Part 2: Taking control of your trading and investing in 2021
How can we take control of our trading in 2021 effectively? We, as an online trading academy, want to share a few tips to aid you throughout the year.
Part 2: Taking control of your trading and investing in 2021
If you haven't read "Part 1" yet, please start reading here
Take it step by step:
In half of the lessons taught on this blog, we have repeatedly emphasized the importance and advantages of being patient. The best trades will find you eventually. When you hold out your trades for long till you start feeling uncomfortable and tense, that's when you know you're undergoing the big moves and big risk-reward trades. Fight infuriation. Your forex, futures, and stock trades should bear fruit for you as long as you let them. Don’t harvest before it’s all set, and don't panic because of a few pitfalls. The market is typically slow, so it needs breathing space to progress.
Other benefits of slowing down your trade include:
Not stirring your account.
The less likely chance of trading during sideways whipsawing price action, eventually blowing your account.
Not likely becoming a trade addict.
A month of a small number of trades is enough to grow a sizeable trading account and maintain a specific routine for a period. You will know you're close to a professional's way of thinking when you find yourself in want of something to do.
Don’t miss trades:
The amount of big trades you miss out on in a year defines the kind of trader you are, even though it's quite inevitable to miss big trades. Most times, you're likely to find yourself in a state of disorientation in the face of a great trade setup, or you doubt your ability after analyzing a chart and end up convincing yourself it’s safer to pull out of a perfect trade setup. These missed trades wind up becoming great trades, and most times, you're not in the trade.
No one can predict what will become winning trades or which will become losing trades as they're distributed randomly over time. Work with this realistic reality to build your confidence so you can take on more trades that balance your trading plan requirements and push yourself to the edge and make your profits from it. If you keep shying away from trade setups because you feel it’s a difficult situation you need to avoid, you won’t have an edge in the market anymore.
Exit trades that are close to your target:
Other issues we frequently notice traders complain about in our email support lines is that they miss hitting profit targets. Sometimes, presumed winning trades turn into losing trades due to missing the profit target, which caused the trade to reverse afterward.
Here are three possible solutions to this:
Before your planned profit target level, come out of the trade a few pips every time. Then, you don’t have to panic for hours about the market getting close to your exit point but not reaching the level entirely.
Every time you pick a profit target in the future, don’t be a perfectionist about it and make it 10 pips, ticks, or cents less than the original level you identified to exit the trade. That way, profit target orders are more likely completed as planned.
Look out for lower R multiple rewards to increase your confidence. Don't always look for 4 to 1 or 3 to 1. Perhaps, lookout for 2 to 1 for the next 20 trades and see if you can build your confidence by hitting some winning trades repeatedly. Ensure you monitor all your trades to see how far they went after exiting. This will help give you a view of how much you can multiply your future targets. Taking on smaller profits may not be sufficient in the long run, but it will indeed build your confidence and teach you a lot. It’s worth the exercise.
Risk the same amount per trade:
Poor capital management is the one biggest reason traders fail, especially how much they risk per trade. Even though it may be considered a boring topic, it's crucial for your understanding and knowledge. Select a fixed $ risk per trade till you get to around 20 R to 24 R in total R profit units in the course of a 12-month time. If people can't prove their ability to increase capital over a long duration, why would they risk more capital in their next trade? If you think hard about this concept, you will know if you should risk more capital than you did in your last trade by jumping on the next trade. Try to stick to a fixed $ amount you decide on in your trading plan and don't shift from that amount until you can build your confidence and profitability track record.
Don’t trade markets you shouldn’t be trading in:
With the vast amount of markets available in the financial market, not all the markets are tradable due to unequal liquidity and size, which changes the odds. Not to digress from the most liquid and most followed markets like Major FX, Major Stock Indices, Gold, Oil, etc; professionals trade these markets, and it's okay for you to trade these markets as well. You can’t compare trading the Turkish Lira to the Euro Dollar. It's best to steer clear from adding those currency pairs and other exotic markets on your watch list. The markets that we here at our online trading academy trade include; EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD, AUDUSD, NZDUSD, EURJPY, and GBPJPY, S&P 500, NASDAQ, RUSSEL 2000, DOW JONES, NIKKEI, DAX, TREASURY NOTES & BONDS, GOLD, SILVER, PLATINUM, COPPER, CRUDE OIL, NATURAL GAR, SOYBEANS, CORN, WHEAT, SUGAR, COCOA, COFFEE and all major stocks.
Note your mistakes and those you did well:
Review what you did well: 2020 was a very challenging year and had its ups and downs, but we can pick something positive out of the year, irrespective. It’s essential to note the things you did well in your trade last year and commend yourself for your efforts. Maintaining discipline in your trading is very challenging; therefore, if you could hold up throughout the year even with some parts of your trading, endeavor to keep it up this New Year.
Review your mistakes: What mistakes did you make in your trading and investing in 2020, and how do you plan to correct them in 2021?
A fellow professional trader and investor once said, "Focus little on your losers and even less on your winners." It took some time to understand what he meant but what it means is that no two trades are ever alike, and every instant in the market is distinctive. Anytime you may come across a similar trade setup, the results are likely to be different, and there will be random winner or loser trades with time. A lot of traders don't learn from the mistakes they continuously make. Make a conscious effort to change for 2021. Do you make emotional decisions in entering and exiting trades as a result of fear and greed? Do you risk too much per trade? Do you frequently change your trading strategies and don't comply with your trading plan rules for trade entries?
To get on the right track with trading the forex, futures, and stock market you need to make a conscious "decision to change." Losses cause trading errors and can be averted if you try to control yourself, your emotions, and maintain your plans and rules. Look at it as a business.
Plan to improve:
We all need to progress in our business and life. To succeed at this, endeavor to end redundant trading mistakes you can work on; mistakes like trading without a sound trade signal that meets all your trading rules, risking more than you should, getting in and out of trades out of fear or greed, and a complete lack of self-control or emotions. These usual and familiar mistakes are what cause traders and investors to fail miserably. Have a trading strategy and plan from it and build a mental discipline to keep to it. That's a sure way to make money trading and investing in the financial market. When you maintain this pattern for an extended period, you let your winning trades compensate for losing trades. 2021 is the time for you to improve and right the wrongs of your trade approaches and attempts of 2020. Act now by taking note of your mistakes to work on them, so you don't remain at the same point as you were in the past year.
Hopefully, today’s lesson has opened your eyes to begin the process of evaluating your successes and mistakes for the year 2020 to enable you to produce a list of your goals and declarations for the year 2021. The following exercise will likely set you on the right path for this year:
What’s the biggest constant problem you have in the market?
What do you need to perfect in your trading throughout the year?
What primary goal do you hope to achieve in 2021?
Are there any declarations you have you can read to yourself every day?
If you want to learn more about professional trading and investing across multiple asset classes such as forex, futures, and stocks, please sign up here for free at our online trading academy www.onlinetradingcampus.com and get access to a free three-hour introductory course.
Author Bio: Bernd Skorupinski teaches the undiluted truth about trading and investing at Online Trading Campus and takes you through what it takes to be a consistently successful trader. His favorite moment as a trading mentor is the way peoples’ eyes light up with excitement and confidence when they understand how Supply and Demand trading strategy works and how it can help win in the trading arena. He believes in building core values and discipline that ensures his students do not succumb to the pressures and temptations of the market. He very much believes in following plans and strategy through. If you want to know more about the author Bernd Skorupinski please read here