Many beginners don't realize that trading is not as easy as it looks. ThinkMarkets compiles 10 ways you can improve your trade

ThinkMarkets Tips on Trading Successfully

We all know that trading means buying and selling assets in financial markets, but what most people are unaware of is the rules to become a successful trader. One of the most common rookie mistakes is thinking that trading is an easy get-rich scheme and that the profit comes naturally. Some adverts might claim that trading can turn a small lump of money into a treasure chest in just a few weeks, but what they don't tell you is the hard work that needs to be put into it.

A successful trader is a skillful, disciplined trader. We may think that trading simply means buying the asset when the price is low and selling when the price is high, but there's actually so much more to it. In this guide, we've summarized ten useful tips provided by ThinkMarkets to create a sound trading plan for your performance.

 

1. Understand the Market

In order to build a good trading plan, the first thing you need to have is a good understanding of the market that you're going to be trading in. For many professional traders, it's their daily job to spend time learning and reading about various markets to increase their knowledge. Having a good understanding of the market will help you use market information better and make informed decisions.

Regardless of the trading instrument that you choose, there are 3 basic points that you need to be focusing on:

  • Market terminology
  • Unique traits of the market
  • Factors influencing market movements

For instance, in forex trading, market movements are measured in pips, while in other markets, they are measured in points or ticks. It's important to know these terminologies in relation to each market's unique traits. Moreover, factors that influence market prices also vary from one market to another. The forex market is heavily influenced by the economic conditions of the home countries of traded currencies, while prices in commodity markets rely on supply and demand. Acknowledging these factors will help you spot trading opportunities and dodge unfavorable conditions.

 

2. Analyze the Market

Aside from understanding the market in general, it's also important to learn how to analyze market conditions in order to find trading signals and spot opportunities. There are two methods of doing so, namely technical and fundamental analysis. The main difference between the two is the type of data used to predict future market movements.

Technical analysis uses past historical price movements, while fundamental analysis relies on economic and financial factors that may have an impact on the market. Technical traders typically use technical indicators and analyze price charts to find patterns that suggest the asset's future price movements. Meanwhile, fundamental traders evaluate the market by measuring its intrinsic value, such as the economy and industry conditions, important news releases, and more.

According to ThinkMarkets, you can choose to use only one method or combine the two. Just start with the basic understanding, then advance to more complex analysis as you start getting a better understanding of how the market works. Just remember that neither of these approaches can guarantee 100% accuracy. They only indicate potential market movements, so it's up to you to make the decision.

 

3. Determine Your Entry

The market may be open 24 hours a day, but it's not profitable at all times. Sometimes the market is highly attractive for traders, while other times it's best to step aside. This is why it's crucial to choose the right entry point for your trade in order to get the highest possible profit. If the trading signal is strong, you can open a position straight away. But if you're unsure, it's better to hold your trade and wait for a better opportunity.

Sometimes you may find yourself in a situation where the signal looks promising, but your target entry is not available on the market yet. In this case, there's an option to place a pending order which will execute your trade once the price reaches a certain point. It can help you manage your trading risk and ensure that you're entering the market according to plan.

Another tip is to stay updated with market news and publication dates using an economic calendar. This can help you anticipate huge market movements and high volatility. However, keep in mind that financial markets are unpredictable, so there's no guarantee that the forecasts are always accurate, even if they're published by experts.   

 

4. Set Your Risk Tolerance

Novice traders tend to focus solely on profit and loss but often ignore the importance of risk management. They increase their risk exposure as they trade while hoping that the market will turn in their favor. On the other hand, successful traders know their risks well. They would determine their risk tolerance and stick to it until the position is closed. As such, a wise trader won't risk more than they can afford.

In order to determine your risk tolerance, you need to assess your level of experience and your trading size. Many traders risk only 1-3% of their trading size, but ThinkMarkets explains that beginners usually start with 1%. So, if you trade with $10,000, a good starting point would be to risk 1% of the size or $100 per trade.

Leverage
1:500
💼 Regulation
💲 Min Deposit
$0
Year Established
2010

Free education
Personal manager
PAMM
MAM
Segregated accounts
Affiliate program
Islamic accounts available
Compensation scheme
Negative balance protection
VPS
Trading via API
Copy trading
Webinar
Neteller
PayPal
Skrill
Wire transfer

As a multi-asset online brokerage, ThinkMarkets present a wide range of trading assets starting from Forex to Precious Metals, Commodities, Indices, Shares, and Cryptocurrencies. The Australian-based broker is established in 2010 and has since opened additional headquarters in London and regional offices throughout Asia-Pacific, Middle East, North Africa, Europe, and South America.

Along with its history operation, ThinkMarkets has been awarded and recognized many times in various aspects. Most recently, they won the Best Value Broker in Asia at the 2020 Global Forex Awards.

Average FX spreads for traders opening an account in ThinkMarkets start from 1.2 pips for the standard account, while ThinkZero provides the best trading experience with 0.1 pips spread. Still, traders may need to consider that ThinkZero applies commission from $3.5 per side for every 1000,000 trading volumes.

As a global online brokerage, ThinkMarkets operates under various financial regulatory institutions. For example, ThinkMarkets Australia is managed by TF Global Markets (Aust) Limited and is licensed by the Australian Financial Services as well as the Australian Securities and Investment Commission (ASIC) with ABN: 69158361561. ThinkMarkets UK is registered under the Financial Conduct Authority (FCA) by the company name of TF Global Markets (UK) Limited (number: 09042646).

ThinkMarkets consistently try to improve their trading environments with various advanced products. Automatic trading fans are provided with free VPS Hosting, while passionate traders who'd like to experience beyond MetaQuote platforms can try ThinkMarkets' proprietary platform called ThinkTrader.

The trading platform is available on 3 different interfaces specifically designed for Web Desktop, Tablet, and Mobile displays. Furthermore, customized tools such as 80+ drawing tools and more than 125 indicators for technical analysis accessible even through Mobile screens would certainly provide a brand new trading on-the-go experience.

As far as market updates go, trading in ThinkMarkets would be accompanied with news from FX Wire Pro that is known for its strict policy toward upholding objective journalism and delivering critical, trusted information in real-time. Information segments covered by FX Wire Pro include Economic Commentary, Technical-level Reports, Currency and Commodities, Central Bank Bulletins, Energies and metals, together with Event-driven Flashes.

For payment methods, ThinkMarkets offer the gateway via bank transfer, credit card (Visa and MasterCard), Skrill, Neteller, POLi internet banking, BPay, and Bitcoin wallet.

All in all, it is safe to say that for a company that started business since 2010, ThinkMarkets is an accomplished broker in terms of legal standing and innovation in trading technology. As an additional safety assurance for traders, this broker underlines its commitment to provide a $1 million insurance protection program which is made possible by ThinkMarkets' insurance policy with Lloyd's of London that protects clients' funds for up to $1 million in the unlikely event of insolvency.

 

5. Consider Your Risk/Reward Ratio

Once you know your risk tolerance, it's time to determine your desired reward level. This is where the risk/reward ratio plays a part. Risk/reward ratio refers to the balance between how much you're willing to risk and how much you're aiming to earn. Similar to the 1-3% risk rule, a 1:3 risk/reward ratio is often considered the appropriate amount for traders.

Using the 1:3 risk/reward ratio means that for every point you risk, you can expect to gain three points of reward. So, if you trade with $10,000 and the risk level is 1% or $100, then your profit target should not exceed $300. However, please note that this number is not mandatory for all traders. Beginners may use a lower ratio like 1:2 to minimize the overall risk.

 

6. Control Your Trading Capital

As you may already know, market movements are unpredictable and uncontrollable. What you can control is the positive or negative impact of those movements on your trade. This is why you must be able to manage your trade well and use a proper risk management system.

Generally speaking, ThinkMarkets points out three possible scenarios that can happen to your trades:

  • The market moves in your favor
  • The market moves against you
  • The market moves sideways, which means no gain and no loss

To gain control over your trade, you can use features such as take profit to lock in your profits if the market moves in your favor, or stop loss to limit your potential losses if the market moves against you. The most important thing is to follow your trading plan and make decisions based on your risk tolerance. Many traders end up losing a lot of money because they adjust the take profit higher and higher, only to find that the market quickly reverses a while later.

 

7. Write It All Down

The easiest way to evaluate your trading performance is to make a record of every single trade you make. You can use a paper notebook or write it digitally, whatever works for you. By writing down your daily activities, you can see where you may have winning or losing trades, and perhaps use the information to adjust your trading plan for future improvements.

It doesn't have to be in a "dear diary" form, but each entry must contain the following aspects:

  • Previous trading session review.
  • Existing trading opportunities analysis, which consists of macro-analysis (news, economic reports) and micro-analysis (charts and technical indicators.
  • A defined entry point.
  • The amount of risk that you can afford.
  • Stop loss and take profit levels.

 

8. Test Your Strategy on a Demo Account

No matter how skillful you are, it's always important to test your strategy on a demo account before putting it on a real market. Demo accounts work the same way as live trading accounts, except it's only a simulation of the real trading environment. This means, no real money is involved.

Practicing your strategy on a demo account can help you identify weaknesses in your plan and allow you to make adjustments if necessary. Just make sure to follow every step and stick to the plan as if you were trading in a real market. Otherwise, the practice won't be useful.

As explained by ThinkMarkets, the goal is to simulate the trade and see whether the strategy works or not. Many beginners make the mistake of not treating demo accounts seriously because there's no risk. As a result, when the same trading plan is applied to a live account, the outcome differs greatly compared to the demo account.

 

9. Eliminate Your Emotions

Uncontrollable emotion is one of the reasons why traders abandon their trading plans and fail to achieve their goals. When you are trading, it's important to be able to act professionally and remove any non-related influences to keep you focused on your trade. There are times when the market tests your nerves, but as a trader, you should learn to keep greed, hope, and fear at bay. Decisions need to be based on logic, not emotion.

There are several common ways to eliminate emotions in trading. Some traders like to use a daily routine, such as making a checklist related to the trading plan, while others prefer to use a brief physical exercise to help them clear their minds and stay focused. You can use any method that works for you as long as it's effective and it doesn't affect your productivity.  

 

10. Take Time to Know Yourself

Last but not least, it's highly important to know yourself. Every trader is different, so aside from knowing the personality of the market you're trading in, you should also identify your trading personality. This includes figuring out what type of trader you are, what your needs are, and what your goals are. Based on ThinkMarkets' guidance, understanding your trading personality can help you achieve your personal goals and make consistent progress.

Nowadays, there are many assessments online that can help you learn more about yourself in a trading environment. There are also loads of books and articles that talk about different trading styles, so you can choose the one that suits you the most and figure out who you are as an individual.  

 

In a Nutshell

At the end of the day, trading is still risky, regardless of how good you are as a trader. Financial markets are unpredictable, so losses can inevitably occur. Instead of aiming to eliminate losses altogether, it's wiser to keep the losses small enough so that you can keep trading to get more winning positions. The 10 recommendations from ThinkMarkets above push you to build a good trading plan and manage your risk wisely. Do not trade more than you can afford, no matter how attractive the market seems.

 


ThinkMarkets is a multi-awarded broker for online trading. Since 2010, they have become a highly regulated brand with a global presence that keeps striving to empower traders with access to a wide range of financial markets on their sophisticated platform, ThinkTrader.