Strangely, the question “How to generate more money” in online trading in the future is completely wrong.
If you don’t make money for your trade activities, you must really ask questions: what can I do to set my losses better? If you successfully answer this question, you will automatically generate more profits, and you can be part of a small club (unfortunately) from a very successful trader.
But if you don’t answer this question, you will continue to struggle and finally forced out of the market. It is said that 90% of individual traders lose money on the market and ultimately forced out of the market or just give up. And remember, the first priority of a successful trader is around one more day!
No matter how you trade or what you trade, your loss is always the same as:
$ loss = $ loss / contract * # contract / trade * #Trades
$ loss / contract = your loss, in dollars, per contract you trade
# Contract / Trade = the number of contracts that you trade
#Trades = the amount of trade you entered for a certain period of time (day, week, month)
Therefore, there are three, and only three ways to lose less money when traded:
You can reduce losses by minimizing loss per contract
You can reduce losses by reducing the number of contracts that you trade
You can reduce losses with less trades.
1. How to reduce your $ loss per contract
Very simple … tighten your stop loss!
Believe it or not, most traders don’t put Stop Loss command at all. So for most of you, tightening your stop loss order only consists of, without exception, always placing the Stop Loss command when you enter the order for your trading.
Where you put the stop loss order is actually quite simple!
Every trade really goes down to hypothesis testing. You put a trade because you have a hypothesis that the market will move in a certain direction.
If you buy, your hypothesis is that the market will rise. When you place your trading for a long time, you are testing the hypothesis.
If the market does rise, he has validated the hypothesis. But if the market goes down, it tells you your hypothesis is wrong. Let the market tell you when your hypothesis is wrong. Then come out. This is where you put your stop loss: where the market shows your hypothesis is wrong.
2. How to reduce the number of contracts to be traded
This is the subject of risk management or money. This is a subject that is largely ignored and misunderstood by individual traders.
Most traders let greed get better than them. They trade as much as possible contracts because they can escape, because they can “match their accounts” based on margin requirements.
But then the market changed against them, they lost most of their accounts, and they left the market.
Good risk management may be one of the most important keys to generate good profits when trading any market.
3. How many trade you have to enter (i.e. How often do you have to trade?)
Obviously the fewer the trade you enter, the less time you can lose. And because most individual traders lose money on the market, entering less trades may be wise for most traders out there.
Entering zero trade (in other words, does not trade at all) it is probably the best medicine for losing traders. Stop trading for a while until you understand why you lose.
If you have made a simple but frustrated advantage because big losses have removed most of the benefits you have made, ask yourself “Why?” What happens in your lost trade? Do you really understand why you put the trade, or did you put it in the “tip” of your broker?
Just put the trade that you have a clear reason. Then let the market tell you whether the reason is still valid or not. Don’t use an automatic system that you don’t fully understand. Don’t trade news. Don’t trade “tips” from a friend