We should know the basics of a trading theory by this time but I want to wrap it all in one – Top 10 trading tips. So, here they are:
1. Trading bank – An amount suitable for the type of trading you intend to participate in. The trading bank should be large enough to absorb the inevitable losing runs you will encounter and should be money you can afford to lose. Please note trading banks differ from betting banks because whilst you may use your entire bank during a trade the amount risked is not the stake being used, but the profit/loss exposure for that trade. For instance when trading tennis it is not unusual for a sports trader to use their entire trading bank to initiate a trade, however the risk associated to the trade is where you have decided to place your stop loss, which is measured either in ticks or monetary value. Therefore if a sports trader has decided that for every trade initiated the maximum exposure/risk they are willing to take is 100EUR, then the trading bank being used should be large enough to cope with a number of failed trades.
2. Planning – Like all business ventures the key to success is planning. Every successful sports trader before entering a trade must have a plan in place; this plan will identify where the entry and exit points are prior to placing any trade. Simply put every sports trader should know what trades to make and how to trade them in order to maximize profits and minimize losses. Planning properly prior to any trades has two very distinct advantages, firstly the sports trader knows exactly what to do in a particular trade and secondly if you know what your liability is before you enter a trade then your heart should not take a beating. However if you are worried then you have set your liability to high.
3. Accepting Losses – You will probably have heard the old adage “cut your losses and let your winners run”. However more important is the ability to accept a loss and move on without emotional hesitation when the next trading opportunity presents itself. The key to getting this right is understanding that you will always have losses to contend with, but how you deal with the losses will be the difference between success and failure. Remember no one, not even the best sports traders have a 100% success rate.
4. Never settle for less – If you have set out your trading plan and the market does not fit or the opportunity is not right, move on there is always another opportunity. Never, never force an opportunity, if one is not available according to your criteria then walk away. Getting involved when the market is not right is the fastest way to lose your trading bank.
5. Patience – We have all heard that patience is a virtue and the rule in sports trading is simple sometimes you have to wait a long time.
Next 5 tips will be published in the next article!