There are many elements you need to know to succeed as a penny stock trader. However, with only a little effort anyone can make the changes required to improve the trading skills and take the trading to the next level.
Here are 10 tips to consider becoming a successful trader:
1. Before you place your position, determine a reasonable risk/reward ratio. What is the potential risk and what is the reward? The rule of thumb is 3:1 ratio.
2. Know your chances and stop guessing. A professional trader understands probabilities and don’t trade when he/she has bad odds. Therefore, you need to know when to trade and not to trade.
3. Don’t trade with too small capital. You will likely start thinking money instead of probabilities.
4. It’s also difficult to stop trading after several good trades and then start loosing. It’s also very difficult to stop trading when you trade with losses. Then it’s very easy to say “I’ll stop when I have lost $ 1000. The limit has exceeded and you still have gains, but the next trade may be the big one.
5. Your bad decision happens either after a very good or after a very bad period. Losses are a part of the game, but many trader starts trading irrationally or give up.
6. If you want to become a successful trader you also have to take some risk. “No pain, no gain”.
7. It is possible to trade with profit just by avoiding the mistakes. To do so you need to have discipline and follow the rules you have set up. Avoiding the most obvious mistakes might be good enough for most traders to come out with profit.
8. Draw up a set of trading rules. Many people don’t know what they are doing when they start trading or why they trade the way they do. Do you want to be one of them when you start trading?
9. Keep it simple. Focus on few simple indicators in your trading decisions. If you have too many criteria it will be very complicated.
10. “All roads lead to Rome”. Learn from yesterday’s master and from the most successful traders in the world. The looser will always do the same universal mistakes. The winner may have different trading style, but they will always succeed.
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Source by Siw Dahl