Here are some top trading tips that Darren Winters has learned over the past years from his own experience and from coaching other traders.
Top Trading Tip 1
Be scared when you think you are invincible. Irrational exuberance and overconfidence can expose you to big risks. Traders get a sense of invincibility when they are on a winning streak.
Warren Buffett famously said, “get greedy when other people are scared and scared when other people are greedy”.
In other words, when investors drive stock prices to indefensible levels it is never a good idea to buy stocks; on the other hand, when everyone is fearful of buying stocks that is usually a good time to buy.
Top Trading Tip 2
Never over speculate, in other words avoid larger capital positions due to a winning streak. You should only increase capital because over time your strategy has been successful. Don’t let anyone’s winning streak make you irrationally exuberant.
Accept that no trading strategy is guaranteed to deliver. Trading is not that simple. If you increase your capital outlay after every win in trading, you will end up giving up everything you have made because there is going to be a predictable amount of losses every year.
Top Trading Tip 3
Understand that trading large amounts of capital is not the same as trading small amounts of capital, emotionally and psychologically.
Darren Winters says that risk tolerance is a muscle that has to be built, so don’t dramatically increase the amount of capital you are trading because you’ll panic over drawdown size even if it’s completely normal for that strategy.
Moreover, execution is also slightly different, bearing in mind that your order could be placed in various stages and at different prices.
Top Trading Tip 4
If the strategy works, stick to it. If you panic out of trades because the drawdowns are larger than you are used to, then you are hurting yourself or the firm’s/clients capital you trade.
Top Trading Tip 5
Simulating trading is not like live trading where your trading decisions can result in real profits and losses.
Simulating trading is different because we are not robots, humans have emotions. It also doesn’t take into consideration slippage where you can’t get the market to agree on price and execution errors.
Top Trading Tip 6
Follow your trading plan. Be consistent as a trader but don’t be foolishly consistent. If the basis of your trading is solid strategy do not deviate from that.
Top Trading Tip 7
Don’t take decisions that lure you into a sense of security and make you feel comfortable. Avoid panicking out of trades, or fear of trading because of the risk of losing money.
Top Trading Tip 8
Successful traders know how to lose well. Ego is a reason why many traders fail; they can’t accept they are losing on a trade. Follow your system, take you stops.
Top Trading Tip 9
Keep it simple, the more complicated the trade the more difficult it will be for you to exit the trade.
Top Trading Tip 10
Have patience!
Get more top trading tips from the investment home study course.