It's not difficult to become a trader, but an easy start doesn't mean an easy profit. Trading is a kind of art. The commodity trading success will depend on many factors, starting from the choice of a broker, the size of the deposit and ending with the mental attitude. Let's explore the top 5 golden rules of commodity trading.
Write Down Your Trading Strategy
The vital rule for successful trading has a proper plan. Some say, "Don't fail to plan, or else plan to fail". You should plan things before and have a proper trading plan about how you will approach the markets. No matter what you face, stick to your plan. Maintain discipline, and the results will follow.
Listen To The Charts, Not The News
Charts can help investors to find out whether an investment choice has been successful or not. An investor is presented with all the necessary information. For example, if you choose to invest in a certain stock, your return and risk assessment (for example, potential loss) will be on the chart before it gets announced somewhere else, like maybe on television or social media within 2 months. Charts are a vital tool used by investors and traders to keep an eye on stocks' market performance, which lets them know how a certain stock will perform as soon as it is listed!
Trend Is Your Friend
Always trade in the direction of the major trend. If you are selecting trades based on charts, look at the weekly chart to determine the larger degree trend of that instrument. Likewise, if you are trading off the hourly chart, look at the daily time frame to determine the larger degree trend. By arranging your entries, you are harnessing the power of the market's directional bias to act in your favour. Boost up your chance of success in trading by following the latest trends.
Cut Short Your Losses, Let Your Profits Run
Many traders fall foul to the same trap, holding on to trades in the red and exiting trades that have given them profits. However, it's important not to let your emotions get involved when trading and always take a logical approach for best results. To make the most out of your investment portfolio, ensure you have planned out clear exit points before entering any trade. These exit points must be pre-defined with precise stop losses that should be monitored closely at all times. Only by being disciplined and sticking to your plan will you be able to truly maximise gains over time, therefore, becoming a profitable trader.
Learn from Your Mistake
The last but not the least golden rule of trading is learning from your own mistakes. It's okay to try new things and quiet ones that don't work but make sure you keep track of what didn't work so that you're better equipped to get it right (or at least a little closer) next time. Keep growing as a trader by patching up your mistakes, and remember it's never too late to brush up on some new skills or refresh your memory! You'll have more money in your pocket when this happens, so don't forget to learn.
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