Top Tips for Making More Profitable Trades
Lee . Rushworth, a beginner trader who has managed turn £500 starting capital into over £7500 gives some top tips to succeed at spread betting. Here’s his tips as to why he thinks he was able to do it and how you could do it too.
Rule 1. Don’t use Your Lunch Money
Relax but stay sharp. Ready to pounce on opportunities as they present.
Rule 2. Get Stupid
Unlearn everything you know about trading. Pick a market that you like the look of, sound of, flipped a coin for – whatever, it doesn’t matter how you choose it. If you try looking at different markets when your mind is relaxed, but sharp, you’ll notice that some markets seem to make more sense to you than others.
It’s difficult to put the feeling into words but think of it like the Rorschach test; some charts/markets will paint prettier pictures for you that seem to make more sense so don’t be afraid to keep looking until you think you’ve found one you’re feeling.
When you’ve found one that you think you’re feeling best, watch it for a few weeks before trading in it. Don’t give the market any power over you just yet. Just watch and read it, see how the picture changes and how your own feelings change as a result.
Absorb. Don’t over-think. This experience, whether you actively try to remember it or not, will be subconsciously stored by your intuitive mind, and will be used to help you make decisions in the future.
Rule 3. Remember The Centipede’s Dilemma
A centipede was happy – quite!
Until a toad in fun
Said, “Pray, which leg moves after which?”
This raised her doubts to such a pitch,
She fell exhausted in the ditch
Not knowing how to run.
Following right on from #2, don’t over-think or over-analyse things. Just relax. Try and find a way to let your mind settle a bit but be open to whats going on in the world around you. I don’t mean in the markets, I mean everywhere. At your work, your pub, your friends’ houses, your childrens’ schools. Learn to listen to other peoples conversations. Listening to ‘life’ will help you pick up wider macro and social factors that will help build your world view.
Doing this enables you to position every possible trade into that world view and the general way of things.
As this skill sharpens, your intuition will start to kick in when you look at charts and markets and this will help you make automatic decisions.
Rule 4. Don’t Fight Any of It
Accept that you’ll never beat the market. Don’t try to predict reversals, tops, reactions or whatever else professional traders call them. Only ever follow.
Don’t try and predict the ebs and flows, just go with them. In plain English, draw two lines on the chart to see which way the river is flowing and then jump in and swim in the same direction. Again, I’ll talk about how you do this in more detail in a later email.
Rule 5. When It’s Snowing, Build A Snowball
When you have a trade that starts to go your way and you’re comfortable it’s going to continue going your way (fits with your world view, the trend and you have absolute conviction), don’t be afraid to double (or even triple) down – personally, at this point, I add in as much as I’m willing to risk. The first position is like dipping my toe in to check the flow, this position is a full blown canonball splash.
Always trade with conviction
Rule 6. (Bonus Tip) – Know When Enough is Enough
If you’ve done everything else right in this mail, then you should be calm enough and at peace enough with your decision to ride the trade as long as it goes. I can’t tell you specifically when it feels right to ‘get out’, but a simple way of looking at this is when the trade meets the expectations of what you had when you entered. So, for example, if you entered a short position in a downward trending market, get out AFTER a new low has been made.
HOWEVER: There is one other way to look at this. Don’t be greedy. Knowing that enough is enough is always enough – so if you’re showing a profit that you like, take it and move on. This is good for your balance and good for your mind. Afterall, your mind is the greatest edge you have, so keeping it calm is the only true path to success.
Alright, that’s it for now. Hopefully these suggestions have, at the very least, given you some food for thought and some insight into how I trade.