There is a well-known proverb “Practice makes perfect”. If you want to become a master of something you just need to practice it. The more you will practice, the more you will learn.
However, you also need to learn from your mistakes. Being a rookie trader, you should develop the mindset to use the demo account for the first six months. Utilize that time on learning the different aspects of trading so that you don’t have to deal with too many losing trades in the real account – Three major steps to improve your trading skills .
Develop your skills
Most of the traders get their basic idea of trading from reading articles or by watching videos. Once they become confident, they start trading with real money. Practicing day trading does not mean doing day trade for years. It means you will learn the basics of technical and fundamental analysis by using the demo account.
[mks_pullquote align=”left” width=”300″ size=”24″ bg_color=”#453D3B” txt_color=”#ffffff”]A trader must have built a trading plan that will specify the trade execution process, the risk to reward ratio, risk exposure, stop loss level/take profit level. [/mks_pullquote]
After learning about these key parameters, the trader should start practicing so that he can find quality trades. Though the learning period will be a little bit tough, you need to deal with these factors with patience.
Analyzing your past trades
To improve your trading skills, you must develop the habit of analyzing your past trades. Losing trades are very common at trading. Even the pro traders might have to deal with losing months. For becoming a successful trader, you need to review your performance during the weekend. Find your weakness and see if your strategy needs to be modified. A trader should also analyze the previous charts to find out which trade he missed and why he missed it. As a professional trader, you must follow four important rules to improve your skills. These are:
- There are some trades in which the market moves past your take profit level. So you can think about expanding your profit level.
- In some trades market went very close to your take profit level and then it reversed the direction. This may indicate you should have used tighter take profit for that trade.
- In some trade markets just touched the stop loss level and went in your favor. This may indicate that you may not place your stop loss level in a perfect position.
- Find the specific time when you have made profit and losses in the trades. Try to trade during a trading day when you do high profits and avoid those times when you do silly trades and get lost.
Managing your trades requires strong knowledge. You might be using the copy trading platform still you need to manage your trade regularly. Follow the above 4 rules so that you can fine-tune your trading plan and improve your trading performance. The elite traders at Rakuten are making a consistent profit because they know the perfect way to deal with the losing trades. Based on their result, they revise their strategy so that they can improve their win rate. Stick to the core rules of investment even though might have to lose few trades. Never rely on the indicators reading as they often create false signals.
Modifying Your Trading Plan
You should review your past trades and technical chart each month. Based on the market dynamics and your past performance, bring some changes in your trading strategy. A trader can never make a perfect trading strategy in one day. As a trader, you need to find the weakness in your strategy and fix those issues. By reviewing your trades daily, you can find where you didn’t follow the strategy. Always try to solve one problem at a time. If you try to solve the entire problem at once, you will end up making more mistakes.