The art of trading is a rather complex one. There is no end to the different types of strategies available and different approaches that traders can try to make when it comes to making investments. The truth of the matter is that even with all of the different tactics and approaches out there, many times, people simply make the entire trading process too complicated. The more complicated people make it, the more difficult trading becomes and the larger the margin for error starts to be. With this in mind, the best advice I can give anyone looking to make smarter traders, is to keep it simple and to follow these three very simple tips for making good trades. Keep these trips in mind, and trust me, you will be in the best position possible to start making smarter trades.
Create a System and Stick to It
If you want to have long term success in trading, then you need to have a system. It doesn't matter who you are or how long you have been trading, you need a system and you need to stick to it. The right system will help you stay in control and stay focused. No matter what that system is make sure the rules that govern your approach are clear and easy to follow. You may be tempted to throw out the rules, but don't. Stick with what you know. It is really that simple and it is all the difference in the world between making smart trades and gambling with your money.
Always Check to Make Sure You Aren't Trade Chasing
Trade chasing is a very common and a very real problem that many people today have. Trade chasing involves jumping on bandwagons and getting caught up in the excitement of the fast-paced trading world. Before you make a trade, there is a simple solution to make certain you aren't trade chasing and you aren't making stupid gambles. Take a deep breath, look at the trade and ask yourself "Am I using my knowledge to make a smart investment or am I trade chasing?" If you can honestly answer that you aren't trade chasing, then go ahead with the trade, if you can't, it is time to let it go.
Make Sure You Aren't Making Emotional Trades
If you don't check your emotions at the door before you sit down to start trading, then you aren't trading right. This is a simple tip and one that I wish more people would follow. If you are about to make a trade, but want to make sure that you are making a good trade, sit back and really assess whether emotions are at play with this decision. Before you make a trade, make certain that you are thinking about it logically, that you can back the decision up with facts and reasons and that emotions aren't to blame for your decision.
Even though the trading process is notoriously complicated, and requires a great deal of understanding, many times the simplest tips are the best ones to follow when it comes to making smart tips. If you are willing to keep things simple, use the information that you know to your advantage and take calculated risks based on your research and knowledge, you will be ahead of the game when it comes to making smart trades.