Nigel has been in the regulated financial services industry for nearly a decade, has previously owned a financial brokerage and has written many times for sites relating to personal finance and trading.
When investors begin to struggle in the trading industry, you might ask yourself why you started trading in the first place, and if there isn’t a more suited trading strategy for your success. If you have been in the field for over three years and are yet to see results, it might be time to consider a new option to boost your investments. It’s vital to remember that trading, like many other things in life, is all about choices and recognising opportunities. Getting stuck can be avoided by asking yourself these four essential questions when you find yourself in a rut, or preferably before you get to that point! Avoid trading mistakes by asking yourself these essential questions to stay on top of your game.
Do you want to be a discretionary trader, a systematic trader or a systematic discretionary trader?
This question is crucial for your trading strategies and investment potential. Being a systematic trader consists of allowing the system’s algorithms a large level of – if not total – control over your trades. The idea of coding and scripting often scares traders away because of the challenging nature of the practice. However, the necessary coding required for your trades are simpler than you’d think and can be highly beneficial to the success of your investments. Unless you are happy to analyse charts and data manually, thus using your own discretion to trade, working with algorithms can make life less complicated and even more convenient.
Over what times do you plan to trade?
Although many traders don’t realise it, the times you trade can have a considerable impact on your investments. Many traders begin as day traders, which can be detrimental to your potential returns. When you trade in the day alone, you worsen your risk-to-reward ratio. The amount of time you spend trading (the risk) versus the amount of profit you make (the reward) don’t usually match up or count in your favour as a day trader. Rather than spending all day trading, use as much of your time to research and analyse the trade, as well as your own trading strategies and trends. Your safest option is maintaining two or more incomes until your life as a trader takes off. By trading higher time frames, you also have the freedom of a flexible and self-determined schedule, rather than being stuck to day trade hours.
Do you want to swim with or against the current?
The answer to this question is all up to your personal trading goals and preferences. By knowing yourself, you will know whether or not you prefer longs or shorts, and how you can use this preference to your advantage. Ways to determine these preferences would be to consider how the idea of new all-time highs make you feel. Anxious? Try opting for reversals instead. A great way to discover your personal trading style is to track your trading and look for the weaknesses and strengths, and then focus on improving them.
Which market is the right one for you?
The best way to answer this question is to let your interest guide you. When you’ve evaluated your trading style, you can observe the different markets and find which one suits you best. Whether you want to be an instrument specialist, prefer forex trading or want to incorporate a wide range of markets, your interests are the best way to explore the fields. Remember that what you started with doesn’t have to be your permanent market option either. It’s all about those choices.
These four simple questions can provide the necessary thought stimulation you need to rediscover yourself as a trader. There is a trading strategy for each individual trader out there, as long as you stick to your personality and stay true to your interests.