› Five tips for a perfect deal

Five tips for a perfect deal

Traders have different criteria for a perfect deal when it comes to the financial markets. Those factors depend on individual perception of the trading process. Some people get satisfaction when they find a complete reversal or entry point; some traders are pleased to catch a strong trend with maximum profit possible, while others like two-way action when they get bargains from selling and buying the same asset. The difference related mainly to the psychological aspect of trading, whereas the main targets remain to gain a profit as not many traders recognize losses as perfect deals.

Human nature strives an ideal. Unfortunately, reality differs from ideal in most cases and traders are getting upset when they understand that. Here comes one of the most common mistakes, not only for the financial markets but also for any profession. People mix feelings and emotions with their professional occupation or business they do. It’s like in sports. The most successful players have the lowest level of emotional impact as they know how to deal with psychological issues. Otherwise, they just cannot grow to the highest level, get out the race and remain amateurs in the best case. Trading is similar to sports as even the most talented trader or analyst might suffer from constant losses if he is not able to learn how to deal with his own emotions. Markets do not care about your feelings. The financial market is a cruel place.

Many traders wait for a perfect deal for too long. Ideal entry conditions can guarantee trading algorithm execution. However, the trading strategy has to be adaptive, and traders have to make immediate decisions sometimes. For example, a trading system based on technical indicators could show a situation which is getting close to the conditions for entry or exit. But the real market’s intention is already in the price action; nobody is going to wait for a technical indicator to show a model signal. Traders must rush if they want to get ahead of the crowd. You’re not the only person watching the same technical picture on the screen.

On the other hand, entering the market too often is also dangerous as technical indicators might show fake signals, while the market players, especially big ones, like establishing traps for the crowd consisting of beginners and newbies. That’s exactly what the experience is needed for. Your logic shows you several reasons to enter, while your intuition draws you a completely different picture. And vice versa. Many teachers and trading gurus recommend just watching the price action, gather fundamental and technical analysis factors, and see how the markets react. Those examples of traps or misleading environment could help traders to avoid the same situation in the future as all of the events are cyclical.

Nonetheless, every deal nearing to perfect conditions has similar features. We gathered five tips for a perfect deal, which apply to any situation whatever an individual trader’s comprehension of the financial markets is. Here are they.

The deal must be executed by the current trend. Some traders get an exceptional delight when they successfully fooled the market, getting a haul against the current trend. That fact makes them think that they are trading gurus and everything is possible from now on. That’s a mistake which leads to potential losses of the whole account balance as the market would let you do that trick once or twice and then it would suck all your blood out. Never trade against the trend. Make sure that all of the positions which you open or even consider opening is coming in accordance with the current long-term trend. Otherwise, just forget about such deals.

Use stop-loss orders. A perfect relation for the stop-loss to the overall account balance must not exceed 0.2%. Some traders ignore that condition, especially when they lack enough depth in the trading account. They enlarge that requirement to 2% or even 5% depending on the leverage they use. Nevertheless, traders should seek positions with minimal stop-loss distances. If a reasonable stop-loss level is far from the current price, then such a deal cannot be perfect as the risk to get deep under the water is too high.

Control your profit-to-loss ratio. A perfect relation is 3:1 or 4:1, meaning that you should risk with one dollar to get a possible profit of 3-4 dollars. Always ask yourself such questions. Can I afford myself to lose this particular amount for this exact deal? What do I get instead? Is the risk worth possible profits? What chances do I have to win? Those questions would help you re-assessing potential risk in relation to profits and think twice before getting into the market.

The deal was executed in full accordance with the trading algorithm. Such a proper attitude to enter and exit conditions, as well as risk management, would lead you to continuous profits and would help you to avoid unnecessary losses. The trading algorithm is aimed to show you the change in the trend’s direction, point out entry and exit points, and assist you to read the chart precisely.

Your psychological conditions are good enough to trade. 90% of losing deals are made when traders aren’t focused, or they forgot to take the monkey off the back before opening the trading terminal. Mental conditions have the most meaningful impact on trading results, and experienced traders never start opening deals if they are in a bad mood or feel wrong. Meditations also help as the inner world must be clear to take into account all of the factors influencing profitable positions.

If you like Five tips for a perfect deal, you might also be interested in this Best Binary Why professional traders make money in the market.

Read also

You have successfully registered

You can choose the needed type of account at any time!