How can traders trade more effectively

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How can traders trade more effectively?

Trading financial assets online is considered by many users as just a way to generate profit. The number of private traders striving to achieve success is increasing rapidly at the same time. The vast majority of which are average people with no specialized knowledge or professional experience. However, this doesn’t get in the way of their ability to perform well on the market. In this article, we will suggest several simple ways for you to increase how effectively you trade and generate more profit.

So, any trading tool will generate a stable income in the right circumstances. This is why setting up optimal conditions is of the utmost importance.

Along these lines, here is the first practical recommendation for increasing how effectively you trade.

Choose the right trading platform. It is not only about finding a well-laid-out and effective terminal for trading but gaining a full assortment of various indicators and trading conditions. Besides that, choosing the right platform protects you from fraud and the significant losses that follow. These days the market is full of trading services that offer a wide range of technical and financial conditions for online trading. With such a selection available, even experienced traders can go wrong, let alone beginners. So, be sure to keep these simple recommendations in mind when you choose a trading terminal:

в—Џ First and foremost, check if the trading platform is licensed. Online trading attracts many con artists, who create their own trading services aiming to steal investors’ funds. On that front, licenses issued by regulatory bodies are not only proof of the legality of the trading platform, but also insurance against fraud. Try to find a terminal that has several licenses, from national regulators as well as European. Therefore, you will completely avoid the possibility of fraudulent trading resources and will be able to work on a secure platform.

в—Џ Give preference to services offering highly-advanced technical tools. Trading is a relatively complex process that requires many tools and services. The main parameter for choosing a terminal should be how equipped the platform’s range of analytical tools is, such as indicators, chart tools, and resources for automatically generating trading signals. It is vital that it has an effective information service for trading that provides an economic calendar and overviews of new publications. If you choose a terminal with access to such services and resources, you will set yourself up with the ideal technical conditions for trading.

в—Џ Thoroughly research the financial conditions of trading on the platform. The trading conditions are not only minimum deposit required and the cost of trading positions, it also includes the commission on trading contracts, means of calculation, cashback, trading capital promo offers and credit and lending for traders.

в—Џ Thoroughly researching all the aspects of the financial conditions will in some cases enable you to earn a profit before you place your first trade. In any case, effective trading conditions will enable you to manage your investment funds right, so as to maximize your trading indicators.

в—Џ Partner with a company that has the reputation as being the most transparent in the professional sphere. To do this, go through the reviews of traders who have already used the trading platform. This helps clarify the nuances that may not have been apparent in your research into the company’s activity when you are choosing a terminal.

If you follow these recommendations, you can choose the best trading terminal for your individual needs, setting up the most ideal technical and financial conditions for trading on the market.

Create an assortment of trading strategies

Trading on the market is more complex than just forming contracts! Traders spend most of their time analyzing the market and generating forecasts based on current and historical evaluations. This requires specific approaches, tools, and methods or, to put it simply, trading strategies. The vast majority of investors use a trading system they found online. There is nothing wrong with that, however, it is hard to achieve the most effective trading strategy by doing this. The reason for this has multiple layers, based on the following factors:

в—Џ The most effective strategies are systems worked out by traders themselves. By doing this, investors take into account all their personal trading preferences, set up the best psychological conditions for trading, and deeply understand the principles for generating the strategy’s signals

в—Џ Not every system available online is profitable and effective for trading
в—Џ The systems can’t demonstrate stability under various market conditions. Sooner or later every system fails and losses occur!

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The last factor requires traders to create a high rate portfolio of strategies for working effectively under the various conditions of market movement posed by different assets. To create this portfolio, traders need to have a good understanding of the different types of trading systems and in what conditions they should be used. We recommend you some of the basic analytical approaches.

So, you can clearly divide all financial trading systems into one of the following strategy formats:

в—Џ Trading on a clear chart is analysis based directly on market data
в—Џ Trading the news is analyzing the fundamental drivers influencing the market
в—Џ Indicator systems are strategies based on automatic services

Anyone of these trading system formats has many subcategories and types and is able to generate relatively accurate trading indicators under particular market conditions. In order for you to gain a better understanding of the general principles of working with each type of strategy, we’ll provide you with a more detailed description of each analysis algorithm

Trading on a clear chart

The approaches for working on the market for this format are based on the various cyclical rules that form the market in the process of building liquidity. This approach has long been recognized and is one of the most tested types of strategies. When analyzing this trading strategy, it is worth breaking down the subcategories of approaches to technical analysis:

в—Џ Trading on a trend
в—Џ Trading on trend levels
в—Џ The analysis of candle patterns
в—Џ When trading on chart figures, when the charts are constructed, the market clearly forms specific geometric figures, which are great ways of identifying the vector of market fluctuation.

Technical analysis as a means of market forecasting is suited to active traders because this type of system is the most dynamic generator of trading signals. Other than that, they produce relatively accurate and universally-applicable forecasts, meaning that they work uniquely well on all basic assets. On average, the statistics on technical analysis systems shows that they produce positive trading results on up to 80% of positions. That is very high, making them some of the most accurate financial indicators in general.

Indicator systems

This type of trading system runs through specialized programs. These algorithms automatically evaluate a large number of technical indicators and market data and generate signal indicators for forming trading positions based on them. The sheer number of different indicators around allows for the creation of effective trading systems. This has made indicator strategies the most popular choice among professional traders. This kind of system is divided into the following types:

в—Џ Multi-indicator – These systems are based on two or more method of analysis, which interactively filter and support the general running of the system
в—Џ Single indicator – These systems are made up of one indicator

Indicator strategies are the ideal choice of trading systems for beginners, regardless of their level of activity. As this system can be either be adopted ready-made or customized as a personalized strategy. Indicator strategies are the most effective and likely to produce results. They are not complicated to use either. By using even simple indicator approaches for generating signals, you can expect 75% or more of your trading positions to produce a positive result.

Trading the news

This type of strategy is best suited to traders who have already devoted some time to working on the market. The advantage of this approach to analysis is you don’t need to continuously track asset rates. The strategy of trading the news is based on the principle of using the publication of macroeconomic statistics and other data as signals that play the roles of drivers, influencing the financial markets. Typically, data released by regulatory sources are used, such as Central Banks, political announcements, and economic reviews. This strategy works simply and logically, negative data is an indicator of market decline, and positive points to growth. The accuracy of the signals produced through trading the news can at times reach 100%, allowing for the generation of profit without loss.
By taking a simple approach to this system, you can form contracts on primary assets. Take the oil rates for example. In this case, we recommend using macroeconomic indicators of the reserves of the primary consumer, the US, as a market driver. The most recent news on that question shows a decline in the reserves, which lead to a sharp jump in the price of oil. We know in advance all the necessary data for forming contracts that will produce results, such as, the release date of statistics, and the assets which they influence, the kinds of drivers on the trading tool’s rates, and preliminary analysis of indicators. Therefore, after quickly evaluating the statistics, we can place trades under the most optimum conditions. So, we see that the oil reserves have the decreased, that is good news for oil, therefore we buy with a high likelihood of turning a profit!

When you have learned the principles of each strategy and the optimal conditions for applying them, you can create an effective toolkit of forecasting methods. By applying the systems under the best conditions, you get the most trading indicators.

Study psychological and sociological principles

In order to become an effective market participant, you need to understand psychological and sociological principles. It is incredibly important to understand that participants directly affect market movements, meaning that their preferences at any given moment decrease or increase rates. Therefore, professional investors very often form their trading positions based on the analysis of sociological indicators on the market activity of traders as a whole. Mob psychology plays an especially important role.

To study the approaches of analyzing societal activity in particular spheres, we recommend advanced textbooks on marketing, as well as textbooks on psychology with a financial lean. The problem is that today the literature on the subject just doesn’t exist, however, you can find everything you need to know online.

Conclusions

In order to increase your profit from trading operations on the financial market, you need to become a professional of a high caliber. For that, every potential investor needs to educate themselves on an on-going basis, so as to increase their technical and analytical tools for evaluating the market. Other than that, today increasing trading accuracy lies in your perspective for creating optimal trading conditions and taking innovative approaches to forecasting asset price movement. These factors require investors to make better quality decisions when choosing trading partners and working out trading approaches. All in all, these days it’s relatively easy to increase the effectiveness of you trading operations and become a successful trader!

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

Top 4 Things Successful Forex Traders Do

There is no single formula for success for trading in the financial markets. Think of the markets as being like the ocean and the trader as a surfer. Surfing requires talent, balance, patience, proper equipment, and mindfulness of your surroundings. Would you go into water that had dangerous rip tides or was shark-infested? Hopefully not. (See also “The 3 Most Timeless Investment Principles.”)

The attitude to trading in the Forex markets is no different. By blending good analysis with effective implementation, your success rate will improve dramatically, and, like many skill sets, good trading comes from a combination of talent and hard work. Here are the four strategies to serve you well in all markets, but in this article, we will focus on the Forex markets.

Approaching Forex Trading

Before you trade, recognize the value of proper preparation. It’s important to align your personal goals and temperament with relatable instruments and markets. For example, if you understand retail markets, then it makes sense to trade retail stocks rather than oil futures, about which you may know nothing. It also helps to begin by assessing the following three components:

Given its low commissions and fees, the Forex market is very accessible to individual investors. However, before you trade, make sure you have a solid understanding of what the Forex market is and the smart ways to navigate it. Learn the basics and see real-time examples of the approaches and strategies detailed in Investopedia Academy’s Forex Trading for Beginners course.

Time Frame

The time frame indicates the type of trading that is appropriate for your temperament. Trading off a five-minute chart suggests that you are more comfortable taking a position without exposure to overnight risk. On the other hand, choosing weekly charts indicates comfort with overnight risk and a willingness to see some days go contrary to your position.

In addition, decide if you have the time and willingness to sit in front of a screen all day or if you prefer to do your research over the weekend and then make a trading decision for the week ahead based on your analysis. Remember that the opportunity to make substantial money in the Forex markets requires time. Short-term scalping, by definition, means small profits or losses. In this case, you will have to trade more frequently.

Methodology

Once you choose a time frame, find a consistent methodology. For example, some traders like to buy support and sell resistance. Others prefer buying or selling breakouts. Some like to trade using indicators, such as MACD (moving average convergence divergence) and crossovers.

Once you choose a system or methodology, test it to see if it works on a consistent basis and provides an edge. If your system is reliable more than 50% of the time, you should consider that an edge, even if it’s a small one. Test a few strategies, and when you find one that delivers a consistently positive outcome, stay with it and test it with a variety of instruments and various time frames.

Market (Instrument)

You will find that certain instruments trade much more orderly than others. Erratic trading instruments make it difficult to produce a winning system. Therefore, it is necessary to test your system on multiple instruments to determine that your system’s “personality” matches with the instrument being traded. For example, if you were trading the USD/JPY currency pair in the Forex market, you may find that Fibonacci support and resistance levels are more reliable.

How much can traders earn?

Private investors have only been able to trade online for a few decades. Today there is an army of traders that make up millions of users and their numbers grow with every day. Forex appeared in the very early days of the internet. We’ve seen its surges and falls, however, most importantly, we’ve laid witness to the rise of new trading tools such as over-the-counter futures contracts and cryptocurrency assets. However, neither the appearance of new trading assets, not the active flourishment of online trading gives users an answer to the more pressing question of how much can traders earn using the financial trading tools at their disposal?

There are many different stories on the topic circulating online, giving entirely disparate accounts, ranging from millions in profit to the complete loss of capital. In this article, we will shed some light on how much traders can earn. Here we will go through the various approaches to trading available and identify the financial indicators that users can achieve.

So, let’s begin with the main topic of the article. It is vital to have an understanding of the primary directions of trading out there today that online investors use to generate profit. Currently, the overwhelming majority of traders trade with three online tools:

• Forex – An online exchange that provides access to over-the-counter CFD contracts on a wide array of financial assets
• Over-the-counter futures contracts – an online tool comprised of futures contracts from The Chicago Stock Exchange CHX
• The crypto exchange – This exchange offers specialized online trading services, such as margin trading for cryptocurrencies, as well as classic exchange operations

Every trading direction has its own algorithm for generating profit and has an array of advantages, as well as disadvantages, that go along with them. This has lead to a wide range of financial indicators for profitability and influences the level of profit generated by traders both in the long-term and in the short-term. Before we get into the nuances, you need to understand the general factors that influence profitability in trading.

What influences how profitable trades are?

Despite the variety of technical algorithms of trading tools, you’ll encounter an array of classic signs and drivers influencing traders’ results on the financial market. The following factors are worth note:

• The concrete market situation – Traders are continuously working under dynamically changing conditions, which have little in common with one another. Of course, particular patterns and indicators are cyclical, however, that does not mean that there will ever be two identical situations. Therefore, investors who have a feel for the market and take a selection of professional approaches to analyzing market conditions are more likely to generate profit. For this, it is very important to not only analyze the market when placing a trade but in the future as well. Identifying trends is critical, the periods of consolidation and flats, because this is what should influence your choice of strategy for a specific trading period, and accordingly how effectively you trade.

• The level of risk – Financial risk, in particular, plays a critical role in your trading results. The problem here lies not only in the potential of losing investment capital but, more often than not, in a trader’s attention to detail and psychology. The desire to profit as much as possible, as quickly as possible, as well as greed, can impair an investor’s ability to accurately evaluate their financial prospects and the trading risks. In this case, the vast majority of traders make the same mistake by increasing the total investment in one trading position and, as a result, lose all their funds.

• Personal characteristics and experience – The main problem has two aspects, an investor’s psychological resilience to stressful situations and their level of experience and drive to learn new trading approaches as well. If you are the kind of trader who invests time and effort in self-improvement, can effectively analyze your past mistakes and accurately evaluate your own actions in any given situation, then you can generate highly-accurate trading indicators.

These classic drivers are universal factors that influence the trading results of any investor. Now, let consider in further detail the opportunities available to investors in specific areas of trading.

Forex

On Forex, the process of producing profitable trading contracts itself, despite the classic approach, is difficult enough. For an investor to profit, they not only need to identify the direction of price movement but the level as well. For example, in order to produce a 100% return on capital, even when using leverage of 1:1,000, the asset rate must move a minimum of 100 points. This level of market fluctuation is common, however, over a relatively long period of time. So, it can take days or even weeks to generate profit.

Moreover, by placing trades on Forex, investors are left with an all-around ineffective regime for money management. There are no clear indicators of a contract’s likelihood to be profitable. Of course, by setting a strike level for the profitability of positions, an investor can identify vital indicators. However, following some research into the psychological aspects of currency trading, a growing number of specialists are now saying that this approach isn’t entirely effective. Therefore, the loss of capital on Forex is very common.
The risks and technical algorithms at play when working with currency assets don’t identify the general financial indicator. Profitability is directly tied to the level of capital. The logic is simple, the more funds you have to invest, the more profit you can generate. It is all a result of secondary factors. Considering the operating mode of contracts, the profitability level, and complexity in regards to generating medium-term and long-term trading forecasts on Forex, we receive the corresponding low levels of liquidity. The vast majority of successful trader say that a good indicator in this sphere is 20% capital growth over the period of a year. Of course, that isn’t a lot for an active trader, taking into account the amount of time and effort necessary to do so. Therefore, by investing larger amounts of capital in typical trading conditions, you can earn a higher income.

Given these indicators, it is hard to say much about large amounts of profit in this direction of trading. Investors who can over a large number of years grow their capital or traders who pool the funds of a large number of investors in PAMM accounts can produce multi-million dollar returns. However, if you’re a beginner with a starting capital of several hundred dollars, taking into account all the possible factors that influence losses, in the period of a year, you could expect no more than 20% returns on your initial investment.

The market for over-the-counter futures contracts

Let’s start with a bit of theory. Over-the-counter futures contracts, as a financial trading tool accessible to private investors, appeared on the market not all that long ago in 2008. The general principle for generating profit with this type of contract lies in forming the correct forecast on future rate fluctuation of a specific base asset within a clearly-defined period of time. To make it slightly more comprehensible, market participants should generate a forecast on where the rates will go and how long the movement will continue. If the forecast is correct, the trader makes upwards of 87% profit (on average 85%) of the total trading position. When the forecast is proven false, 100% of funds invested are lost.

The leading problem that stands between traders and the stable generation of profit is the fact that the negative mathematical expectation of generating profit is 15%. Taking into account that the probability is 50/50 and the negative expectation of producing a positive result, it is fairly difficult to earn anything at all! If these issues couldn’t be overcome, then this type of contract would be considered as an ineffective financial tool, and simply relegated to history. On the contrary, we’ve seen surprising growth in the popularity of this tool among private traders. That means that it can’t be all bad. If you perform all the complex mathematical calculations, analysis and technical trading optimizations on the stock market, then this will be the result:

• You’ll maintain a strategic balance between profit and loss of at least 65% so as to generate a stable income. Once you’ve achieved this balance, and as a trader, you’re still wondering how much you can make because you want to exactly how lucrative it is.
• Your trading result will entirely depend on how actively you trade, your total capital and the price of the contracts you trade with. The approach you take to money management when trading has an influence as well.
• These so-called trading strategies consist of rules for conducting analysis when generating forecasts for options so as to trade stably with a positive result. These days there are an innumerable amount of these systems, however, we will consider the main ones.

In regards to the concrete profitability indicators of this trading sphere, it is worth mentioning that, thanks to simple algorithm protocols, the presence of clear trading signals (the profitability of the trading operation, its duration on the market, the level of loss), as well as the speed and trading dynamic of this tool, we rarely see this indicator shows 100% capital growth within a 24 hour period. That being said, to reach that level, you need to be a very disciplined and active trader who uses a wide array of technical strategies able to accurately identify short-term trend vectors. However, these days that is completely possible and enables you to generate highly-accurate trading signals. On average, stock market traders can expect growth of several thousand percent in a year.

The cryptocurrency market

You must have a tailored approach to investing in the cryptocurrency market, as there are many factors that influence trading results that are exclusive to it. In general, this direction of trading is very similar to working on the stock market, where the primary goal of any investor is to find lucrative assets for investing and identifying to most opportune moment to purchase the asset.

The issue is that the rise in the popularity of cryptocurrencies online has led to the dynamic growth of new crypto coins. Therefore, the number of assets on the cryptocurrency market has become difficult and time-consuming to evaluate. In turn, these factors significantly influence traders’ results. To demonstrate the possible level of income generated through trading cryptocurrencies, take the simple example of the first cryptocoin, Bitcoin. In its case, when the asset was launched on the exchange, it was worth a fraction of a penny (2009), by the end of 2020, the coin reached the level of $20,000. Potential cryptocurrency investors find this fact unsettling, which only serves to popularize this trading direction further.

So, in order to generate profit here, you need to accurately and highly effectively evaluate the perspective price growth of a specific asset. To do this, follow these simple approaches and recommendations:

• Properly evaluate the idea of the crypto-coin project – The more innovative and widespread applicability of the cryptocurrency or the more obvious its perspectives are as a payment system or in other areas of activity, the higher potential it has for price growth

• Analyze the project’s end plan – What does the developer want to achieve

• Find out how many of the cryptocoins will be released – If the cryptocurrency release isn’t limited to a certain number of coins, it is very bad!

• Learn how to withdraw from the investment – The means of monetization, the dividend payment scheme, the methods of buying and selling the coin

Follow these recommendations when you are choosing an asset to invest in and you will find the most lucrative tool to invest funds. With regard to the possible level of profitability of this approach to trading financial assets, if all goes well, investment activity can total tens of thousands percentage-wise, however, don’t forget about the financial risks, you could lose it all!

Conclusions

A trader’s profit level is determined by their preference of which direction to trade, their activity on the market, their ability and their forecasting approaches. In general, every investor has the ability to regulate their own profit level, taking into account the nuances of trading with different financial tools. If you operate within a specific category, then you need to participate in that system in order to know the level of profit you can make!

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

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