How to trade correctly? A little introduction!

However, trading can be carried out not only manually, but here also so-called trading robots can take over or support the trade, such as the "Anon" system. The Anon System experience of users can definitely be described as positive.

The way trading works

The basis of every trade is a guess how the trade will turn out. The guess is always based on an analysis, either manual or technical, or a combination of both.

However, it is not enough to trade based on analysis alone. There is no definitive certainty here. Even if the price development points in a certain direction in terms of trends, indicators or other signs, it does not mean that exactly this development will also occur.

In the trading market there can always be unpredictable and spontaneous developments. To make trading not a game of chance, it takes a little more than knowledge and indicators. It is imperative to follow some important rules here.

Always keep an eye on the financial stakes

On the stock exchange, there are different stock market wisdoms, to which one should absolutely adhere, especially as a newcomer. They result from years of experience and a lot of knowledge. One of those stock market sayings is "you gotta lose money to make money". It results from the fact that it can always come very quickly, especially on the stock exchange, rapid events, then even the best price analysis no longer helps.

Even a correctly estimated price analysis does not always necessarily lead to success. Unforeseen incidents can quickly occur, for this reason it is extremely important to consider the stake you have invested in a trade as a made expenditure. In other words, you should never depend on the investment you have made.

Trading advisors, who are particularly strict, suggest that you should not invest more than two percent of your money allocated for trading in a single trade.

The Trading Plan

When trading, you should not do without a trading plan. In this written set of rules, one sets the entry and exit criteria of a trader. Thanks to today's technologies, it has become very easy to test trading ideas. How successful a trading strategy has been in the past, traders can quickly determine from backtesting.

For this, the strategies are applied to historical data. Provided that the backtesting shows good results, the strategy could be used in trading. However, it is also crucial to then actually stick to this plan.

Often the question arises, if you have missed the optimal time, whether you should still sit out the trade. Here it is really important to have a trading plan.

The Stop Loss

This could possibly look like thinking about a target (exit) beforehand. What is meant is the moment you exit a trade. This strategy involves setting a specific value at which to exit, i.e. sell, absolutely regardless of the current trend.

Not only is this method particularly simple, but it also has the advantage that you can automate this process at many Exchanges. On the one hand, here you run the risk of getting out of a trade if it goes up even more, but on the other hand you reduce the risk of loss.

Setting up stop losses will also help you avoid bigger losses. As soon as the price falls below the set stop loss, you will be sold automatically. For trades that are particularly volatile, this value needs to be adjusted every now and then.

The stop loss can be either a euro amount or even a percentage. If you trade correctly, you will never ignore the stop loss. If the trade runs under the rules of one's trading plan, it is always a good trade, even if one gets out, although one is just on the winning track.

If you ignore the stop loss once it has been set, it is not uncommon for this to lead to bitter losses. While losses are part of trading, the primary goal here is to keep the risk of loss as low as possible.

Watch timeframes closely

When trading, it is extremely important to always look at the different time frames. This means that the charts need to be looked at more closely, so both the hourly, the four-hourly and also daily candles should be looked at closely. This is the only way to get a complete overview of the long-term and short-term developments.

The long-term developments are shown in the charts with the daily candles, while the four-hourly charts give information about the medium-term values and the short-term development can be seen in the hourly candles. This allows you to see both the uptrends and the downtrends.

Such an overview of the price trends at all levels makes it possible, on the one hand, to confirm the price trends and, on the other hand, to recognize possible buying opportunities.

Trading in the forex sector

Different rules apply when trading forex than when trading stocks. Firstly, the market participant structure is different here and secondly, the trading volume is also different. The forex market is characterized by investment banks and central banks. Key interest rates, inflation and geopolitics play a major role here, and all these criteria influence the currency rate.

What is also problematic is that it is precisely here that people often hold on to positions because they have simply forgotten to remember the concrete equivalent value of the currency. But here, it's especially important to always keep an eye on potential value gains and losses.

It is necessary to consider not only the exchange value, but also the trading and transaction fees. This is the only way to ultimately determine what the performance of your own balance actually looks like.

Knowledge is power

Successful traders learn every day, because the more expertise you have, the better your understanding of the market will be. This makes it much easier to make quick and, above all, profitable decisions.