Hello traders! Near five years experience allows me to formulate the 13 proposals, on which should be based effective speculation on any financial market. Of course everyone can say that he/she disagrees. I have my knowledge and I think this is the essence of trade. Feel free to read and polemics.
1st Nobody is bigger than the market.
There is simply no, remember this. A samurai will not attack the hundred-thousandth army. Likewise, we, individual traders, we will not speculate against the banks, funds, investors with large capital. We have only to join them early enough to not become those who buy back their big positions and run at a loss. Therefore, a general rule what is most important for us is: do not go to war with the market. That's what you should look at the market. Well unless you want to still be in 95% who losing.
2nd Learn to be in the minority.
This is an important skill. You can not submit to pressure from the crowd that in 90 to 95% lose. How do I? I just trust my method and do not pay attention to analysts, other traders (with the exception of the most experienced). Does this mean that you have to play against the trend, because this is shaped by crowds? Nothing could be further from the truth. Your task is to identify a trend early enough and open position consistent with it. Then we wait until we all join us and generate a nice move. We go out for a profit, and they ... it's not our problem. Therefore, even if you open positions in line with the trend you have to be careful not to stand on the wrong side.
3rd Simplify everything to a minimum.
Do you think that the more indicators, filters, data interpretation, the better the system? Well, you could say we'll see in a few months. In my opinion, unnecessary indices, averages, lines, shapes do just clutter in the chart. A combination of two medium moving averages, oscillator as a filter and a trend line is quite enough. And perhaps it is too much. Try to clear your charts. Clean charts means clear mind.
4th Determine your goal.
If anyone ask trader why he/she does what he/she does, the answer would be as many as traders. This question have not got one correct answer. Everyone has to know, why speculate. Each reason is good, just is not destructive, for example, "because I have to make 1,000%". Remember that for most of the goal should be as regular income rather than a temporary high profits. The rest is typically discretionary.
5th Be objective, exercise yours psyche.
It would seem quite obvious, but not all traders follow that. It is about view of the market. If we look at the market in terms of our position, we will not get far. It is something like: "I have a super-reliable methods of speculation, I took such and such a market position and MUST do such and such a move." And if you're on the wrong side of the market? And if you're over-confident? And if you are not protecting your position? Hitler also thought he was wonderful, but he was not. This may not be the best comparison, but is able to make us aware that we can not be stuck in the wrong. Therefore, we need to practice psyche. We attribute the successes and failures just to ourself - not to others.
6th Check everything twice.
Or three times if you need. It is important to be sure that what you are doing. If you are unsure do not go to the market. Why should you do that? To not commit foolish error as bad calculation of size of the position, inaccurate entry point, a mistake by a few pips in setting stop-loss orders, which can throw us out of position. Sometimes we can misread a signal and, consequently, suffer a loss. For example, we can forget about the publication of macro figures, which can cause movement in the opposite direction and then we will have a convenient place to take a position. It seems to be waste of time – I prefer to dedicate it to avoid unnecessary losses.
7th Start with trend analysis, always and in every market.
Do you think why? Do not you know? I wonder what position you will open? Whatever you did not open, you have some chances of success - of course in the short term. If you do not know what is the trend, I propose to go back to basics. Of course it is not so easy to recognize the trend. Sometimes it seems that we have a sort of consolidation and the need to reduce the interval and the clear trend is already evident. And when we answered the question what trend we have, we should open positions, which are consistent with it - "doomed" to greater success than the opposite. True story.
8th Let your profits run and cut losses rapidly.
The loss is greater the more people are reluctant to cover position, because market “has to” bounce once. And yes, it may bounce, but it is occasion to clear the entire deposit. So absolutely must set the stop loss orders. If we know that the position can not be saved it must be close and you must admit to mistake (I know it's difficult, but necessary if we want to make money). Another aspect is to reduce profits. Once we see that we are in the black is a lot we want to close a position, because we think: "and if it do not increase?". And why not? We should always do an analysis of whether it's the right time to close the position.
9th Use money management principles.
Anyone who does not use them sooner or later drop out of market and lose, what she/he earned. Of course I'm not saying that everyone should apply the principle of 1% risk. Everything depends on the number of lossy transactions in a row and maximum slippage, which investor accepts. So if we accept max. slippage of 25% and 4 occurred historically lossy transactions in a row that we should apply the principle of slippage / (number of lossy transactions + 1). What gives us 5% on each transaction.
We can increase the risk at positions consistent with the trend and reduce at positions based on the break the trend signals. I know that we limit the potential profit, but the point here is that we get the repeatability and survive many years, and not earn a 1000% and lose "only" 100%.
10th Have a plan and stick to it.
Speculation without a plan is like driving in unfamiliar areas without a GPS / maps. We can not just enter the market. Even if we will guess, once, second, tenth, we will fail in 11th approach. Develop a method that corresponds to you. After checking on historical data, later in the demo account, you can start earning money. If this strategy is correct, use it consistently in the long term to succeed. Of course there is no system by 100% efficiency, 80% considered to be almost perfect.
11th Loss is a natural part of trading.
If you do not know that, stay away of speculation. The fun lies in the fact that the losses were much lower than profits. If you think you are a men, who speculates flawlessly, so prove it for over two years period. I think is needed not more than half a year and you change your mind and market would welcome your money. It will be such that the margin call is a sprite, and you're desire. Do not hold it against me, I just warn you.
12th Control your risk, use protective orders.
You can not use these tips only if you are a kamikaze pilot. Otherwise it is good to not lose money by our stupidity. Therefore, do not take excessive risks, and if you necessarily want to, go to casino. In my opinion, someone who does not control the risk and not use protective orders (in the sense that she/he does not even have the opposite order freezing losses) is either ignorant or overly confident about his prodigy or is simply a moron. Well except for some of losing money is the meaning of life.
13th Do not overdo it with trade.
Let's start with another question: what is your’s car engine? 2L, 2.5 L, 3L? And why? In the city is speed limit to 50 km/h (in Poland). The same applies to the trading, although it depends on the strategy. One good deal is better than 8 good and 4 bad and gain the same amount. In fact we pay more commission, we feel mental discomfort, we have a strategic chaos. Simply specify the precise moment of entry, you have time, do not act under pressure.