Many beginners don't realize that trading is not as easy as it looks, ThinkMarkets has compiled 10 ways to optimize trading。

We all know that trading is all about buying and selling assets in the financial markets, but most people don't know the rules for being a successful trader。One of the most common mistakes of novices is to think that trading is a simple get-rich scheme where profits will come naturally。Some ads may claim that a deal can fill a coffer with a small amount of money in just a few weeks, but what they don't tell you is that it still takes hard work。

A successful trader is skilled and disciplined。We may think that trading just means buying assets when the price is low and selling when the price is high, but there is actually more to it。In this guide, we've summarized ten useful tips offered by ThinkMarkets to help you develop a sound trading plan to boost your performance。

1.Understanding the market

In order to make a good trading plan, you first need to fully understand your trading market。For many professional traders, taking the time to learn and read various knowledge is their daily work, and a good understanding of the market will help you make better use of market information and make informed decisions。

No matter which trading instrument you choose, you need to focus on 3 basic points:

• MARKET TERMS
  Unique characteristics of the market
  Factors affecting market trends

For example, in forex trading, market movements are measured in pips, while in other markets, they are measured in points or ticks.。It is important to understand these terms in relation to the unique characteristics of each market。In addition, the factors that affect market prices vary from market to market, with the foreign exchange market being heavily influenced by the economic conditions of the home country of the trading currency, while prices in commodity markets depend on supply and demand.。Recognizing these factors will help you identify trading opportunities and avoid adverse conditions。

2.Analyze the market

In addition to a general understanding of the market, it is also important to learn how to analyze market conditions to find trading signals and identify opportunities.。There are two methods, technical analysis and fundamental analysis, and the main difference between the two is the type of data used to predict future market trends.。

Technical analysis uses historical price movements, while fundamental analysis relies on economic and financial factors that may have an impact on the market.。Technical traders typically use technical indicators and analyze price charts to look for patterns that indicate future price movements of an asset。At the same time, fundamental traders assess the market by measuring its intrinsic value, such as economic and industry conditions, important news releases, etc.。

According to ThinkMarkets, you can choose to use only one method or a combination of the two methods。Just start with a basic understanding, and then when you have a better understanding of how the market works, you can perform more complex analysis。Keep in mind that none of these methods guarantee 100% accuracy, they only indicate potential market movements and ultimately depend on your choice。

3.Identify Entries

Markets may be open 24 hours a day, but not always profitable。Sometimes the market is very attractive to traders and sometimes it is best to exit, so please choose the right entry point for your trade carefully to get the highest possible profit。If the trading signal is strong, you can open a position immediately; but if you are unsure, it is better to hold and wait for a better opportunity。

Sometimes you may find yourself in a situation where the signal looks promising, but the target entry is not yet available in the market。In this case, you can choose to place a pending order. Once the price reaches a certain point, the pending order will execute your trade. It can help you manage trading risks and ensure that you enter the market as planned。

Another tip is to keep abreast of market news and release dates using an economic calendar that can help you predict huge market swings and high volatility。However, financial markets are unpredictable, so there is no guarantee that forecasts will always be accurate, even if published by experts.。

4.Set risk tolerance

Novice traders tend to focus only on profits and losses, often ignoring the importance of risk management。They increase their exposure when trading, while hoping the market will be in their favor; on the other hand, successful traders are very aware of their risks。They will determine their risk tolerance and stick with it until they close out their positions.。As a result, wise traders do not take on more risk than they can afford。

To determine your risk tolerance, you need to assess your level of experience and the size of the deal。Many traders only risk 1-3% of their trade size, but ThinkMarkets says beginners usually start at 1%.。So if you're trading at $10,000, a good starting point is to choose 1% of the size or risk $100 per trade。

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As a multi-asset online brokerage, ThinkMarkets offers a wide range of trading assets from Forex to Precious Metals, Commodities, Indices, Stocks and Cryptocurrencies。The Australian-based broker was founded in 2010 and has since opened more headquarters in London and regional offices in Asia Pacific, the Middle East, North Africa, Europe and South America.。

Along with its historical operations, ThinkMarkets has received numerous awards and recognition in various aspects.。They recently won the Best Value Broker Award in Asia at the 2020 Global Forex Awards。

Standard account average forex spread for traders who open an account with ThinkMarkets from 1.From 2, while ThinkZero offers 0.Best trading experience at 1 point spread。However, traders may want to take into account that ThinkZero charges 3 per side for every 1,000,000 trades..$5 commission。

As a global online brokerage firm, ThinkMarkets operates under the supervision of multiple financial regulators, for example, ThinkMarkets Australia is managed by TF Global Markets (Aust) Limited and licensed by the Australian Financial Services Authority and the Australian Securities and Investments Commission (ASIC), ABN: 69158361561。ThinkMarkets UK is registered with the Financial Conduct Authority (FCA) under the name TF Global Markets (UK) Limited (No.09042646)。

ThinkMarkets is always committed to improving its trading environment through a variety of advanced products.。Auto trading enthusiasts can use free VPS hosting, while enthusiastic traders who want to experience outside the MetaQuote platform can try ThinkMarkets' proprietary platform ThinkTrader。

The trading platform offers 3 different interfaces designed for web desktop, tablet and mobile display。In addition, custom tools such as more than 80 drawing tools and more than 125 technical analysis indicators can even be accessed via mobile screens, which will undoubtedly provide a new mobile trading experience.。

In terms of market updates, the ThinkMarkets deal will be accompanied by news from FX Wire Pro, which is known for its strict policy of adhering to objective news reporting and providing critical, credible information in real time.。Information areas covered by FX Wire Pro include economic commentary, technical-level reports, currencies and commodities, central bank bulletins, energy and metals, and event-driven bulletins。

For payment methods, ThinkMarkets provides gateways through bank transfers, credit cards (Visa and MasterCard), Skrill, Neteller, POLi online banking, BPay, and Bitcoin wallets。

All in all, for a company that has been in business since 2010, ThinkMarkets has been quite successful in terms of legal status and trading technology innovation.。As an additional guarantee of safety for traders, the broker highlighted its commitment to a $1 million insurance protection plan, which is achieved through ThinkMarkets and Lloyd's of London insurance policies, in the unlikely event of bankruptcy Provide up to $1 million in protection for customers' funds。

5.Consider the risk / reward ratio

Once you understand your risk tolerance, you can determine the level of return you want, that is, where the risk / reward ratio comes into play。The risk / reward ratio refers to the balance between the risk you are willing to take and your target return. Similar to the 1-3% risk rule, a risk / reward ratio of 1: 3 is usually considered the appropriate amount。

Using a 1: 3 risk / reward ratio means that for every point you take, you get a three-point return.。Therefore, if you trade at $10,000 and the risk level is 1% or $100, your profit target should not exceed $300。However, please note that this number is not mandatory for all traders.。Beginners can use a lower ratio, such as 1: 2, to minimize overall risk。

6.Control of transaction funds

You may already know that market movements are unpredictable or uncontrollable, and what you can control is the positive or negative impact these movements have on your trading, so you must be able to manage your trading well and use appropriate risk management systems。

ThinkMarkets points out three possible scenarios that can happen with your trade:

• The market is good for you.
• The market is bad for you.
  Market moves sideways, indicating no gains or losses

In order to control the trade, you can use functions such as take profit to lock in profits (if the market moves in your favor), or use stop loss (if the market moves against you) to limit potential losses。The most important thing is to follow a trading plan and make decisions based on your risk tolerance。Many traders end up losing a lot of money as they move their take-profit higher and higher, only to find that the market quickly reverses soon after。

7.All recorded

The easiest way to evaluate trading performance is to record every trade you make。You can use a paper notebook or record it electronically. By recording your daily activities, you can understand which trades you may win or lose, and you may use this information to adjust your trading plan for future improvements。

It does not necessarily have to be in the form of a diary, but each entry must contain the following aspects:

• Review of Past Transactions
  Analysis of existing trading opportunities, including macro analysis (news, economic reports) and micro analysis (charts and technical indicators)
  Starting point
  The level of risk you can take
  Stop Loss and Take Profit Levels

8.Test the strategy on a demo account

No matter how technically proficient, it is always important to test your strategy on a demo account before putting it into the real market。A demo account works the same way as a real trading account, except it's just a simulation of a real trading environment, so no real money is involved。

Practicing your strategy on a demo account can help you identify weaknesses in your plan and make adjustments if necessary。Just make sure you follow every step and stick to the plan as if you were trading in a real market, otherwise, the exercise is useless。

As ThinkMarkets says, the goal is to simulate trading and see if the strategy works。Many beginners make the mistake of not taking a demo account seriously because there is no risk。Therefore, when the same trading plan is applied to the real account, the result is very different from the demo account。

9.Eliminate emotions

Uncontrollable emotions are one of the reasons why traders abandon their trading plans and fail to achieve their goals。When trading, it is important to be able to act professionally and eliminate any irrelevant influences to focus on your trading。Sometimes the market tests your nerves, but as a trader, you should learn to curb greed, hope and fear。Decisions need to be based on logic, not emotion。

There are several common ways to eliminate emotions in trading。Some traders prefer to use everyday habits, such as making lists related to trading plans, while others prefer to use simple exercises to clear their minds and stay focused。You can use the method that suits you, as long as it works and does not affect work efficiency。

10.Take time to know yourself.

Finally, it is important to know yourself.。Every trader is different, so in addition to understanding the personality of your trading market, you should also determine your trading personality, including what type of trader you are, your needs, and your goals。Understanding your trading personality can help you achieve your personal goals and make continuous progress, as guided by ThinkMarkets。

Nowadays, there are many assessments online that can help you learn more about yourself in the trading environment, as well as a large number of books and articles discussing different trading styles, so you can choose the most suitable one and get to know yourself well。

Conclusion

At the end of the day, no matter how good you are as a trader, trading is still risky。Financial markets are unpredictable, so losses are inevitable。Instead of aiming to eliminate losses completely, keep losses small enough so that you can continue trading to gain more profitable positions。The above 10 tips from ThinkMarkets will help you develop a good trading plan and manage risk wisely。No matter how attractive the market looks, don't trade more than you can afford。

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ThinkMarkets is an award-winning online broker that has become a highly regulated brand globally since 2010, constantly striving to give traders access to a wide range of financial markets through its advanced platform, ThinkTrader。