Top three stock trading tips for the beginners

Stock trading is not an easy task. Those who are living a life based on stock trading knows the associated pressure related to this business. Being a new trader, you might be wondering to use a high leverage account to boost the profit. But did you know that leverage is one of the key reasons for losing money at trading? It’s more like dealing with a hot iron rod.

Unless you have the skills and tools to hold the hot iron rod, you will badly hurt yourself. In the stock market, the price of the trading instrument is constantly changing and making things hard for retail traders. But if you look at the bigger picture of the market, you will realize the importance of a higher period. You will be able to analyze the long term trend and this will allow you to execute quality trades.

This was just an example by which you can improve your stock trading strategy. Now let’s discuss the top three professional stock trading tips used by the trained professionals.

Multiple time frame analysis

Do you know how to deal with the false spikes and signals at trading? If yes, you are lucky. If not, there is nothing to get in a panic about. You have to learn about the multiple time frame analysis. Analyzing the different time frame data in the higher period and trying to look for the quality trade signals in different time frames is known as multiple time frame analysis. When you do the multiple time frame analysis, you might get confused by seeing sell signals in the 4-hour time frame and buy signals in the daily time frame. To avoid such a problem, give priority to the higher time frame. Since you will be trading the major stocks, never give before trade setups formed in the lower time frame. Focus on the daily, weekly and monthly time frame so that you can find high risk to reward ratio trade setups.

Use a valid trading strategy

Trading the stocks without having any strategy is a very big mistake. The successful traders at Saxo always encourage the new traders to use their demo account so that they can create a trading strategy without getting themselves hurt. The demo account gives you the ultimate freedom to test different kinds of trading strategies. Without developing your confidence by trading the demo market, you should never try to trade real stocks. The stock price is extremely volatile and a slight mistake on your end can result in a big loss. So, improve your trade accuracy by learning from the mistakes. Test different kinds of the trading method in the demo environment and revise your trading strategy so that you don’t have to lose too many trades while dealing with the real market.

The risk to reward ratio

In stock trading, the risk to reward ratio is the ultimate king for the retail traders. If you want to make a big profit, you have to think about the recovery factor. Find the trade setups that have at least 1:5+ risk to reward ratio. Unless you can learn to deal with the risk to reward ratio in each trade, things will be hard. You will be losing most of the trades and eventually blow up your trading account. Being a currency trader, learn about the complicated price movement. Focus on the long term goals and try to learn the basics of trading. Never lose hope if you lose a few trades in a row. Losing orders are just a part of the stock trading business.

Conclusion

Stock trading is an elite class business. However, you have to learn the business by heart. Get yourself ready to prepare a trading strategy in the demo account. If you feel that you know the details, you can start trading the real stock with a small amount of capital. Slowly increase your account balance as you gain more experience.

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