How to become a good trader?

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Many people wonder how to become a good trader? Is there a specific formula or some guidelines that traders need to follow? Are we living in a society where there are determined rules to earn money?

In fact this is true, there are guidelines that can be followed to earn money easily. However, you should keep in mind that becoming a good trader requires much patience, hard work and a bulletproof motivation. Hopefully for you, I will give you some of the guidelines essential to develop the habits and skills a good trader needs to face the financial market.

Be realistic

Optimism can be compared to a two-edged blade while speaking of the binary options industry. It is good to be an optimistic trader, however, too much optimism at times can lead to a bitter disappointment. The line between being optimistic and realistic is very fragile, this is why traders may find themselves at the wrong end of the market at times. Let me give you a concrete example. If you are aware that the commodity market is going through a rough time, you will without any doubts choose to place a Put instead of a Call. Placing a Put in this particular case means that you are realistic. However, believe me or not, there are traders who will choose to place a Call as they think that the situation will get better soon. While reading this, you will find it logical to place a Put. The point is that sometimes when you are confronted to this kind of situation you unconsciously tend to toggle towards the optimistic side of the situation. This is why, before placing a trade, traders should analyse the pros and the cons. If you are not 100% convinced of the outcome of your trade, make use of daily market reports and charts. Don’t marginalise the benefits of using such tools.

Don’t misinterpret winning streak.

Binary options trading is not the same as playing Blackjack or any other gambling games. That is, it has nothing to do with superstitious beliefs or whatever. It may happen that you win several trades in one go; rest assured, that it has nothing to do with luck. Accumulating winning trades is the result of a proper analysis of the market paired with the adequate dose of logic. However, many traders, specifically beginners, tend to be discouraged when they hear about market analysis. Don’t worry market analysis is only a jargon, there is nothing complicated in analyzing the market and you do not need to have an in depth knowledge of economics to be able to do it. I will teach you how to carry out an analysis in only three steps.

First of all, you have to look for and read financial trending news. You have to stay updated with what’s happening around the world, a recent example of a factor which is impacting on the finance world is the wildfires which consumed Fort McMurray.

The second step of the analysis will be to keep a record of the important events. It is advised that you keep a journal or sheet with the discoveries you made through the financial news. This record will help you to draw a timeline of the performance of the assets you would like to trade.

The last and most important step of an analysis is to forecast the future direction the price of the asset will take. The record you gathered from step two will help you to make more accurate predictions.

Wake up the businessman in you.

There is a businessman in everyone, all you have to do is to wake up the one who is sleeping in you. The key to managing your trades like a pro is to treat it like a business. As you already know, having a business carries expenses, risks and uncertainty. Same applies for online trading. Once you understand that, as a trader, you will be able to better accept losses as it is inevitable unfortunately. In order to generate and earn money, you have to invest and in a worse case scenario, lose money. As you already know, you can’t make an omelette without breaking eggs. However, if you want to be able to better accept losses, you should invest only the amount of money you can afford to lose. This is why, it is advised to always invest 5 percent of your initial capital in each transaction you place.

Trading is a like a holiday.

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When you are thinking of going somewhere for your holidays, you need to first of all make a plan. That is, you have to choose a destination, your accommodation and most important of all you have to plan your budget. When you are thinking of binary options trading, you will have pretty much the same decisions to take. You will have to choose with which binary options broker to trade, which type of account you are going to open and finally how much you are ready to allocate to trading. Without a proper plan, trading can become very confusing and stressful. This is why a well established plan is recommended to become a good trader.

The End.

Being a good trader is not an inborn character trait, it can be taught. All you have to do is to follow the guidelines stated above. It's like a diet, once you adopt a healthy habit it will be easy for you to keep it. Furthermore, it will help you to train your brain so that you are able to detect real clues that indicate potential trading prowess.

Priscilla Camryn By: Priscilla Camryn
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