3 Things You Need To Know To Be A Successful Trader
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Are you hoping to live the life of a successful online investor?
While there is certainly no substitute for experience and patience, it is still important to realize that the best traders in the business tend to follow a handful of tried-and-tested rules.
What are three maxims to keep in mind and why are these suggestions critical if you ever hope to enjoy fiscal independence?
1. The Balance Between Short- and Long-Term Positions
Is it better to embrace a short-term strategy or does success equate to long-term wealth?
The truth of the matter is that some of the most experienced investors realize that a combination of both tends to breed the best results (1). Short-trades are a means to generate liquidity and yet, they can be difficult to predict on a day-to-day basis.
Long-term positions are associated with trends and in a very real way, trends can be followed forever.
Consider this type of diversification if you wish to enjoy the best of both worlds.
2. Practice Makes Perfect
Consider for a moment the dedication required to become a world-famous sports star such as Michael Jordan or Lionel Messi.
While there is no doubt that these and other individuals possess innate talent, they would have remained embedded within obscurity if they failed to practice.
The same principle holds true in regards to successful investing. The regular practice provides you with several unique benefits:
- You do not necessarily have to trade with real money.
- You can better appreciate how modern trading platforms function.
- You will become more aware of advanced trading methodologies.
- You can learn from your mistakes before entering into real-time trades.
The final point should be further emphasized.
Some of the most valuable lessons arise from previous errors. No matter what skill you try to learn, the biggest difference maker will always be the amount of time you spend practicing. Using a demo trading account allows you to practice without the risk of losing any money.
Even investors who possess years of experience will regularly return back to the “drawing board” to hone a certain skill or to test an upcoming strategy.
3. View Trading in the Same Way as Your Would Approach a Business Venture
Some would-be investors approach trading as a mere hobby. This is a mistake that should be recognized and avoided from the very beginning. Hobbies may not be taken seriously enough and this can result in half-hearted attempts at success.
On the contrary, view investing as a full- or part-time job (2). This perspective will provide you with the necessary discipline and motivation. Set regular trading hours and limit yourself in terms of how much capital you spend during a typical cycle (such as a week or a month).
While trading can be a great deal of fun, it is always important to embrace a certain amount of discipline if you ever hope to rise to the next level.
Those who are able to adhere to these three principles should expect a lucrative trading career. Success represents just as much of a mindset as a physical experience.
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