Trading means 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 novice mistakes is to think of trading as an easy get-rich scheme where profits come naturally。Some ads may claim that a deal can turn a small amount of money into a treasure chest in just a few weeks, but don't tell you the hard work it takes。

A successful trader is a skilled and disciplined trader。We might think that trading simply means buying assets when prices are low and selling them when prices are high, but in reality, trading means much more than that.。In this guide, here are ten practical tips from ThinkMarkets to develop a sound trading plan for your performance。

1.Understanding the market

To make a good trading plan, you first need to have a good understanding of the market you will be trading in。For many professional traders, the daily job is to spend time learning and reading various market information to increase their knowledge。Understanding the market helps you make better use of market information and make informed decisions。

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

market terms; unique characteristics of the market; factors influencing market movements。

For example, in forex trading, market fluctuations are measured in points (pips), while in other markets, they are measured in points (points) or ticks (ticks)。It is important to understand these terms in relation to the unique characteristics of each market。

In addition, the factors affecting market prices vary from market to market。The foreign exchange market is heavily influenced by the economic conditions of the home country where the currency is traded, while prices in commodity markets depend on supply and demand.。Understanding these factors will help you identify trading opportunities and avoid adverse conditions。

2.Analyze the market

In addition to understanding the market in general, it is also important to learn how to analyze market conditions to find trading signals and identify opportunities.。There are two ways to do this, namely technical analysis and fundamental analysis。The main difference between the two is the type of data used to predict future market movements.。

Technical analysis uses past 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 find patterns that suggest 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.。

ThinkMarkets pointed out that you can choose to use only one method, or you can use a combination of the two methods。Start with the most basic understanding, and then perform more complex analysis as you begin to better understand how the market works。Keep in mind that neither method guarantees 100% accuracy。They can only point out potential market movements, so it's up to you to make the decision。

3.Determine the entry point

Markets may be open 24 hours a day, but not always profitable。Sometimes the market is very attractive to traders, and sometimes it's best to stay out of it。Therefore, choosing the right entry point for trading is critical to maximizing profits。If the trading signal is strong, you can open a position immediately, but if you are unsure, it is better to hold the trade and wait for a better opportunity.。

Sometimes, you may find yourself in a situation where the signal looks favorable, but your target entry point has not yet appeared in the market。In this case, you can choose a pending order, which will execute your trade once the price reaches a certain point。This can help you manage your trading risk and ensure that you enter the market as planned。

Another suggestion is to use the economic calendar to keep abreast of market news and release dates to help you predict huge and wild swings in the market。But keep in mind that financial markets are unpredictable, so even forecasts issued by experts are not guaranteed to always be accurate。

4.Set risk tolerance

Novice traders tend to focus only on profit and loss, but often ignore the importance of risk management。They increase their exposure when trading, while hoping that the market will work in their favor。On the other hand, successful traders are well aware of their risks。They determine their risk tolerance and stick with it until they close out their positions。Therefore, wise traders do not take risks beyond their own reach。

To determine your risk tolerance, you need to assess your level of experience and the size of your deal。Many traders only risk 1-3% of their trade size, but ThinkMarkets explains that beginners usually start at 1%。So if you're trading at $10,000, a good starting point is to risk 1% or $100 of your trading volume 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 need to take into account that ThinkZero charges 3 per side for every 1 million trading volumes..$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 (Ref: 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 FXWire 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 FXWire 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' insurance policy with Lloyd's of London, 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, it's time to determine the level of return you expect。This 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 the return you want.。Similar to the 1-3% risk rule, a risk / reward ratio of 1: 3 is often considered an appropriate amount for traders.。

Using a 1: 3 risk / reward ratio means that for every point of risk you take, you are expected to get three points of return。Therefore, if you trade with $10,000 and the risk level is 1%, which is $100, then your profit target should not exceed $300。But 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 trading capital

You may already know that market fluctuations are unpredictable and uncontrollable, and what can be controlled is the positive or negative impact of these movements on your trading。Therefore, you must be able to manage your trading well and use an appropriate risk management system。

In general, ThinkMarkets points out three possible scenarios for your trading:

The market moves in your favor; the market moves against you; the market moves horizontally, i.e., no gains or losses。

In order to control your trading, you can use features such as take profit, lock in profits when the market moves in your favor, or limit potential losses when the market moves against you。The most important thing is to follow your own trading plan and make decisions based on your own risk tolerance。Many traders end up losing a lot of money as they turn the take profit higher and higher, only to find that the market reverses quickly after a period of time。

7.Write it down

The easiest way to assess your trading performance is to record every transaction you make, either in a paper notebook or in an electronic product.。By writing down your daily activities, you can see where you are likely to trade wins or losses, and you can also use this information to adjust your trading plan to improve in the future。

Not necessarily written in the form of a diary, but each entry must contain the following aspects:

Review of previous trading sessions; analysis of existing trading opportunities, including macro analysis (news, economic reports) and micro analysis (charts and technical indicators); clear entry points; amount of risk that can be tolerated; stop loss and take profit levels。

8.Test strategy in demo account

No matter how skilled you are, it is important to test your strategy on a demo account before putting it into a real market。A demo account operates in the same way as a real trading account, except that it is a simulation of the real trading environment.。No real money involved.。

Practicing strategies on a demo account can help you identify weaknesses in your plan and make adjustments if necessary。Just make sure to follow every step and stick to the plan as if trading in a real market。Otherwise, this exercise will be useless。

As ThinkMarkets explains, the aim 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。As a result, when the same trading plan is applied to the real account, the results are 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 in a professional manner, exclude any extraneous influences, and allow yourself to focus on trading。The market sometimes 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 a daily routine, such as making a list related to a trading plan, while others prefer a short workout to help them clear their minds and stay focused。As long as it is effective and does not affect work efficiency, you can use any method that suits you。

10.Know yourself

Finally, it is important to know yourself.。Every trader is different, so in addition to understanding the personality of the market you are trading, you should also determine your trading personality。This includes figuring out what type of trader you are, what your needs are, and what your goals are.。According to ThinkMarkets guidance, knowing your trading personality can help you achieve your personal goals and make continuous progress。

Today, there are many ways to evaluate online to help you learn more about yourself in the trading environment。In addition, there are a large number of books and articles on different trading styles, you can choose the one that suits you best and find out your personality。

Conclusion

At the end of the day, no matter how good a trader you are, trading is still risky。Financial markets are unpredictable and losses are inevitable.。Instead of aiming to completely eliminate losses, it is better to keep losses within a small enough range so that you can continue trading and get more profitable positions。

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ThinkMarkets is an award-winning online trading broker。Since 2010, the company has become a heavily regulated brand with a global reach and access to a wide range of financial markets for traders through its advanced ThinkTrader platform.。