isn’t necessarily right or wrong. The information from multiple sources is indicating that you should definitely start with at least $500 and ideally with $1,000 or more.

The exchanges themselves provide traders with most of the market basics. For example, the New York Stock Exchange and NASDAQ provide educational resources on how the stock market operates through the main menus on their websites. The Chicago Mercantile Exchange does this for futures and the Chicago Board Options Exchange does the same for those wanting to learn about options trading.

Learning the Advanced Basics

Learning trading basics gives new traders an opportunity to learn about the various markets and the one in which they want to trade.

When learning the basics, traders determine if they want to trade stocks, futures, options or forex trading. Upon making this choice, they can then delve deeper into the trading basics specific to that market.

For example, a new options trader needs to learn about options Greeks, which help determine the price of an option. Those interested in futures trading need to learn about ticks, points, and the various specifications for each futures contract they may want to trade. Stock traders need to learn how to short sell, how dividends work, and the differences between pre-market trading and trading during normal hours. Forex traders need to learn about pip values and daily rollover rates.

Books on trading and instructional websites can offer information and lessons on these and other more advanced basics topics.

Trading Systems and Techniques

The next step is to learn strategies that will produce a profit in whatever market you want to trade. Such strategies are subjective, which means the source of the information matters. Free resources may provide generic strategies that worked at one time, but no longer work.

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    The Best Binary Broker 2020!
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  • Binomo
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Finding viable strategies requires much more research and verification than learning trading basics. When learning strategies, review charts and look for examples of the strategy at work. If it seems it could be profitable on your own small real-world test, then continue investing some time in the method. If not, leave the method alone.

The best method of learning a trading technique is to find a professional trader that will teach you their trading technique. Some professional traders offer websites or books highlighting their methods. They may also provide personal mentoring, which is the most direct approach to learning how to trade.

It is also possible to learn a discretionary trading technique without any form of instruction. Self-learning is fine, but it may take longer to come up with a profitable system when compared to learning a system that is already profitable.

Many professional traders develop their own trading methods by continually studying charts, noticing certain patterns or tendencies, and then developing a system that exploits those tendencies. This may take months or even years of testing before the trader finds a viable method that produces profits consistently.

Gain Some Trading Experience

Practice doesn’t make perfect, but in trading at least, perfect practice makes improvements. You’ll never achieve perfect results because not all trades are won, even by professional traders. And that is okay.

You don’t need to win every trade to produce a good living. What is required, though, is implementing your method nearly perfectly. This is within your control, while results are not. If you do the right thing, favorable results are more likely. Doing the right thing is following the methods you have learned and opted to use.

Use Paper Trading for Training

When first learning a trading method it may seem very easy. However, once you begin to implement it, it may be harder in actuality than you had anticipated. Most traders quit at this stage and seek out another strategy. Unfortunately, these types of people rarely become successful. Even a simple trading strategy often requires at least several months of hands-on experience before the method starts producing profitable results.

Many trading platforms offer a paper trading capability, which is trading with “fake” money instead of your own, real dollars. As you develop trading strategies, you can try them out with paper money and real-time market movements. Some platforms also offer historical market data, and many professionals use this to back-test their trading strategies to test whether the trades would work under various known market conditions.

As a trader progresses and gains more experience, they will likely find ways to improve their strategies or notice other market tendencies that can be exploited if another strategy is formulated. A successful trader may also find that a strategy that once worked is no longer performing well. In this way, a trader is always learning from their experiences and trying to find better ways of performing their job. They are simply adapting to changes in the market that may make current strategies obsolete but provides an opportunity for a new strategy to be deployed.

The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.

TraderFeed

Exploiting the edge from historical market patterns

Thursday, February 27, 2020

Taking Trading Journals to the Next Level

Traders have long used journals as performance tools. A trading journal is a great way to track your ideas about markets and also track your development as a trader. Finding the right format for a journal is important, as a journal for your market ideas might be quite different from a trading performance journal. The common goal of all journals, however, is to cement important observations and facilitate reflection and creative thought. When we take ideas out of our heads and commit them to screen or paper, we become thinker, writer, and reader. That enables us to process information more deeply and in multiple ways.

I am a big fan of using Evernote as a platform for journaling. Evernote enables you to write journal entries online, store them in the cloud, and access them from just about any device. Because Evernote stores pictures, videos, web content, and even handwritten information, it is a great way of turning a journal into a multimedia learning tool. For example, you could cut and paste news articles about a market into a journal entry, annotate with your own comments and observations, and include relevant charts of that market.

One of the most useful features of Evernote is that it allows you to tag content and acts as a searchable database. That allows you to pull out all entries on a particular stock or all posts that pertain to a given topic, such as overtrading. You can even use your phone as a scanner, take pictures of something from your trading screen, and save them to your Evernote journal.

Want to share your journal for coaching and mentorship? Group journals enable multiple people to contribute to a single journal, or you can grant access to your journal to trusted colleagues.

Used properly, a multimedia journal can be a great productivity tool and a powerful prod to creativity.

Further Reading: Formatting a Trading Journal

How tools can take your trading to the next level

Growth is the jet fuel of business success, but you can’t expect it to be constant. There will be plateaus in any business trajectory. At about $5 million a year, things sometimes seem to stall — often due to issues with the leadership team. That’s because many startups begin life as a small group of plucky first-timers, with plenty of heart but perhaps not as much cool-headed business acumen.

During stalls in growth, experience and perspective can be crucial for determining how to increase financing. But many businesses are not successful with this key challenge: A National Small Business Association survey from December 2020 showed that 27 percent reported not securing the financing they needed.

Of course, many companies do get through these stalls effectively and take their businesses far beyond any plateaus. So, what makes the difference between those that falter and those that rise to new heights?

It’s really a matter of staying the course, keeping your wits about you in tough times, and leveraging savvy business sense. Let’s take a look at a few ways that you can maximize your chances of doing just that.

1. Connect with a focused partner.

Partnering with a consultant or private equity firm can give you access to resources and outside counsel on how to jump-start your growth. That’s just the sort of perspective that can help get you through revenue plateaus strategically. The most successful firms maintain strong partnerships by maintaining a small pool of clients, so they can focus their attention effectively on each one.

For example, Blackford Capital has helped more than 40 organizations grow by focusing on just a few partnerships at a time. By keeping its roster of clients manageable, the company is able to provide the kind of attentive guidance that can make a massive difference to getting companies through a plateau period successfully.

Private equity firms may offer this sort of assistance in the form of operational, financial, or governance engineering. All of these services can help you steer things toward increasing revenue, cutting costs, and using financing wisely.

2. Invest in increasing visibility.

If revenue isn’t coming in at the rate you need it to, consider whether there are enough people in your market who know and love your brand. Chances are, there aren’t.

Getting the brand in front of more eyes is one of the best things you can do to get off a plateau. Of course, increasing traditional ad buys is one possibility, but you should also consider other important ways to promote your brand today.

To start, make sure your website is optimized for SEO. For businesses with physical locations, ensure that you are signed up with Google My Business and have a presence on Google Maps and other map applications. Don’t ignore video advertising, whether through actual video ads or through instructional videos that add value for the consumer but also build trust and loyalty in your brand. Finally, you’ll want to connect with thought leaders in your industry because they have influence that can shine favorably on your company.

3. Learn to properly evaluate financial risk.

Recent volatilities in the bond market highlight the need to take a dispassionate and long-term view of the financial landscape. That requires staying committed during the ups as well as the downs. It also means refraining from making critical decisions driven by emotions and looking at risks only in the short term.

Craig Birk, Personal Capital’s Chief Investment Officer, underscores this point: “Truly reaping reliable benefits from the market means you can’t let yourself get swept away by fear or excitement. Making decisions in these emotional states is how you end up hurting your future gains.”

By staying in the game, increasing visibility, and partnering with those who have the experience and perspective necessary to see things through a plateau, you can take your company to new heights.

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  • Binomo
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