8 tips to trade more successfully

8 tips to trade more successfully

It is not uncommon for day traders to wake up extremely early. They often start at six o’clock in the morning with a good cup of coffee and start trading on the stock exchange at 7 or 8 o’clock. These stock market traders get up early for a reason. It is one of the ways to achieve success in the stock market. You can read why that is and how you can be even more successful in this article.

The fantastic game called the stock market

To be successful as a (day) trader you need to understand how the stock market game works. It is dynamic and never gets boring, although losses can be very frustrating. In this article you will find some strategies to be as successful as possible in the game.

These are tips and not advice, always make sure you determine and use your own strategy. This way you can probably get the best results

Tip 1: Get up early

It is very wise to be well prepared before the stock market opens. You really don’t have to get up at 5 a.m., but we do recommend preparing for trading before the market opens. The period just before the stock market opens is called the ‘pre-market’. This is usually between 8 and 9.30 am.

The reason you get up so early is because you want to know what happened in the night. Wherever you are in the world, somewhere during the week the market was open while you slept. This must be taken into account during trading on the exchange where you trade. All other traders know this too, and make sure they are aware of it. If you do not do this yourself, you will already start with a backlog.

Day traders

Day traders in particular use the ‘pre-market’. As the name suggests, day trading involves trading stocks or other stock market products on a daily basis. He or she gets in and out on the same day. Many people choose day trading because it is quite simple and you can make money every day. In addition, you do not have to worry that things will happen after the stock market closes and you can no longer sell anything.

Tip 2: Make a plan

It is very important to draw up a plan. What is your budget and at which course do you want to get in and out? It sounds double, but even day traders are not active on the stock market every day. Sometimes the market simply does not offer lucrative opportunities. Day trading is not always beneficial.

Spontaneity can lead to both great successes and enormous bad luck. To find the very best stocks and to trade like a pro, you really need to make a plan and stick to it. By sticking to your plan, you also ensure that your emotions do not take over.

Tip 3: Identify opportunities and risks

As a stock market trader, it is essential to recognize opportunities and risks as well as possible. After all, the values of shares are constantly rising and falling. You must be able to anticipate the changing rates as quickly as possible. An investor’s life revolves around opportunity. If you know how to seize that one opportunity, it can change your life. Just look at these successful stocks in 2020:

• Cardiff Oncology: +1,311 percent
• Problem Blockchain: +1.441 percent
• Wax species: + 1.606 percent
• Blinck Charging: +2.332 percent
• Novavax: +2.889 percent
• Bit Digital: +3.691 percent

Tip 4: Trade stocks with high liquidity

It is advisable to buy stocks with high liquidity. This means that they are traded a lot, making it a lot easier to buy and sell them. Moreover, on the stock exchange, the rule applies that the higher the liquidity, the lower the spread. The spread indicates the difference between the bid and ask price.

Liquidity: practical example

A practical example makes it clear how liquidity works. Imagine you have a thousand (1,000) shares. In that case, it’s much easier to divide them than if you only have ten shares. A large quantity often results in a discount. For example, you can use the so-called ‘Trade Volume Index’.

Thanks to this tool, you can see when a certain amount of shares are bought and sold. In this way you closely follow supply and demand on the stock exchange.

Tip 5: Look at the 30-day average

Stock market traders use various indicators to map price developments (for example, read this article). One is the 30-day average. This means that you look at the price movements of the last month. So it gives you all the information about the growth of the market. Study not only the national market, but also global exchanges such as the Dow Jones, NASDAQ, Russel 300 and S&P Global. That way you get a complete picture of the developments at the fair. Moreover, international fairs often concern a very broad market.

As an example, you can see the price of Apple in the image below. The red/orange line you see running is the 5 day average of the course. The blue line is the 30-day average. It runs much smoother than the actual course. Based on the price and the 30-day average, for example, you can better determine your positions. A very simple indicator, which is used by many for a reason.

Tip 6: Choose stocks with medium volatility

The stock market has to deal with volatility. Simply put, these are price fluctuations that you simply cannot prevent. Experienced investors prefer stocks with medium volatility, which means that the price changes by less than five percent daily.

Extremely volatile stocks often create uncertainty and increase the likelihood of loss. Typically, only seasoned investors take this risk.

Examples of stocks with high volatility are often stocks with low liquidity. Furthermore, you can also look at crypto trading if you are looking for instruments with high volatility.

Tip 7: Always follow your own path

Never be tempted by group behavior. Following what other people are doing is part of our nature, but not always smart. Imagine that the price of a stock starts to fall sharply. Several investors sell their shares. The more that is sold, the more the price falls. The more it falls, the more investors start selling. This is the result of panic and sometimes has no basis whatsoever.

Still, it affects the price. Other investors are hesitant to sell and decide to keep their shares. This also sometimes leads to losses. In any case, always follow your own path and do not deviate from your investment plan.

Maybe it’s part of your strategy to sell (for example, if you do swing trading), but make sure you don’t go along with what everyone else is doing if it’s not in line with your established strategy (otherwise, read tip 2 again).

Tip 8: Blijf ontspannen en raak niet in paniek

Experienced investors usually make wise choices. Following your intuition is great, but to be the best investor you have to act rationally. Open and close a stock based on certain indicators and don’t get carried away by the crowd.

Conclusion: How to become a successful trader?

Becoming a successful investor is a long-term process. It can take weeks, months or maybe years to make a lot of money. However, be patient and be willing to learn. This involves trial and error. Get up early, read everything that is loose and fixed about the economy and the stock market and follow the price movements closely. Don’t be guided by Fear of Missing Out (FOMO) and panic reactions from the masses. Come up with a plan, a strategy and stick to it. We wish you a lot of success at the fair!