The start of a New Year is always a time to not only look back on the old, but also look ahead to the new.
Resolutions are often made during this period, so we wanted to provide some suggestions of what you could try from a trading perspective in the year ahead.
1. Keeping a Trading Journal: This doesn’t have to be as onerous as I’m sure you’re thinking! Every time you initiate a trade, write down in a notebook, on your phone or in a file on your laptop, why you’ve executed the trade, your expectations for the trade, the entry and stop loss level(s), possible objectives, the outcome of the trade, and finally your thoughts on what was right/wrong/or how things could have been improved.
This will allow you to look back on all your trades, assess your trading strategy and check on how results have changed from trade to trade. Does one strategy consistently outperform the others? Are you making consistent mistakes with trades that lose you money? Are your stop losses being hit more than objectives?
This can be performed on a daily, weekly, monthly, or even annual basis to provide valuable insights into what you may be doing wrong and, more importantly, what you are doing right
2. Never Trade Without a Stop Loss in Place: The first question you should always ask yourself before you hit the trade button, is where your stop loss needs to be.
Choose chart levels that matter, like previous highs or lows, moving averages, or Fibonacci retracements. Setting a stop loss based solely on risk tolerance may place it above strong support or below strong resistance, where price reversals often occur after stops are triggered. Consider putting your stop loss just above resistance for short positions or just below support for long positions.
3. Determine the Size of Position You Take in Each Trade by Using The Stop Level: This follows on from number 2 above. Try not to go into every trade thinking, I’m prepared to lose X amount financially on each trade, so I will trade my usual size of the asset, which means the stop should be here.
Consider whether a better approach maybe to identify where your stop loss should be before you trade an asset, then try adjusting the size of your position to suit where the stop loss level you identified should be placed.
This way, your financial risk remains the same each trade, but your stop is in what you have identified as the correct position.
4. Establish a Chart Template on Your Pepperstone System Using Technical Indicators You Trust: Consider assessing what technical indicators you like and trust, be it for example Bollinger Bands, Moving Averages, Momentum and/or Trending indicators, or a combination of them. Whatever you feel works for you and you have a feel for.
If you’re not sure which indicators work best for you and your trading, use a Pepperstone demo trading account to test out the technical signals you receive and see what does work for you in a risk free live environment.
Remember you don’t have to overcomplicate things by always having all the indicators available to you on a chart. Consider keeping it simple with one momentum, one trending, one sentiment indicator, and an indicator that allows to gauge sentiment, such as Bollinger Bands. Take a look at our timeline where we have already covered several indicators and the types of signals they generate; over time we will add to this coverage.
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Global risk Warning CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading in CFDs. You should consider whether you understand how CFD