Amazing Tips on How to Become a Professional Trader

Becoming a Professional Trader

Richard Dennis, the legendary trader who grew his fortune from $1,600 up to a whopping $200 million worth, is regarded as a mentor for a group of traders known as ‘The Turtles’. With his Turtle experiment, Richard Dennis achieved overwhelming success demonstrating that anyone can become a professional trader. 

Professional traders aren‘t born, they’re made! 

There is more to trading than simply typing on a keyboard and using your favorite support and resistance indicators. A professional trader knows that being successful in this endeavor entails effort, time, and some rare specific characteristics. It is safe to say that the road to becoming a professional trader is not paved with shortcuts.  

Yet, the good news is that one does not need a special talent to become a professional trader, but merely the right mindset. In most cases, financial managers, bankers, and institutional traders learn the art of trading from a professional trader with successful trades under their belt. Although there are a few exceptions, such as self-taught professional traders, this only confirms the rule.

Secondly, you must possess the mindset of a professional trader! 

Developing a trading mindset is one of the key factors to successful trading, and every professional trader understands this. Traders often believe that all they need to do when they first begin trading is develop a great trading strategy. Unfortunately, any professional trader can tell you, its not easy. It is not uncommon for traders to lose money despite using intelligent, well-designed trading strategies and systems. 

Only a few traders are consistent winners in the game of trading because they have developed the right psychological mindset to succeed. In order to succeed in the world of trading, certain beliefs, attitudes, and psychological characteristics must be present. 

The mindset of a successful trader should include the following characteristics: 

• Professional traders dont mind taking calculated risks. 

• Professional traders follow a disciplined trading strategy. 

• Professional traders are well aware of the importance of leaving their own personal opinions at the door when trading. 

• Professional traders dont take trading losses personally. 

While there are definitely more things that can be added to the above list, these are usually the things that amateur traders find hard to overcome. This article on trading psychology may help you understand why it plays such a crucial role in generating profits.

The “IDERR” Method for Becoming a Professional Trader

Traders who are consistently profitable share certain characteristics with their methodology that make them successful. Following the ‘IDERR’ methodology can be a great way to keep up with the best professional traders and remain in the winners circle. 

So “What is IDERR？” 

The term ‘IDERR’ refers to a set of five important trading philosophies and techniques for staying ahead of the game and achieving success as a professional trader. Lets take a look at what it represents, 

I – Identify Your Trading Methodology 

D – Develop Your Trading Plan 

E – Execute your trades consistently 

R – Record trades 

R – Review your trades 

It is guaranteed that by checking all these boxes and mastering these skills, youll have a good chance of becoming a successful trading master in the very near future.

I – Identify your trading methodology

The first step in achieving success as a trader is to realize that there is no standard or one-size-fits-all trading style applicable to all professional traders. Were all different in our views and approaches to life, and financial markets are no different.  

Despite the fact that professional traders employ a variety of different trading approaches, there is one common goal that they all strive to achieve, which is to make a significant profit. We will examine the different styles of trading to help you decide which suits your time constraints, profit goals, and personal strengths. 

Position Trading — Position trading is a popular long-term trading approach that involves holding positions for long periods of time, usually months or years. In this process, you identify a trend and follow it over a period of time. In contrast to short-term traders, position traders determine their strategies based on more precise fundamental analysis and long-term trends. Professional traders who adapt position trading often do not trade more actively and are typically long-term buy-and-hold investors.  

Scalping Strategy — Scalping involves entering and exiting positions within minutes or seconds, making it the most popular short-term trading strategy. On an average trading day, a scalper must execute hundreds of trades to earn a significant profit since each trade only yields a small profit. Despite only involving a few pips, short-term trades can result in significant losses if not executed correctly.   

Swing Trading — This is one of the most advantageous trading styles for beginners. Swing traders profit from price swings by using a medium-term trading strategy. Trading this way requires patience to hold trades for several days. Swing traders attempt to predict where and when prices will move next before entering positions. Then they ride the assets ups and downs. Swing trading is most appropriate for individuals with lots of free time to keep up with global economic trends. 

Day Trading — Day trading is a very popular trading style that involves buying and selling assets on the same day. In this strategy, traders typically make several trades a day and close them at the end of the day without holding positions overnight. The goal of this strategy is for day traders to make a quick number of trades, usually ten to one hundred times their normal transactions. Essentially, it is done to maximize profit from a relatively small market swing. Traders often use charts based on short timeframes, such as one, five, or 15 minutes, when they trade. 

Having found a trading style that resonates with you, be sure to put in a lot of effort to learn everything you can about it if you want to succeed as a professional trader.

D – Develop Your Trading Plan

As soon as you‘ve done your research and gained a good understanding of your trading style, it’s time to incorporate all that knowledge into a trading plan (essentially a blueprint on how youll trade the markets). 

Your trading plan should address these 4 questions if you expect to be a savvy professional trader! 

1. What is your time frame and trading session？

Time frames have a significant impact on professional traders and their trading styles. No matter if you are a day trader, swing trader, scalper, or position trader, time frames are always a crucial consideration. 

Using Forex as an example, currency trading is not driven by a single exchange, but rather by a global network of exchanges and brokers. Each participating country adheres to its own set of trading sessions on the foreign exchange market. As a forex trader, it is essential to learn about the different forex trading sessions to execute your trading strategies profitably. 

2. Which markets are you trading？

Make sure you have a clear understanding of which assets to trade based on the market conditions. For example, during a recession, it is important to know which assets to trade and which to avoid trading. 

Almost all traders have a basic understanding of how the stock market works and how to trade stocks. When a company does well, stocks of that company go up in value, and if you own stock in that company, your shares increase in value. A bull market is a good time to take profits. When it comes to downtrends and bear markets, things are a bit different. Stocks are very unlikely to make money during bear markets or market downturns. In the event of a downward market reversal, you should exit the trade in order to avoid losses.  

Heres why forex trading during recessions is better than stocks and other types of investment, as it is an entirely different kind of investment. In forex trading, you buy and sell a currency pair, which implies that you expect one economy to do better than another. If your expectations are accurate, you may be able to earn a good sum. 

3. How much are you risking on each trade？

Risk management is key here. As a professional trader, you must know how much you are willing to lose on a single trade. Risk management consists of identifying potential risks and analyzing them in advance, then taking precautionary steps to minimize their impact. Setting a risk-reward ratio can help you identify how much money you will risk per trade. Try to stick to a 1% common risk rate per trade. This step is of utmost importance. The risk-to-reward ratio should also be 1:2 or 1:3, meaning that profits should be at least double the losses. 

4. How will you enter and exit your trade？

A profitable trading strategy begins with developing a well-thought-out entry and exit strategy. Despite knowing when the value of an asset will rise or fall, it is unlikely to be profitable until you know when to enter and exit the market. It is more likely for professional traders to be successful if they follow a predefined plan rather than allowing their emotions to dictate their actions. 

E – Execute Your Trades Consistently

Once you‘ve finished putting together your trading plan, it’s time to test it out in the real markets. The most important thing to remember is to start with a real account and begin small, since you may not succeed (for a start at least). Getting started with a Cent Account is an excellent idea! 

Why is it crucial to be consistent when trading？ 

Consistency is the key to creating good habits, and habits ultimately determine how successful one will achieve in trading. Consistency is key to mastering an effective trading strategy, and this will enable you to see if it is working for you. If you want to determine whether a strategy works for you, you need to use it continuously for at least six months before you say it doesnt.  

In order to make consistent profit in the market, you will need to consistently follow your strategy (dont overtrade), manage your risk properly, and maintain your composure after every trade, whether you win or lose. 

Trading without experience can feel like walking across a narrow plank under a pool of sharks while blindfolded. Your chances of losing are high. It is best for beginners to open a demo account to learn how to trade in real-time markets. Having mastered the basics and refined your skills, you will be more confident when diving into live trading.

R – Record Your Trades 

In order to be successful in trading, it is not enough just to execute your trades. It is important to keep a trading journal if you want to become a successful trader.  

A professional traders trading journal contains the following metrics: 

• Date – The date on which you entered the trade 

• Time Frame – Duration of the trading session 

• Setup – The trade setup that triggers your entry 

• Market – The markets/assets you trade 

• Lot size – The size of your trade 

• Long/Short – The direction of your trade 

• Tick value – Average tick value 

• Price in – Your entry price 

• Price out – Your exit price 

• Stop loss – The price at which you‘ll exit if you’re wrong 

• Profit & Loss in $ – Net profit or loss from this trade 

• Initial risk in $ – The amount youre willing to risk 

• R – The risk of the trade in terms of R. 2R means that you made twice your risk. 

Keeping a journal of your trades helps you keep track of all your transactions. One of the fastest and easiest ways to identify what you‘re doing right and what you’re doing wrong is to keep a trading journal and refer to it regularly.

R – Review Your Trades

Once you have executed 10 trades consistently or a number of trades that you are happy with, you can evaluate whether your trading strategy is giving you an edge over the market or not.

To do so, you need to use the expectancy formula below: 

Expectancy = (% Winning trades x Average gain) - (% Losing trades x Average Loss)

A positive expectancy is something to be proud of, so congratulate yourself! Your trading strategy has a good chance of giving you an advantage over the market in the long run. However, what if the expectancy is negative？ It may be a good idea to review your losing trades to see where the breakdowns are occurring and take action accordingly. 

Trading mistakes are an important part of learning for master professional traders. The majority of losers do not. As the trade unfolds, make sure to examine the following topics: your entry point and your reason for buying or selling; where your stop-loss and take-profit orders were placed; what happened in the market after you initiated your trade and how you responded; and last but not least, your profit and loss. 

Mastering the art of trading is not easy, but it is possible and very rewarding. Youre one day closer to making your financial dreams a reality if you start working in that direction today, rather than tomorrow. 

How to trade in inflation-beating assets？

Do you know that you can make a profit even in the falling market？ Yes, trading CFDs provides you with the opportunity to do just that! CFD trading should be an essential element in every investors portfolio. A contract for difference is a contract between an investor and investment intermediate to exchange the price differences of assets like forex, shares, commodities, and indices. 

In CDF trading, profits and losses are determined by the price difference between the opening and closing prices. If you think the price of an asset will rise, you can open a long (buy) position and profit as the price rises. Conversely, if you think the price will fall, you must open a short (sell) position and profit from the decline. Upon closing the position, we will be able to see both profits and losses associated with the position. 

Heres how to get started with CFD trading in five simple steps:

• Open a trading account by logging in to the member account on AximTrade, and clicking on the “+ Open Extra Account” button on the top right.  

• Choose your preferred account type. You can choose between Standard, Cent, ECN or infinite leverage accounts. You can also choose a demo account if youre a beginner.  

• Choose the asset type you would like to trade and make a profit from inflation. 

• Choose ‘buy’ if you want to go long or ‘sell’ if you want to go short. 

• Now your account is ready for trading. You can find all your accounts in the “My Accounts” tab. 

• The key to success in investing is to have a solid foundation of knowledge. Despite the fact that CFD trading is one of the most effective ways to make money online, it may seem complex and confusing for beginners. In order to establish a rewarding investment and subsequently profit from inflation, learning is the first step to successful trading. An online trading course provided by an established provider is always a good place to start. 

• Disclaimer: This post is from Aximdaily and it is considered a marketing publication and does not constitute investment advice or research. Its content represents the general views of our editors and does not consider individual readers personal circumstances, investment experience, or current financial situation.