- Developing a Trading Strategy of Your Own - April 17, 2020
- How to Become a Great Trader? - March 2, 2020
- 7 Mistakes Novice Traders Make (Please, Avoid Them) - February 12, 2020
Now many newbie traders may not realize this, but it is possible to come up with your own unique trading strategy. However, it is difficult to come up with a strategy that can guarantee steady payouts. So, the question is, how should you choose trading strategies also what to avoid during the process? That’s what we will be discussing in this article.
Perhaps the first thing we’ll tell newbie traders is not to set your expectations too high. Initially, that trading strategy isn’t going to make your rich. Think of it more as a starting point. So, below is where you should start.
The Five C’s of Strategy Building
Choosing a market. Start with a market you are comfortable trading in. Most people choose Forex, but it is different from stocks, bonds, and cryptos. So, the factors that govern movement in currency isn’t the same as what would move your stock position. That said, the trading strategy should be market-specific.
Choose a time frame. You should have a time frame in mind. Every time frame should be traded successfully. You should put both long and short term deals in place. Regardless of the time frame, the long term and short term strategies shouldn’t be identical.
Choose the tools of your trade. Many traders strongly believe there are bad and good indicators, and if they can find the right combo, they won’t have to make trading decisions. In reality, it does not work that way. Every indicator is essential at some time. That’s why it is possible to trade without using any indicators. That said, for novice traders, an indicator or maybe a couple will help them better understand prevailing marketing conditions. That’s why you should find a tool that’s best suited to your style of trading.
Choose an entry signal or signals. As a trader, the gut feeling shouldn’t be guiding you. Not having enough trading experience makes it difficult for you to predict how the market will move based on instincts. So, to improve your chances of success, it is essential to make a list of all the entry triggers. Triggers are defined as conditions that would allow for a position to be taken. Take, for instance, a sudden reversal of the trend or a piece of news that may affect the market.
Choosing existing conditions is also important. Exiting is just as important, if not more imperative than entering. Existing is defined as when you move out on the deal, evaluate your past performance, and then adjust the strategy used accordingly. Having an exit strategy is the final ’C,’ and the outcome of your entire deal hinges on getting this right.
Factors All Newbie Traders Should Consider
To start with, your trading strategy should be simple. The biggest misconception amongst newbie traders is that the more indicators and triggers they follow, the better off they will be. Having an overly complex trading strategy rarely ever works and, in most cases, results in losses. So, keep things simple.
You shouldn’t be afraid to make changes because adapting is the key to surviving as a trader. Continue to fine-tune your trading strategy until there are steady returns. Also, when a strategy fails to work, then it is time to use a new one.
Copying the trading strategies of other traders is perfectly fine. When you’re starting, using a successful trader’s strategy is a good way to start making money. When you emulate, more experienced traders there will be a success. However, you’ll want to develop a strategy of your own in the long term as you gain experience in the industry.
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