This is an incredibly unique period in history. One of the best markets for trading I’ve seen in years. Regardless of how irrational the stock market rally of the past couple of months might seem, we as traders don’t need to be concerned.
We just focus on momentum and trend each day. That is the beauty of this style of trading. Price action is always king.
Summer trading is typically a period where opportunities slow down, as liquidity dries up as many traders go on vacation and take time off.
This summer is different. No one can go on vacation, and no one else has anything better to do than trade!
Many of you reading this are new to trading, and this may be a period where you are just starting to dabbling with the markets. If you are new or struggling in the current market environment, follow these trading tips!
Focus on Low Risk, High Reward Plays
Out of all the trading tips, this is the most important. Understanding how probability relates to the Risk: Reward on your trades is what defines if you can be profitable or not. Study your trades, and see what your win rate and average Risk: Reward ratio is on your trades.
For most traders, it’s easier to improve their Risk: Reward ratio than their win rate. Focus on taking low risk, high-reward trades. It puts much less stress on the need for having a high win rate to be profitable.
Start With a Small Account
Most aspiring retail traders are trading with account sizes of $10,000 or less. This is actually a good thing in the beginning, even if you have the means to trade with a larger account.
There is no reason to risk a lot of your hard-earned capital when you haven’t proven yourself to be consistently profitable. Start with SMALL size if you are new, or still struggling to find consistency.
In the beginning, when you are unproven, the goal is to survive, NOT making money. Once you prove yourself, THEN you increase your position sizes slowly and start scaling your trading profits. Follow these strategies above when trading a small account.
Don’t Trade Cause You’re Bored
This is a period where most of us are stuck inside in front of computers. Boredom trading is VERY important to combat during this period. It is crucial you use these strategies to avoid trading out of boredom to preserve your hard-earned capital.
Know your edge. And stick to it. If you are having issues finding a niche and strategy that suits you, or struggling with consistency, hit us up here!
Let Winning Trades Run
Letting winning trades run is one of the most important skillsets of a successful trader. New traders have a tendency to take profits too soon and cut losses too late. Use these strategies to stay in your winning trades longer so you can maximize your profits.
Focus on Process, Not PNL
It is easy to get caught up on how much money you are up or down in a trade. “That’s my mortgage”. “That’s my weekly grocery bill”.
It’s one of the easiest ways to make yourself trade poorly. Disconnecting from your PNL is one of the most important steps you need to make for consistently profitable trading.
Focus on market signals, and not how much you are up or down in a trade. Hide your unrealized PNL in a trade to help take your focus off this.
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