Top Trading Tips in 2019

Top Trading Tips In 2018

INTRODUCTION

The markets have been open for decades.

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In that time people have become incredible traders, investors and businessmen.

At the same time, people have also lost fortunes in the market.

The market is a beast in itself – so we do not learn how to tame it, but instead – how to profit from it.

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You see, we are very lucky to live in a world where hundreds of thousands, if not millions, of people, have already journeyed down the path of the financial markets. We are lucky to have their experience and wisdom passed on to us.

We are lucky that we have the Internet and social media which means these top trading tips are really accessible to anyone with an internet connection.

That is why we have compiled a huge list, for you.

This top trading tips list is curated from professionals and ourselves with the aim to help you become a more competent trader over time.

We have included top trading tips for beginners to experienced traders, and have rounded it off with the top trading tips from the best investors in the world.

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So go ahead and bookmark this, share this with your friends, because this article is going to contain some value!

Oh:

We are not just going to give you bullet points and a boring list.

These top trading tips will be actionable immediately and how you can use them.

Finally, these actionable trading tips are not in any numerical order or of significance.

So the first top trading tip you see is not the ultimate trading tip in this article.

Let’s get started.

Top Trading Tips For Beginners 2018

Top Trading Tips For Beginners In 2019

Trading Is NOT For An Income

Honestly, the amount of times we see adverts luring people to build a second easy income in Forex drives us insane. Yes, you may take profits out to support yourself. However, you are taking away capital from growing even further. We are not saying don’t take money out, we are saying change your mentality around trading to capital growth.

Actionable Tip: Focus on growth more than depending on a monthly paycheck from the Stock Market otherwise you could be going on a rich then broke then rich then broke rollercoaster.

Don’t Get Complacent

Feel like you just can’t go wrong? Made 10 out of 10 trades this month? Is the market a free ATM to withdraw as much cash as you want?

We’ve all experienced times when we feel unstoppable. Complacency reduces your attention to detail and could lead to a downfall or overconfidence in a trade. That could, in turn, allow you to open the floodgates to mistakes… This isn’t a losing trade, I’ll move my stop loss… I’m going to double down as I’m on a hot streak… just to name a few.

Actionable Tip: Stick to your plan… you are going to see this tip a lot!

Lockin Your Profits

Wait, what? Yes that is right, you can do this. Use a trailing stop loss or a mental stop loss that follows the profit’s direction. Locking in profit allows you to stick in the trade without the worry of realising a loss. This one little trick will make you more money over your trading career.

Actionable Tip: Take time to adjust the volatility of the asset and pre-determine profit lock-in areas. Simply move the stop loss in a profitable direction. Easy peasy.

Forget About the Secret Success Formula

Have you ever seen this line before?

“Do this one little trick and make $1,000 a day in the stock market”

Gurus and internet markets tell you that they have the secret sauce, the ultimate strategy and of course – the Holy Grail.

They target beginners in the hope of showing them a quick solution will bring floods of money and make them trade 100% accurate 100% of the time. Sorry, but this is absolute bullshit. Trading/Investing takes hard work to grasp and execute.

Actionable Tip: Get away and blank the adverts. They will not help you. Especially all them free courses with strategies.

Never Move Your Stop Loss

It’s an easy decision at times – you have the right idea, the right asset, the right market but the price is nearing your stop loss; what do you do? Move it further away?

NOOOOOOOOOOOOOOOOOOOOOOOOOOOOOO

Moving your stop loss is the single most costly mistake beginners do. You are better than that. If you get stopped out, it means your timing is incorrect. That head and shoulders pattern may be a triple top pattern you just overlooked… Either way, never move your stop loss. Never.

Actionable Tip: Easy, don’t move the stop loss.

You Must Be Disciplined

Investing/Trading is not an environment you want to lose your emotions in. Losses happen, mistakes happen, life events happen. Furthermore, it is just as important to refrain from your trading plan. The plan is there because you pre-defined what must occur before you can execute a trade. Don’t let yourself down and lose reckless money. Discipline cannot be taught, sorry.

Actionable Tip: Before you read any news, look at the charts, or even load up the computer – grab your trading plan and go through it a couple of times. So get the plan in your head. Spend 5-10 minutes getting the plan in check. Also, you may find it a good practice if anything comes into your head that is a distraction, write it down and ask yourself “Is this significant” “must I do this now”.

Never Ever Love or Hate A Stock

If you’re too in love with your trading vehicle, you give way to flawed decision-making. It’s your job to capitalize on inefficiency, making money while everyone else is leaning the wrong way.

Love and hate are two very costly emotions in trading. The market doesn’t care if you have the latest iPhone or Tesla car. You can love a product, but if you want to make serious money – you must be rational and sell when it’s time to sell.

Actionable Tip:  At the end of the day, the company is a vehicle for you to make your hard-earned money work even harder than you did to make it. The only thing that matters for you is the PnL of the trade.

Your Intuition Is Key

Steve Jobs once said: “Have the courage to follow your heart and your intuition. They somehow already know what you truly want to become.”

Albert Einstein said: “The only real valuable thing is intuition.”

I’m sure you’d agree that these two individuals were successful, now listen to your “gut”.

Actionable Tip: Unlock and listen to your intuition further by using Youtube videos or googling. We cannot help much, sorry.

Early Signs Can Prevent Large Losses

Big losses are not out of the blue (unless it’s a Black Swan event), even still – market data is always the best way to gauge market changes, As long as you do your research, stick to your trading plan and NEVER MOVE YOUR STOPLOSS AWAY FROM THE MARKET you should be fine.

Actionable Tip: If it goes against your values and theories, change it.

You Must Not Break Your Rules

The only time you set a rule or a condition is after you’ve thought about it validated it and agreed with yourself that the rule should be implemented to protect you and your capital. If you break your own rules in bad faith, you are not only second guessing the market (gambling) but also sabotaging your self-confidence and conviction in your own abilities. You are better than that.

Actionable Tip: Clearly define your rules with purpose e.g)

Rule: I will not trade unless the candlestick has closed.

Purpose: Because the market may change direction during the same direction and make the execution signal invalid.

You Must Think For Yourself

This is a very important point. 90% of traders lose 90% of their investment capital in 90 days. Most of them look for a quick solution after they’ve taken a loss, or they are following others. Now, there are ways to obtain information from professional traders for free (read it here). When you have learned how to trade the markets, you will learn to think for yourself and manage your own conveyer belt of trading ideas.

Actionable Tip: Stay away from gurus, news channels showing trading tips, trading tip websites etc.

Leave Your Personal Life Outside

We don’t mean to sound insincere but the fact of the matter is if you are unable to consciously and clearly make decisions with certainty, then you will have a higher chance of underperforming. This too can have a knock-on effect on your personal life… losing money is never easy, especially when other things are on your mind.

Actionable Tip: Ask yourself “how significant the issue is” and rank it between a 1-10 scale; if it is a 5 or greater – deal with it immediately (if action is required) or if something tragic has happened – take some time off to deal with it. Trading in the wrong mindset will lose you more money and continue to deepen your negative thoughts. If it’s not a huge issue and can be dealt with after you’ve done your trading then just be extra cautious when investing.

Don’t Chase Your Losses / Revenge Trade

Losing money happens. It happens a lot. In fact, you may lose your trades 90% of the time, but that 10% that are profitable can vastly outweigh the losses with appropriate risk management. Chasing losses expose you to potentially losing even more as your mindset drifts from looking for positive opportunities to recovering the losses opportunities.

Actionable Tip: This is a big one that serious professionals and hedge fund managers* use. Implement Kelly’s Criterion to help not only manage your risk and capital deployment but also your performance. Every loss generates a new capital deployment size helping you automatically reduce the risk to your portfolio when you are underperforming.

Fun fact: This is used to help deploy capital between the Hedge Fund’s traders. Traders that perform well are rewarded with more capital from the Hedge Fund manager. Whilst underperformers position sizes are reduced according to Kelly’s Criterion. 

Analyse Your Trades

Any profession will go through reviews of their performances and discovering ways to improve themselves. This is important as it can be an empowering exercise to do and stimulate confidence.

Actionable Tip: Write a trading journal and note down your mistakes and winners. This builds a log of what you did right and what you did wrong which can unlock patterns. Patterns can be repeated and broken.

Understand You Are In The Business Of Risk

If the above title comes at a surprise to you, you best get back into the education arena. You do not buy shares for the sake of it. Your goal is to have the smallest risk and ascertain the highest reward. You should be constantly evaluating your risk. Risk is the only true factor that remains the same when we trade and therefore is the what we should focus on.

Have fun

This is easy to point out, have fun and enjoy. You should feel empowered and joyful that you have taken action in learning to grow your money. If you don’t enjoy it, trading can be extremely tedious…

Top Trading Tips In 2018

Top Trading Tips

Only trade the best opportunities

This may seem like an obviously trading tip but trust us, people still trade setups that are not formed correctly – or they have begun to form. The whole reason for a pattern is to wait for it to be complete to provide a valid entry level. Not to be taken as a sign to get in earlier.

The Best Investment Is In Yourself

The most beautiful aspect of trading is that the environment is dynamic and fast-paced. We must constantly learn and adapt to achieve consistently profitable trades and that also means learning about different events, data, trading environments and economies.

Simplicity Is Key

Trading is not a complex business nor should you make it so. 4 screens of data, charts and chat rooms doesn’t make you a “pro” or a better trader. Keep your work and trading simple, this will make better trading opportunities clearer and easier to spot in the long run.

Probabilities Play A Big Role

Trading is a varied business, as traders we want to risk little to be rewarded a lot. That is why we must stack the probabilities in our favour. Executing ideas when the probability is in our favour is more likely to result in a profitable trade. We discuss this in our Pairs Trading Masterclass in great detail and firmly believe that it is important to understand the odds of certain outcomes happen. For example, the odds of the asset to move 5% in 1 month.

Never Force A Trade

If you haven’t traded for a couple of days, weeks or months because you haven’t seen anything then don’t go and trade in blind faith in making money. Lots of variables come into play such as market cycles, business cycles and volatility. Each of these variables alone can set aside short-term traders to the sidelines for months and vice versa.

You Learn Quicker With Real Money.

Paper trading is good to learn the platform and how to execute trades whilst dummying trading strategies. There is no problem with this. However, the best way to learn is by using your own money.

Turn The TV Off

Push media AKA TV news channels like CNBC, CNN, BBC News, Bloomberg push content that THEY want you to hear and see. The points and discussions raised on these channels are worthless background noise and already priced into the markets. In Stock brokerages, these channels are turned on not for their information but to mainly portray the sound and buzz so the client can hear it over the phone. This reinforces their expert analysis…

Penny Stocks and Binary Options Should Be Avoided

If you want to keep your money, avoid the above. Simple.

You Will Not Get Rich Over Night

Don’t expect to be able to learn this trade and become instantly rich and consistently profitable all the time. This is serious graft but the rewards can be humongous.  After your first year, you should expect to be making a stable profit stream.

Don’t Believe Anyone That Says They Have An “88%” Strike Rate

88% sounds like a realistic figure right. Not perfect, but high enough to succeed. One of Goldman Sachs greatest ever technical chart traders achieved 30 years of YoY profits with a 40% strike rate. It is uncommon for professionals to have a strike rate of anything over 50%. Here is the difference:

Let Your Winners Run

When professionals, like yourself, make a trade that is profitable – they do not close out their position after making their take profit level. They let their winners run for as long as possible. Remember, you have done your research and put a good amount of time and attention to the trade idea. Why do all the effort again immediately after when you can have a position open for as long as you want. You could have caught the start of the biggest ever trend!

Never Double Down On Losses

Common practice is to average down an asset because you firmly believe the company is going to go higher, but when? If the price goes down and takes you out of your trade – and you still remain firm on the asset going high longer term – then take the small loss (as per your trading plan because you stuck to your rules (well done)). What this means is that your timing was wrong; keep the idea on ice and trade it again when you get another confirmation.

The Market Is Always Right

Just accept it. We have.

Avoid FOMO

Bitcoin is the latest evidence of FOMO’s negative effect. EVERYONE on TV and in the barbers was discussing Bitcoin going to $100,000 in 2 years time!! Everyone jumped in thanks to FOMO. Where is Bitcoin now, anyone? *awkward*

Set A Stop Loss Before Every Trade

It doesn’t matter if you are watching the markets all day for 5 days a week. Set a stop loss as you execute your trade. This should be second nature to you. Remember, we are in the business of risk.

Trade With Capital That You Can Afford To Lose

These trading tips are not here to install common sense, but you must be able to be able to lose the money without flinching. If losing your capital causes you pain and unaffordable to you, then don’t trade.

Control Your Capital Deployment

Have a standard trading size to deploy for each trade. For example, it’s common for professionals to trade with 1-2% of their total portfolio value. This, in turn, reduces risk and over-exposure to the markets.

Never Catch A Falling Knife

This is a very common expression in the markets which means – never try and guess the bottom of an asset. The risk is higher than the reward.

Never Turn A Short-Term Trade Into A Long-Term Trade

This is common when a short-term trade idea (intraday etc.) isn’t performing well and it becomes a “portfolio buy” to hold on until it is back into its profit/breakeven point. Remember your analysis, if it’s within your time horizon – that’s perfectly acceptable. If it is not, cut it.

Never Use The Words Cheap And Expensive

An asset is never cheap or expensive. Price is price and that is what you pay. Associating these words to the price puts you into a false state of belief. You are not the market and you are certainly not in control of the stock price – how can you say if it’s cheap or not?

Top Trading Tips From Professionals 2018

Top Trading Tips From Proffessionals

“Buy not on optimism, but on arithmetic.” – Benjamin Graham

This is a legendary quote for sure and reinforces being mechanical and disciplined to your trading plan. We can always hope we are right, but it is not optimism that should make us trade but the correct market conditions.

“Minimizing downside risk while maximizing the upside is a powerful concept.” – Mohnish Pabrai

This is a painfully simple and obvious quote, however, you will be surprised the number of beginners who risk 50% of their trading capital for a quick 0.5% gain. This is the wrong way around.

“The desire to perform all the time is usually a barrier to performing over time.” – Robert Olstein

This rings true in most scenarios. By trying to always win your trades and outperform everyone else can usually lead to gaining market-level returns or underperform.

“No wise pilot, no matter how great his talent and experience, fails to use his checklist.” – Charlie Munger

Heed advice from the Vice Chairman of one of the most successful companies on earth. There is a running theme here, always follow your plans.

“Wide diversification is only required when investors do not understand what they are doing.” – Warren Buffett

Diversification is just a sales point to generate more commissions. Don’t worry about a balanced portfolio because you will get balanced and underperforming returns.

“Compound interest is the eighth wonder of the world. He who understands it earns it. He who doesn’t, pays it.” – Albert Einstein

We included this because of its echoes true to our point earlier on about trading for income. IF you keep your trading capital in the account, you will compound those returns faster into more money. If you take it out, you are sacrificing your gains.

“I will tell you how to become rich. Close the doors, be fearful when others are greedy. Be greedy when others are fearful.” – Warren Buffett

Probably one of the most quoted men on earth when it comes to investing. Again look at Bitcoin as a recent example, everyone was greedy and look what happened.

“The entrance strategy is actually more important than the exit strategy.” – Edward Lampert

Timing is everything with the markets. If you have an outstanding trading idea but execute it at a poor time, that trade idea will lose your money. That is why it is so important to ensure you do your research and take external market factors into account. For example, does the stock look promising but the entire market and sector is falling hard? Not the best time to invest is it?

“The easiest way to manage your money is to take it one step at a time and not worry about being perfect.” – Ramit Sethi

The road to profitable trading is long and hard, don’t try and force it. One trade at a time allows you to confidently place and manage the position.

“If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.” – Peter Lynch

Peter Lynch’s success is driven by his ethos of the only invest in what you know, anything less is gambling and stacking the odds against you. You should always stack the odds in your favour.

“The stock market is filled with individuals who know the price of everything, but the value of nothing.” – Phillip Fisher

Phillip Fisher was an extremely successful long-term investor. He truly understood the power behind researching into companies and understanding their true value which isn’t always reflected in the stock market price.

“The four most dangerous words in investing are: ‘This time it’s different.'” – Sir John Templeton

This is a funny statement because we all do it. Optimism spills in thinking that “this time it’s different” and we act on that mentality. Sir John Templeton knew that the market moved in cycles and trends – which is how he amassed his fortune. He understood that instead of predicting the future, look at the past and you will have a more accurate picture of what can happen.

“Wide diversification is only required when investors do not understand what they are doing.” – Warren Buffett

Diversification is what IFAs and advisors tell you to do when they want more commissions. You know what you are doing and being overweight or underweight in your portfolio is irrelevant. This is called tactical investing.

“If you have trouble imagining a 20% loss in the stock market, you shouldn’t be in stocks.” – John Bogle

Markets move up and down, if you cannot endure the lows to enjoy the highs then you shouldn’t be investing.

“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.” – George Soros

George Soros knows one or two things about investing. Although we slightly disagree with this quote, as we believe if you are passionate about what you do and how you work, then good investing can be fun.

“If you have more than 120 or 130 I.Q. points, you can afford to give the rest away. You don’t need extraordinary intelligence to succeed as an investor.” – Warren Buffett

This is a significant quote as investing and trading is labelled for brilliant minds and difficult to learn. This is not the case at all and anyone can learn how to do it. The companies that make it seem hard and sophisticated are the advisors and managers who want to keep your mindset like this so they can charge commissions for their work.

“Smart investing doesn’t consist of buying good assets but of buying assets well. This is a very, very important distinction that very, very few people understand.” – Howard Marks

The amount of people that believe that buying the right asset is all it takes to achieve the rewards is scary. Howard Marks points out that this is just one part of successful investing. The key to unlocking assets full potential is investing at the right time.

“You get recessions, you have stock market declines. If you don’t understand that’s going to happen, then you’re not ready, you won’t do well in the markets.” – Peter Lynch

This echoes a few points from earlier. Markets do not always go upwards and you should be prepared for this. If you can’t stomach it, stay aside.

“The emotional burden of trading is substantial; on any given day, I could lose millions of dollars. If you personalize these losses, you can’t trade.” – Bruce Kovner

You are trading to increase your wealth and hopefully spend the money in the future, this is standard. However, whilst the money is in your trading account, it is a vehicle for you to use to generate positive returns. If you relate the money in the account to the money you need to spend on bills, this will hold you back.

Conclusion

There we have it.

We really enjoyed putting this article together and we hope that you will reap the benefits and found a nugget of information or two.

Don’t forget that with trading you must adapt and be flexible to different market events and market cycles.

Our favourite top trading tip for beginners is to let the winners run.

Too many traders when they start out just want to take a profit and find another trading idea, instead of relaxing managing the position actively.

By managing the stop loss you can lock-in profit so no matter what happens, you will profit. On top of this, you can keep going and the position open for as long as the market is in your favour.

Imagine taking a small profit at the start of a huge trend? All that research and work into that idea could have been 10x more profitable for the same amount of risk and work.

So if you can change one habit or have one take away from this article, we hope it is this. You will become more consistently profitable and longer over time with this one tip.

If you have any further trading tips, feel free to message us by e-mail or on our social channels and we will be sure to add it in here.

Good luck and have fun.

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