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How to approach trading in the 21st century: Tips from the successful

16th May 2021 Print

Living in the 21st century, one of the only things that is certain is that individuals need to be adaptable and willing to learn if they want to succeed. This applies to every job on the market and every element of business, and no financial challenge could be more effective in proving this than trading. Whether you are involved in trading stocks, currencies, or any other trading vehicles, there is no one size fits all approach. In fact, trading is often a very personal, and at times random, venture. Despite this, there are similarities in the approaches of the people who have earned the highest pay days. While there is never a one hundred percent guarantee of outcomes when investing in stocks, there are ways to bolster your success rate. Want to trade like a 21st century trading all-star? Here are some tips to get you trading like the best in the business in no time.

Do Your Research

No one will ever master something they don’t fully understand, so the first thing you should do when preparing for trading is to do your research. Make sure you’re intimately aware of the details of whatever you’re planning to trade. If you’re trading currencies, ensure that you are up to date on all news items and the politics of currencies you’re looking to trade. If you’re looking to trade stocks, make sure you understand the market and the various exchanges. It’s hard to confidently buy and sell stocks when you’re not familiar with the trading landscape. Enlisting help or even a formal education might be the best move if you’re looking to move into trading full time. However, if you’re trading as a second hustle, study the trends for a while before you jump into the market. Like a television pilot, it’s a good idea to test and refine your skills before you start relying on them for high stakes trades.

Make A Plan And Test it

Once you’re confident in your knowledge base, the first step towards success in trading is strategizing. Creating a trading plan is essential to retain control and be successful with your trading decisions. Start with a strategy- this should include your entry into and exit from the market, along with how you’ll be approaching and managing every purchasing decision- and go from there. The cardinal rule is: once you make a plan, stick to it. Even if something looks good, the more trading you do outside of your set strategy, the less effective it is. If your strategy is not working, start over if you can rather than going of course. A good way to gage whether a trading plan will have success is backtesting to see if it is viable prior to investment.

Find the Right Broker

If you’re not ready to deal with exchanges directly or simply want better access, it’s a good idea to look for a broker. In the case of the foreign exchange, a broker is a tool to find trading success without needing large sums readily available for investing. Giving a potential trader easy access to the exchange, brokers allow customers to trade in any available currencies, which are traded in pairs. It’s important to select your broker carefully, as different brokers will offer very different things. Some brokers charge minimal fees, some will have better customer service, and some will have a wealth of educational tools. Decide what matters most to you, then do your research accordingly. Look for comprehensive online roundups based on location to make it easier to compare. Brokers vary across the globe, so forex brokers operating in Australia will differ from ones in Japan or in the United States. Even so, the range of brokers is wide no matter where you are, so ensure you know what you want and select a broker that will work best for your needs.

Be Smart About Loss

When they say “cut your losses”, in trading they’re really not kidding. If you talk to any top trader, they will tell you the same thing: be smart about loss. This means setting up financial parameters from the very beginning. Make it very clear how much money you have to invest, and how much is an acceptable loss. Otherwise known as a stop loss, many people use a percentage figure. For example, if you give yourself a loss limit of 5%, then as soon as a certain stock dips to that number you should immediately bail out. This eliminates the urge to stay in longer and hope that a stock improves. Though at times a stock might recover, no matter what, this will prevent loss beyond a comfortable and predetermined percentage or number. Additionally, risk only what you’re willing to lose. Despite there being patterns and trends in any trading scenario, there is still an element of risk involved. Don’t ever invest a sum that will financially ruin you if lost. If your ambition is to be a successful trader, you won’t typically reach a top financial goal in one good trade- but you could lose all of your funds in a bad one.

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Use Technology

With any trading, it’s important to remember that technology is your friend. Every single one of the top modern traders utilize every resource they have at their disposal. This includes the basics, such as high speed internet, and extends to much more. Browsing charting platforms, analyzing current and historical data, keeping on top of the news, and making sure that market updates are consistently sent to your phone or computer will improve your trading success rates tenfold. The internet is an amazing tool and should be leveraged fully to seize advantages.

It doesn’t matter if you’re a trading novice or someone who has been doing it for years, there is always room for improvement. The right approach to trading in the 21st century is well researched, skillfully executed, and usually, risk-averse. How you strategize will depend on what you’re trading and how much you have to invest, but the foundational elements should always be present. As long as you research, strategize, test, mitigate loss, and use brokers and technology as necessary, you should be confident in your movements. Trading can be uncertain, but it can also be a great way to make money and gain a new skill. Test out the tips above and watch as you take several steps closer to becoming a trading success story.

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