Trading: The Adventure Begins, The Questions Arise And The Experienced Trader Answers

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As you begin trading, there are times when you have either reached out to someone who is successful or wished that you had the opportunity to do just that.

All traders start out with the hope that their trading will be quickly profitable. You may know someone who has experienced exponential wealth through trading.

On the other hand, you may have witnessed others lose their savings and you don’t want to end up like them.

A relatively new trader took advantage of a chance to learn some tips from Darrell Martin at Apex Investing Institute and got some ideas that might help him in his trading. He prefaced his questions by saying that he wanted and needed to be successful like Martin in trading, then asked what his recommendations would be.

Martin answered with three main things to do that will help anyone become a successful trader:

  • Trade Consistently
  • Manage Risk
  • Follow A System

These three things work together to help make you a better trader. For example, in order to trade consistently, you need to be managing your risk as well as following a system for trading.

There are many things that go into Trading Consistently.

You can start by figuring out when and how many hours you are available to trade, what system you are going to use and what instrument or market you are going to use to trade it. The time of day or night that you are able to trade also factors into what markets are open for you to trade. Then you need to demo trade until you are proficient at trading one system and instrument before you move on to live trading and another instrument.

Martin recommends a five percent/six rule for Managing Risk.

This means that you take five percent of your account and divide by six. Do not exceed a five percent drawdown. If you have six net losses, then you stop trading for the day. This is not to say that you are limited to only six trades per day, but be sure that you have your five percent risk spread out over six trades. You would stop if you were up or down five percent. You only recalculate the five percent once a month. There are financial and psychological benefits to this rule. To read more about how this rule works, see 3 Money and Size Management Models.

You must Follow A System.

Whatever your system is, learn it and follow it. Don’t take any entries your system does not tell you to take. Don’t “cherry pick” trades. You have to trade the system or you will pick the losers and miss the winners. Martin reminds traders to use common sense while trading, i.e., know when news is coming out, when the chart is hitting a deviation level, when to tighten risk or back off of a trade entry. He goes on to tell this trader that as far as trades go, we have a bad habit of remembering when it worked and an even worse habit of not remembering when it did not work.

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The new trader also asked about the challenge of staying out of choppy markets. How can you tell if the markets are going to be choppy? Martin said that choppy markets are every trader’s challenge. He again referred to making sure that your risk management is under control. If your win/loss ratio is decent and your reward/risk is good, then you just grind through some of the choppiness.

Does a choppy market indicator help? Martin answered that it does help, but that it is an experiential indicator which means it takes a while to get it down. It also has certain requirements and won’t work on all platforms, instruments or timeframes.

Learning to trade takes an investment of time. Take the time to learn and follow the rules that apply to the system you are trading. Demo trade as you are learning.

There is a series of articles that addresses Valuable Trading Tips. See Part 1 HERE.
For Part 2, click HERE. And Part 3, click HERE. These tips will also help you as you get started in your trading adventure.

Apex Investing Institute offers free education and other trading tools.  To learn more, visit www.apexinvesting.com, a service provided by Darrell Martin.

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Posted In: Binary OptionsOptionsapexinvestingbinarybinary chartsbinary optionsbinary scannerbinary signalsdarrell martinday tradinghow to tradenadex binariesnorth american derivative exchangepremium collectionscalpingspike strikerspread optionsspread scannerweekly options
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