Ten Tips for Beginner Traders

At the very beginning of starting trading, entering the market anew is a very exciting moment for people. Beginner traders are extremely excited about the opportunities in existing markets and the potential for large profits.

When you first start trading, the market will promptly punish bad trades, making it very dangerous. Despite the danger of trading, you can make money by luck, but the risk dramatically increases for the next trade, leading to large losses.

Below is a list of our recommended tips to help traders survive the early dangerous period of starting trading and grow into experienced and successful traders.

1. Keep it simple.

Using many indicators is very appealing. Reading many blogs and exposing yourself to many news sources with the expectation of absorbing a lot of information can help trading performance. However, having a complex trading process makes it extremely difficult to decide when to enter the market and when to exit, which is the primary cause of worsening trading results and eventual losses. Trading is actually a very simple process: choose buy or sell and guess whether the market will rise, fall, or stay flat. By keeping the trading process simple, a trader can make better decisions under pressure and maintain consistent trading performance much more easily, and you can also understand why your trading strategy may not be working.

2. Practice on a demo before trading real money.

It is mentally very difficult to recover from losses. Because trading capital is so important, you need to protect the funds from all costs. From the very start of the first trade, every trader wants to make money quickly because there seems to be a big profit potential. The crucial first step in trading is to verify that you actually possess the skills to profit from the market. Just as a pilot practices on a flight simulator learning from experienced pilots, it is important to practice trading with real money under the guidance of experienced traders before trading with real money.

On the other hand, trading on a demo account is very different from live account trading, and some people think demo trading is a waste of time. Demo trading tends to make people care less about results, but this is not an excuse. We must ensure that we can earn money on a demo account before trading on a live account. Building a trading plan, understanding the psychological challenges of trading, and learning from experienced traders make it extremely valuable. Pro Trader Japan has started a gym service to track demo trading performance. Therefore, trading results are a serious matter. We monitor trading through the gym, set the trading rules and tasks to follow, and provide regular feedback.

3. Understand your personality.

There are many different trading markets and strategies available to current traders. It is important to understand your own trading personality, and when your personality matches your trading strategy and the market, you have the best chance of consistent profits. For example, risk-averse traders should trade in markets with relatively stable movements and trade with low-risk strategies such as the USD/JPY night session (Japan's night). Traders who prefer exciting situations are suited to short-term buy/sell strategies in very active markets like EUR/USD at the European market open. To understand your trading personality, we have prepared some quizzes on our website.

4. What to prepare before trading.

The big difference between amateur and professional traders is their approach to the market when trading. Pros have well-tested strategies. Even before opening your trading platform, they know exactly where to look for opportunities. While professional traders are waiting for the chance to implement their trading strategies, it can be very boring in reality. Amateurs look at prices and try to find reasons to enter the market. They trade without a clear plan on where to take profits or cut losses, which is a stressful emotional rollercoaster.

5. Review trading results.

Learning from trading mistakes and losses makes a big difference in trading results. When we review trading results, we focus on the actual trading analysis rather than the final profit or loss. It is far more important to analyze the trading process than whether you make money in the short term. Anyone can make money in the short term by luck, but if there is no trading plan or the ability to follow rules, a trader is unlikely to be profitable long-term. By analyzing where and how money was earned and lost, you begin to understand how to improve trading analysis and mental approach, enhancing profitability.

6. Be realistic

Trading in financial markets is one of the best opportunities to build enormous wealth, but most traders suffer losses far larger than they expect. If you approach trading with a business mindset, rather than expecting to make money quickly like a gambler, you increase your chances of being profitable in the long run.

7. Learn to follow rules.

The ability to follow a trading plan determines whether a trader can survive long-term. The ability to control losses and maximize profits arises not from using special indicators or brilliant market analysis, but from following rules. There is a big difference between profitable traders and analysts. It is crucial to understand that the market will never move exactly as predicted 100% of the time. You do not need to make trading rules overly complex, but following them for 100% of the time you spend is the key to success. If you break the rules even once, you may face significant losses that force you to stop trading.

8. Give yourself time to learn the market.

When you start trading, it often seems very easy, and you will find many materials claiming that trading is easy. Today’s technology makes the mechanics of buying and selling very simple, but understanding how to achieve long-term profitability is difficult. In the early days, beginners may get lucky and make money, which can lead to overconfidence and very large losses. Proper education about the market and taking time to learn will increase a trader’s likelihood of long-term profitability and, more importantly, help avoid large losses.

9. Talk with other traders.

Becoming part of a trading team and maintaining regular contact with traders at different experience levels has a very positive impact on profitability and reduces trading stress. Understanding how other traders analyze the market and the techniques they use to cope with trading stress can help improve your own trading process. It is impossible to make money every day, and other traders understand better than anyone that “making money every day is impossible.”

10. Mental and financial management are the most important. (Mental management, money management)

Many traders believe that if they can find the right indicators or have access to the right information, they can generate unlimited money. No matter how good the analysis or information, it is impossible to profit 100% of the time. Therefore, traders are tested on how they handle losing periods. A professional trader may win in roughly the same proportion of periods as an amateur, but the final profit differs greatly. The difference is that they quickly cut their losses, maximize profits, and maintain a strong mental approach to trading to avoid mistakes.