Key Decision-Making Factors In Trading: On a global scale, the stock exchanges have a capitalization of $80 Trillion in 2018, which is a 320% increase from $25 Trillion in 2009. As an investor, it is important to analyze and interpret the share market and select a share that suits your requirements the best.
As a thumb rule, investing in a diversified mix of exchange-traded funds and low-cost index funds is a clever long-term strategy for an average trader.
Even die hard share traders swear by indexing for the capital that they’re not using to purchase certain equities and securities.
If you’re asking yourself if your future as a trader or an investor is bright, then you should start by clearing your doubts about the difficulties before taking the leap.
Fortunately, there are some key decision-making factors and useful guidelines to follow for a viable investment opportunity.
So, let’s take a look at some of the basics and what you must know before stepping into the world of trading.
4 Key Decision-Making Factors In Trading 2018
Set Realistic Goals
Markets constantly improve, and that’s why your trading strategy should keep growing too. When it comes to trading, many individuals begin with farfetched expectations.
For instance, an investor opens a trading account with a brokerage firm with an initial investment of ₹ 1,00,000.
Immediately from the primary month, he hopes to make 20-25% of the capital, which is doubtful to happen. Assuming such excellent profits right from the beginning can lead to poor experience if you lose the money.
Hence, never trade more money than what you can afford to lose, and set realistic goals.
One good tip is to start trading with a small capital. This way, even if you make a wrong judgment, you will only lose little money and eventually learn how to manage risk.
Make Use Of Technology
Trading online is an aggressive industry, and one can assume that almost every trader is fully equipped with technological innovations.
Charting programs such as ProRealTime give brokers an unlimited variety of strategies for analyzing diverse business sectors.
Backtesting a report on previously recorded information before taking a chance with any money can save not only a trading account but also the disappointment factor.
Obtaining market updates with mobile devices enable us to monitor trading from anywhere.
Indeed, innovations that we underestimate, such as a fast internet connection, can extraordinarily enhance your trading experience. Utilizing innovation further and staying up-to-date with technological advancement can be rewarding in trading.
Know Your Strengths And Strategize Accordingly
Every investor has certain unique qualities that he can leverage in his trading strategy. Some traders may be good at analytical skills and spotting counterintuitive trends, and some can be great at coding and managing their sentiments well.
All these strengths can be used as an advantage and implemented in a trading strategy. Once you understand what your strengths are, you can determine your trading strategy.
For instance, if you have an HFT (high-frequency trading) strategy, then determinants such as framework and colocation are imperative for the success of your strategy.
Similarly, if you follow an LFT (low-frequency technique) strategy that demands you to follow trends, then your ability to accurately spot trends becomes the most crucial factor.
Thus, try to develop a trading strategy based on factually driven research and data.
Accomplishment in trading isn’t controlled by a few factors, but it is dictated by your ability to win reliably over a certain period of time. Surprisingly, various traders are ignorant of the idea of risk management in trading.
Risk management is a standout aspect of trading, and an investor has to stay vigilant to be successful at it.
When you put a specific sum of money in your trading account, avoid placing the majority of the cash in a single transaction. A reliable method is to risk only 2% of your account capital on any trade.
Since your chances of winning aren’t constant, by investing 2%, you will not lose a major part of your capital if a trade goes haywire.
To improve the profits, devise a technique in such a way that you make minimal changes to your key strategy parameters. Likewise, it is necessary to make changes in the strategy to help minimize the impact of unexpected market behavior.
An investor can earn consistently from trading if it is done in a legitimate way. If somebody can’t earn profits, it just implies that he/she has not utilized the fundamental principles of trading.
Thus, understanding the importance of these trading factors, and how they impact you can help build a viable trading career.
So, if you want to be successful at trading, then start with the right plan and try not to invest a massive amount of money in the markets.
Begin with demo trading, comprehend the principles of trading and eventually trade with real cash.
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