3 useful pieces of advice in trading stocks
Many traders started their trading careers by viewing those commercial day-trading-related content. Unfortunately, all these commercials failed to mention the risks involved in day trading, crypto speculating, and FX CFD gambling.
These brokers are nothing but bookies and their top priority is to bring you to the gambling table, and most importantly, they want you to trade very big, and very very aggressively.
The thing is, you might not wanna take all their advice since you may end up trading over-leveraged CFD contracts and end up blowing up your account.
And you end up losing all your life savings to these shady brokers and bookies.
After maintaining profitability in my 10years of trading experience I have noticed that there are 3 most effective rules that I have followed on daily basis to keep growing my trading account.
The first piece of advice would be, never overtrade.
By meaning overtrade that I mean trade less frequently and trade with smaller sizes instead of going all in.
Lots of folks are simply ignoring the size of their trading account and obviously, they are so greedy that they want to make profits out of one or two over-concentrated bets.
You may start with a 1000 dollar or 10000 dollars account and you are betting nearly 90% out of one position. You may have a trading plan but the thing is when you are reaching this amount of bet you will behave emotionally which will result in great market losses.
Perhaps you are not buying the bottom you are building your position halfway and the stock is consolidating now you may be in huge losses, you may not have enough margin to survive the stock price going back and forth. You may end up cutting losses when there are too many losses to bear.
The second piece of advice would be, never sell in panic.
I have encountered many extreme market conditions in my life and it is not funny to see SPX down by 7% overnight and having your long side bets burned to the ground.
Most of the common mistakes in these tail events are that traders stop losses and sell in great panic. instead of following the technicals and their trading plans, they chose to follow their emotions.
I myself made similar mistakes as well.
Always remember to remain calm no matter how the financial market is trending against your favor. If you are selling in panic, your trading account will end up receiving a margin call from your broker.
The third piece of advice is to utilize your leverage wisely.
Many traders make great returns from using financial leverage which means borrowing money and extra funds from the broker. That leverage could end your trading career quickly or brings you great prosperity.
The nature of leverage is a double-edged sword therefore traders should respect the market and use leverage with maximum cautions. Plenty of traders and portfolio managers went bankrupt simply because their leverage applied was too large.
For instance, Bill Hwang from Archego, this Korean portfolio manager was achieving crazy market return but now he is suffering a 200 Billion dollar huge loss.
The above three pieces of advice should be helpful for anyone who wishes to grow their trading account continuously.
Good luck trading!
