5 Trading Advices That Begs To Be Questioned

January 28, 2016
5 Trading Advices That Begs To Be Questioned

[bsa_pro_ad_space id=1]There is no end to the amount of suggestions you can get online, to get you started with profitable trading. There are naturally different suggestions for different markets, but some ideas seems to be used unquestioned in all markets. Personally, I hate seeing these ideas being posted again and again, without any critical perspective, whatsoever.

With that being said, I am not directly saying that the ideas posted below are wrong, but I definately think its a good idea to question them. They might be suitable for some, and not for you.

Let’s get to it.

There is no risk in taking profit

Take profit in trading
This is such a cliche and in my opinion and in my opinion, a truly bad advice. From a static perspective, the specific wording is correct, but it indirectly implies that your expected trading career is a binary bet and not a long term plan. Taking profit might give you a dollar in the pocket now, but if that “profit” is based on an initial setup with a risk of say 100 USD -and you plan to execute your next trade with the same R/R conditions, there is a risk of doing this. A risk which, over time, is equal to the sum of your account balance.

Start practicing with a demo account

start trading with a demo account
So this isnt exactly a bad advice. But people promote this for the wrong reasons, which is; start with a demo account to find a strategy that is profitable, and then move on to a live account. This is a bad advice! Starting with a demo account can be a good idea, as a way to get a grip of the details as to how to platform functions, and the details of your account. You need to learn how to place orders, close them out, and see how this accounts your account balance, equity, margin and so on. Once you know this, the next step should done on a live account. The reason why you cannot find a profitable trading strategy on a demo account and replicate it on a live account is because of the way funny money alters your mindset and psychological threshold. In order to find a profitable trading strategy, you need to be able to handle losses of real money.

Have a specific trading plan

Have a specific trading plan
People state this like its the only way to become a profitable trader; having a trading plan, with specific setups that trigger entries and exits, along with specific take profit and stop loss levels, that is. This might work for some but it certainly doesn’t work for everyone. This can easily spotted in the market for algo trading. I have seen I don’t know how many of these, and majority of them are nothing more than hot air; interestingly, they are all based on exactly that; very specific trading setups. Sure there might be certain particular trading setups that work wonders, but don’t be fooled into believing that any random strategy will be profitable, just because it’s based on fixed parameters. It won’t! And finding one that will, will take a lot of time and effort.

Control your emotions

Control your trading emotions
Easier said than done. It’s said a lot! It’s done far less! The funny thing is that this exact advice is shared a lot! But specific actions steps as to how you should do this, are close to nonexistent (at least in the trading space). Usually, people who start on a trading journey, wont know emotionally affected they get, untill its too late. I dont have the perfect answer either. The short version is that people make this seem a lot easier than it really is, by stating the obvious. Few people share thoughts on the significace on this, or how to actually go about, controlling your eomitions.

Follow the trend

follow the trend in trading
In some markets and for some strategies, sure, this can be a good idea. But traders often highlight this as more important than anything else in trading; it might be, if you are using a trend following strategy, but if you aren’t, following the trend is obviously not important. You can make a profit from trend following, but you can just as easily do it the other way around. The whole talk about trend following makes more sense for stock traders than for FX traders as there is a mean reversion tendency in the FX market. The trend itself is also a blurry thing. Traders certainly don’t agree on how to identify it, nor what time frame is the ideal for spotting a trend; opinions on actual trends are shattered. Trading in the direction of the trend can be a good idea, but it can also be a bad one. If you do it, do it for the right reasons, and stop throwing the word around like it should form an essential part of any trading plan out there. That is not the case.

Recommendations

Let us send you our latest updates & Tips

Jose L. Aguilar- SharkInvestor.com Author

Being able to Invest & Trade on your own is the most amazing road to financial independence & optional retirement. I was very fortunate to have amazing mentors and read many amazing authors, I hope you enjoy my articles & books suggestions which are made with the intent to share my experiences as simple as possible.

Follow Us

By Jose L. Aguilar

Being able to Invest & Trade on your own is the most amazing road to financial independence & optional retirement. I was very fortunate to have amazing mentors and read many amazing authors, I hope you enjoy my articles & books suggestions which are made with the intent to share my experiences as simple as possible.

Related Articles

Downtrend – How to Spot it and How to Trade it

Downtrend – How to Spot it and How to Trade it

In today’s volatile world, financial security is becoming more and more of a prominent issue for all of us. We need to figure out how to invest out money so as to milk the good times for all they are worth and to ride out the bad times till they are over. We also need...

read more
What Commodities To Invest In In 2017

What Commodities To Invest In In 2017

2017 has indeed proven to be a turbulent year and many investors are wondering what the markets may next have in store. Whether referring to the relatively fragile state of the Eurozone, the Brexit confirmation or the decidedly dubious track record of the Trump...

read more
Will it be good to bet your real estate money

Will it be good to bet your real estate money

Savvy investors with money to spare and a particular interest in real estate may have issues investing their spare cash. This year, prices for high-end properties have gone up. The solution might be focusing on private property debt funds; they might take the place of...

read more

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *