To help ensure your chances of success, these seven key recommendations form the background to our technical trading strategy.
#1 - Know Your Market
Even if you are going to be a purist technical trader, you still need to understand how the different macroeconomic events impact your market so that you are always a step ahead.
We are gold traders and have been for many years. We rarely trade anything else (unless there's an obvious set up which exactly meets our trading rules). We have previously traded the forex and equity markets, but our passion is gold. We know an awful lot about the gold trading market, but there are always new things to learn.
We’ve all been there at some time in our trading careers. Some initial successes which hook you and then a run of losing trade after trade and not knowing why, or what you need to do to break the cycle…it doesn’t take long until your funds have expired and you feel stupid!
#2 - Plan Each Trade
We plan where we are going to buy or sell, where to place our stop losses and most importantly where to exit each trade. Then, once the trade is planned and executed, it is critical that we are totally disciplined – we made the trade for a good reason and with solid justification, therefore any changes or adjustments need equally solid justification.
#3 - Keep Losses Small & Maximise Winners
If it’s clear that the trade is going against you, get out quickly. In many cases a trade will go the wrong way at some point – it’s not always possible to pick the perfect entry point and so you need to allow room for the trade to “breathe” as it confirms a bottom/ top or performs a natural retrace after a big move.
However, where it’s clear that market conditions have changed you need to cut your losses and move on to the next trade – this is critical and one of the most difficult disciplines of trading. We have learnt it over many years and our trading products can teach you this discipline too. One thing never, ever do is widen your stop loss in the hope that things will turn around.
Our long term average winning trade is $52 (or 520 points) and our average losing trade is $11 (or 110 points) – this difference, coupled with a higher percentage of winning trades than losing trades, is why we are successful traders.
If you want to share in our success, check out our products page and get started on the road to professional trading!
#4 - Remove Emotion
Novice traders tend to let losses run too long, by either widening stops or ignoring signals that the trade is going wrong, in a desperate attempt not to lose money.
The inevitable result is when you do eventually have to take a loss, that loss is a huge one.
This means that there is even more pressure to succeed when the next trade is opened - if there even is a next trade….
Removing emotion from trading decisions is a very hard discipline to master, but it gets easier as you become successful. Following a method over the long-term which has paid dividends gives you confidence - when short-term setbacks occur they no longer affect your judgment. Our methodical and disciplined trading and years of experience ensure that we never fall prey to emotional trading mistakes.
#5 - Have A Money-Management Strategy
Money management is vital to sustained success – many traders risk far too much of their available capital on each trade chasing the “big win” rather than a sustained, gradual and controlled growth through smaller more manageable trades.
Our own proprietary money management strategy has resulted in many years of consistent and steady gains for us.
You need to find the right level that suits your funds, risk appetite, style and frequency of trading – our tutorial packages can help you find the right level of risk for you.
#6 - Don't Overtrade
Overtrading means more money is lost on commissions and spreads and the likelihood of losing is higher as trades are more frequent.
#7 - Never Chase A Loss
Accept that losses are just as much a part of trading as winning. You need to be able to deal with losses without allowing them to cloud your judgement – we know this is sometimes hard, especially after a run of heavy losses. If you’ve followed the other tips in this article, you shouldn’t be getting too many big losses in the future anyway!