In this short overview you will get 13 valuable trading tips for more success on the stock market. Whether you are a beginner or a professional, if you follow these simple tips, you are guaranteed to achieve higher profits and reduce your risk.
Even if the tips are simple, it is unfortunately not always easy to implement everything at once. That’s why you should only make one or two changes at a time. The goal is to get a little bit better and more profitable every day, every single trading session.
1. create a trading plan
Without a plan and strategy, you are just gambling. But why trading is not gambling, you can read here. Professional trading requires that you know what you are doing and what you want to do.
The trading plan includes your strategy, your entries, your exits, your risk management, your trading routines, your personal motivation, trading times and much more.
For long-term success, the trading plan is the most important tool. It helps you to see trading not as a hobby but as a professional business.
All further details and a detailed explanatory video can be found in the trading plan article on the website, including a sample trading plan for download.
2. risk management
You have no control over what the market will do. A single trade in day trading is always subject to chance to some extent.
All you can control is your inner attitude and the psychological aspects of trading on the one hand and your risks on the other.
You control the risks through your risk management. This includes, for example, never risking more than 1% of your capital in a single trade.
The second very important rule is to always set a stop loss order.
The market can do anything at any time and also the opposite and a stop loss order protects you from losing too much money.
In my trading strategy, I also lose more than 50% of the trades in some times. This sounds bad at first, but it is not, as long as I am still profitable overall. If I lose only smaller amounts of 10-100 Euro with a loss trade, but gain a multiple of that with the profit trades, usually well over 1,000 Euro, then I am even very profitable. One speaks here also of Risk-Reward-Ratio. So the ratio of losses to profits. It should be at least 1 to 2 depending on your chosen trading strategy.
3. avoid too much information
Learning to trade successfully means that you make decisions on a regular basis. If you go to the supermarket now and have 10 strawberry jams to choose from, do you think it makes the decision easier than having only one alternative or two?
You have to compare a lot more and the decision process becomes more uncertain, complex and lengthy. Studies even show that in such a situation we are more dissatisfied and make worse decisions.
It’s the same with trading. Less is more. Avoid too many indicators, news, markets or strategies. These will not make you a better trader.
News that is public is often already too late, indicators are sometimes too inaccurate and need more analysis and interpretation and in the end it comes down to completely different factors in trading.
Your strategy, discipline and that you have an advantage in the market.
The example is out of date, but read here about Nicolas Darvas – the Dancing Trader who made millions on the stock market. Unlike all his colleagues, he didn’t follow the daily news at all. He relied completely on technical analysis – which assumes that all publicly available news is already priced in.
Especially in trading, breaks are extremely important. After a loss, after an emotional phase, sometimes also after gains, in order to keep them. Clicking the mouse is not so physically demanding at first, but the mental challenges are very high.
It is difficult, after a loss, to really close this also in the head. I still feel that way today!
Take breaks more often, opportunities will still exist tomorrow, and as long as you have money in your trading account, you can take them.
If you lose everything in a stupid moment out of greed or because you want to “win back” your money, then it will be hard. I have lost my first trading account, after having won thousands of Euros before, within a few days because of such a stupid phase.
5. trading routines
Trading routines are fixed procedures that you perform regularly before and after your trades. The goal is to simplify your trading, make you think less, and most importantly, avoid mistakes.
My daily analysis before each trading day, the price and market analysis before a trade and the entry in the trading diary. These are all routines that I do over and over again.
You should also look for such trading routines that suit you.
The “suitable for you” is important here. In my sample trading plan I have described some of my routines in more detail. But you have to see what helps you.
Some people find it helpful to trade with special music, I have now also experienced some traders who meditate in between and others have made special analyses a routine.
Whatever it is, find your own trading routines and stick to them.
6. fixed position sizes
One of the most common beginner mistakes is to change the size of the traded position.
You trade 0.5 DAX contracts one day and 2 the next, 10 shares one day, 50 of the same company the next.
First, let’s say again, determine your position size based on risk management and your strategy.
Risk as much as you can afford and just as important, choose an amount you are comfortable with.
But within a strategy and a market, you should stick to one position size.
Often beginners, when they are particularly confident or because they want to make up for losses, trade larger positions. This is one of the safest ways to empty the trading account. Assuming you are right and the trade yields a big profit, do you think it will be easy for you to go back to trading smaller positions and small profits?
Experience shows that this is not the case. You will stay with the bigger positions – and without proper risk management sooner or later at the first loss your trading account will suffer big setbacks.
Another scenario is at least as common, many traders consistently make good small profits only to lose it all again with a larger trade.
You then have to risk another big trade just to make up for the previous one and so on. Even if you reduce the position size out of prudence after a losing trade, only to not lose so much again, this has the effect that you may be right this time, but do not make as much profit as you lost before.
I’m sure you can see where this is going. Changing position sizes are in most cases the downfall.
Trade with a fixed position size until your risk management allows an increase and you have had success with the current position size for at least 100 trades or a longer period of time. This period must be long enough to exclude that you had only one lucky phase in your strategy.
7. create a strategy
Do you know the roulette game in the casino? 18 red squares and 18 black and a green zero.
You can bet on red and black at the same time and you would win 97.3%!
Sounds pretty good at first, but it also means that just because of this green zero you will statistically lose everything in one out of 37 games.
This little green zero is the reason why the casino always wins in the long run. You can certainly win the odd game, but in the long run the game can’t be beaten.
Your trading strategy is your personal green zero. The advantage you compete with. So strategy is extremely important and you should, before you start trading, work out a strategy first.
In the Daytrading for Beginners book some possible strategies are presented.
You can also find a short overview here on the trading strategies page.
Small tip in addition: Concentrate on simple strategies and do not start as a beginner with too short-term strategies such as scalping.
8. trade in liquid markets
Liquid markets means that there is as often as possible a price position, because transactions are carried out continuously. This is not to be confused with volatile markets, which are subject to large price fluctuations.
Note: The volatile markets are also particularly interesting for traders, because you can earn the most here. Therefore, many trades, for example, the opening periods of the stock exchanges and the times when the opening times overlap.
In liquid markets you usually have lower trading fees. Also, your market/stop orders will be executed close to the current price. In very illiquid markets, this can lead to significant price fluctuations due to lack of liquidity.
This is not suitable for day traders. In the Forex area it is the majors that you should trade. For example EUR/USD as a currency pair.
Otherwise all major indices like the DAX, S&P500 and the DOW.
All stocks listed in the major indices are also included. So Microsoft, Facebook, Amazon, Apple, Google and all those big companies we all know anyway.
With stocks, of course, the newstrading is exciting, example the VW emissions scandal, in which you could earn very very well. You can also find a video in the day trading course on this, in which I show you how I traded this.
The order volume or the time and sales charts can be displayed in most trading programs to estimate the liquidity.
Also note that the greatest liquidity is when the opening hours of the major exchanges overlap. For example, the German stock exchanges + the US stock exchanges. These are practically the only ones I trade regularly anyway.
9. no market order
As a newcomer to the stock market, you should avoid market orders.
These are the cause of most impulsive and spontaneous trades. Instead, use the limit or stop buy order and set the corresponding stop orders.
If you don’t know the different orders yet, take a look at our day trading course, where everything is explained in a beginner-friendly way and you can ask questions if you are unsure.
Adjust them to your strategy, set entry and stops beforehand and stick to them. This will help you to control your emotions while trading.
10th Trading Diary
The 10th and probably the most difficult tip for many: Keep a trading diary regularly and, most importantly, evaluate it.
Difficult because it requires, even if only a little, but every time some effort from you. But exactly this extra effort protects you from many other mistakes. This conscious reflection and reconsideration that can save you some expensive mistakes and make them visible in the first place.
Only with a trading diary can you record your performance, track down mistakes and continuously improve your trading.
In the trading diary you enter all trades, with entry, exit, traded market, your mood and what else influences your trading.
11. avoid trading too much
In my interview with Richard Cohen, the author of The Trading Code, he told a great story of his most successful trade that completely changed his life.
In this one, he went on vacation without his trading computer for 4 weeks at the request of his wife. Read here what an impressive result he achieved during this time.
Every trade costs you fees on the one hand and there is such a saying in the stock market “back and forth makes pockets empty”. Sure, we trade a little more in short-term trading than a buy-and-hold investor, but that doesn’t mean we have to be invested in the market all the time!
Pick the best opportunities and trade only those that exactly match your strategy. There are plenty of opportunities!
If you miss a trade today, it doesn’t matter. If you trade in the opposite direction immediately after a losing trade or if unclear trading signals lead to losses, this will cost you money that you will then miss for the good trades and your overall performance on the market will deteriorate significantly.
12. choose a good broker
The headline says it all. The right broker is one of the most important decisions you will have to make during your career.
I have chosen AvaTrade for several years now and I don’t really recommend anything else, except in very special situations and for very large trading accounts.
Avatrade offers me the following advantages:
Metatrader 4/5 support
100% reliable! Especially when it comes to money, this is very important to me. Unlike other brokers, I have never experienced a failure here or that something did not go or orders were executed inaccurately.
Has won several awards and was regularly named the most popular and best broker
has several licenses and is strictly regulated – the most regulated broker in the world they say too
great support – you can reach someone around the clock