We plan certain New Year’s resolutions at the beginning of every year. If you are a stock investor and trader, there’s a good chance you have made some interesting resolutions for 2020. Those who had to go through struggles and losses in the stock market, this is your time to start a fresh and ace the trading industry. This includes changing your approach to trading.
Whether you have just started trading or you have been in the stock market industry for a while, it is important to pen down your objectives and commit to your trading strategy to reap the best rewards. If you had been an active stock market trader in the past year, chances are you must have learned a lot about trading.
Some of the basics of stock trading include the terminologies, how to control your losses, how to manage risks, what will help maximize your profit, how can you diversify your investment portfolio, when is the right time to buy or sell stocks, and which stocks should you pick. In this post, we’ll walk you through some effective steps that can help you dominate stock trading this year. Let’s have a look:
- Your Full Focus Must be on a Single Trading Strategy
Stop putting your energy and time in a couple of trading strategies. Your focus should be rather on a single and efficient stock investment strategy that could turn out profitable in the long run. Focus on trading only a single price action signal.
It might seem quite easier to stick around with your original trading strategy. But when you step in the trading world, you feel tempted to modify your plans constantly. If you don’t want to mess it up, stick to the single trading strategy, at least until you become pro at it.
- Don’t Engage in Recency Bias
Recency Bias refers to a situation when the trader believes what has happened in the past will keep on happening in the future. For example, if the stock market has been performing quite well over the past few years, it is likely to give the best results in the coming years as well. This is normal human behavior. We like to believe what’s happening recently will stay the same in the future. Here, we don’t give much thought to, what if the opposite happens? Or what if different events unfold?
The last thing you want is to give up all your earnings just because of your greedy and overconfident nature. It is best to play safe and stick to your pre-determined trading strategy to keep yourself from losing all your hard-earned money. Sure, you can earn incredibly well in the first month. But, don’t let your winnings or some unpredictable surprises overwhelm you. Follow your regular trading strategy and avoid Recency bias.
- Write Down the Trading Affirmations and Read Them Every Day to Stay Positive
Losses and risks are part of the stock market. With every trade, there is a risk of losing all the money or a major portion of your investment. But, don’t let it stress you out. Keep the negativity aside and read out some trading affirmations every day to stay positive.
- Spend Less Time on Trading and More Time on Learning About Stock Trading
The last thing a trader thinks about after setting up their trading account is ‘trading knowledge’. People consider stock investment so easy that they get started with an account and stocks before even learning the basic terminologies of the stock market.
There’s a lot more to the stock market than entering and exiting trades. While how much you earn depends on your luck, knowledge will always help you make informed decisions. Some people get so addicted to trading that they glue themselves to their desktops or mobile screens. While some keep on searching for a new and lucrative trade, others watch their open trades throughout the day. Either way, you are doing nothing but draining your energy into something useless.
Try to spend this time learning stock trading and the less-known facts about the investment. You could join a stock market to pursue a trading course. Alternatively, grab a stock trading book and accumulate information about the stock market.