Dale’s trading tips

Hello, my friends!

I would like to share with you some quick tips to help you with your trading! These tips will be mostly about a trading approach, psychology and money management. I personally stick to every one of these. Here they are:

1. Stick to your strategy: Have one or two working strategies that suit you best and stick with them. You will be tempted to try something completely different from time to time but remember there is no Holy grail among strategies. In the long run, there probably isn’t some strategy that would have much higher winning probability than others (at least I didn’t find any and believe me that I tried). The success lies in the trader, not in the strategy. You should know that every strategy will have its weak moments, losing streaks or days/weeks without trades. The key is to stick to it, trade it every day the same and accept it with as it as it is – the good and the bad.
2. Improve your strategy little by little: As a trader, you should be a bit curious and inventive. I suggest you think sometimes about how to improve your strategy. Don’t get me wrong – I don’t want you to change your strategy only to improve it by small changes. You may try to change your money management, risk-reward ratio, some settings or add new markets…Be careful though! If you have a working strategy making a too severe change could ruin it. I suggest that you slowly improve you strategy little by little. Make only the smallest adjustments, one at a time. Then review the results and see if it made the strategy work better or not.
3. Focus on execution not on results: I heard a saying that went something like this: “A good tennis player focuses on the ball and on the match. He does not look at the scoreboard all the time. He won’t win the game by looking at the scoreboard”. I think this works almost for everything, trading included. When trading, focus only on your trade, your strategy and it’s execution. Don’t worry about your previous trades your equity or anything else. Now you have the ball and you have to play it right. That’s all that matters now.
4. Have a list of hard rules: Lot of traders make mistakes and spontaneous actions when they are in a trade. The reason is: when you are in a trade you are not able to think clearly because you are too influenced by your fear/greed and primal instincts. You need clear, emotion-free mind, which you had before you opened the trade. This is why it is a good idea to have as many hard rules as possible. I suggest you create a set of rules, write them down and when in a trade you follow them almost blindly. Don’t let your clouded judgment get in the way.
   
5. Never break your rules:  Every trader knows that they absolutely must not break their rules but they still do. Over and over. They just can’t help themselves. I myself had problem like this in the past: Whenever my trading position was reaching profit target Í got really nervous and scared and I quit my position too early, usually at about 80-90% of the original profit target. You can guess what happened next. Price reached the original  profit target. I could have got 10-20% more from this trade but I didn’t. What helped me was this: I started to write these situations in my trading journal. After some time I looked at the results and was astonished how many times I was wrong and the market would eventually make it to the original profit target. After I saw this I never quit my position early. Problem solved. I hope this little trick will help those of you who are struggling with similar problem.
6.  A losing trade isn’t necessarily a bad trade: Don’t be mad at yourself if you had a losing trade. If you made your analysis, took a trade according to your rules and executed it flawlessly – it was a good trade. The result of it doesn’t matter. In the trading business you need to accept that you cannot be always right. If you have for example 65 % winning ratio you have to accept that 35 % of your trades will be losers no matter how hard you try.
7. It’s okay not to trade: you should understand that trading sometimes means doing nothing and just waiting. The result is what counts not the number of trades or the amount of action you had. Sometimes it is hard just to sit and wait for a trade especially when you feel that everybody except you is busy making money and you just sit and wait. My advice is – never mind that and stick to your methodology and your strategy. Money is won by patience. Being a trader is little bit like being a fireman. Fireman makes his preparations and then he “sits and waits”.  If a fireman was sitting and waiting the whole day would you say his day was pointless? I hope you wouldn’t, because if there was a fire in your house he would be there, ready to put it down.
   
8. Live to fight another day: If you are having a bad day, you can’t take any winner and you feel the anger rising – turn off your computer and don’t trade anymore. This is the only way how not to get into a downward spiral of rage and “revenge trades”. Once you are in this downward spiral you take more risky trades with more and more of your trading capital and you lose more and more. You cannot see clearly and you turn a bad day into a nightmare. Money management rules like: turn off your computer for the day when you lose -5 % of your account, can be really helpful here.
9. Never take a loss that could hurt you: Never use a trading position too big to hurt you if it ended up in a stop loss. It doesn’t matter how much you like or trust some particular trade, never risk too much. In my own experience, trades that you like the most turn out to be the worst ones. It is a terrible feeling when a single bad trade ruins your previous work and takes away many smaller profits you made with a lot of effort before. What I suggest is to use the same amount of your capital for every trade. Don’t favourize any of them.
10. Use real money: Don’t use demo accounts. Always trade with real money. Even if you are trying some new approach or you are quite new to trading. Trading on a demo account is extremely different from trading with real money.  You need to see trading with all its flaws, slippages, spreads, problems and psychological tensions – you need it to be real. Even if you trade with only 0.001 lots it is still hundred times better than trading with 100 standard lots on a demo account. If you start with a real account your progress will be much faster and solid then with a demo account. You have my word on it.

I hope you guys liked my 10 trading tips. Please let me know your thoughts, for example, what was new for you, what will you try or what you agree or disagree with!

Happy trading

Dale