Author Topic: Tips For Traders  (Read 107 times)

Caesar

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Tips For Traders
« on: March 25, 2020, 08:06:54 PM »
Some suggestions that may help traders protect or grow their accounts.

Some of these are more suited for stocks & shares and others more for forex, I'll try and differentiate between them as I go along.

Feel free to add any ideas of your own
« Last Edit: March 26, 2020, 07:12:28 AM by Caesar »

Caesar

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Re: Tips For Traders
« Reply #1 on: March 26, 2020, 12:04:54 PM »
Don't panic sell

This year hasn't been great for traders, especially shares and funds which have taken a battering thanks to Covid-19.

If you currently hold shares or funds, I would discourage selling now. Selling during a sell-off is widely regarded as the most foolish course of action and a sure way of crystallising losses. Watching a share price fall is painful, but remember, you have only lost money once you have sold your shares. Unless you need a ready supply of cash immediately (and if you do, you probably shouldn’t have been in the stock market in the first place), you should not sell your shares while they are in free-fall.

Take a fresh look at your shareholding. If you were looking for a share to buy today, would the ones you already hold appeal? If you think they would, then theres a good chance others think so too, so they may begin rising. Of course they could be wrong and things may worsen, thats a judgment you have to make.

Caesar

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Re: Tips For Traders
« Reply #2 on: March 27, 2020, 01:54:10 PM »
Take extra care over weekends and public holidays.

Use extra caution when leaving positions open overnight or over the weekend.

With policymakers constantly announcing new measures to counter the pandemic and developments rapidly unfolding, markets are more likely to gap when resuming trading.

This is especially important when US markets are hitting circuit breakers both up and down- being halted during normal trading hours. Consider reducing positions over weekends and overnight to mitigate against gap risk.

Caesar

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Re: Tips For Traders
« Reply #3 on: Yesterday at 11:16:25 AM »
Don't ignore bad news

This is a common reaction to bad news: we close our eyes to it. If we have problems in life the natural tendency for most people is to ignore them, either hoping they will 'go away' or that something else will come along that negates them.

A paper by Edika Quispe-Torreblanca at Oxford’s Said Business School describes what’s going on here, and how it affects our investment behaviour. Information, she says, isn’t merely a neutral input into our decisions: we are not merely calculating machines. Instead, we get pleasure or displeasure directly from it, and so choose to heed good news more than bad.

By looking at how often 87,000 clients logged onto Barclays online broking service, she and her colleagues show that investors are more likely to pay attention to their portfolios when the overall market or their recent share purchases have risen. This affects how we trade. After they have made profits, investors are more likely to trade even in other stocks, whereas after losses they are less likely to do so.

Closing your eyes to losses encourages you to hold onto falling shares. This costs us money to the extent that shares are prone to momentum, with falls leading to further falls. And if we pay more attention to our profits than to our losses we’ll convince ourselves that we are smarter traders than we really are and so we can become overconfident.

Good traders, whether it be in shares, forex, cryptocurrencies, or any other instrument, will regularly check their performance (frequency depends on their trading strategy) and will make measured judgements as to when is the right time to sell/close a trade and when is the right time to open/buy another. They cannot do this if they are hiding from reality.