Being a newbie doesn’t necessarily prevent you from accomplishing big things. In fact, many famous people started out with little to no experience in their field. Blake Ross is a great example. When he started working on the Firefox browser in the early 2000s, he was a college student with little experience in web development. But just a couple of years later, he and his team released the first version of what would become a popular alternative to Internet Explorer.
So don’t let your status as a newbie hold you back from creating a profitable strategy — embrace the challenge with these tips!
Trading with up to 90% profit
Identify your edge
First of all, you need to identify the unique skills, knowledge, and experience that set you apart from others and give you a competitive advantage in the market.
Take an honest look at your strengths, weaknesses, and what you’re passionate about. What are you good at? What do you enjoy doing? What do you know more than the average person? These questions will help you discover the unique qualities that can help you stand out as a trader. For example, it can be an analytical mind and experience in a particular industry or sector.
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Focus on a few markets
Develop a deeper understanding of market dynamics by limiting your area of focus. You also don’t want to spend too much time developing your strategy, so trying to trade too many markets at once would only lead to burnout and frustration.
This is where your edge comes in handy — if you have a background in finance, you may want to focus on trading stocks. Or, if you have a passion for commodities or world economies, you may want to consider trading futures or forex.
Use multiple timeframes
By analyzing different timeframes, you can identify trends, patterns, and potential trading opportunities that you might have missed by only looking at one timeframe. And it wouldn’t be a good strategy unless you did your best to gain a more comprehensive view of the market.
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For example, if you’re trading on a daily chart, you might miss the nuances of short-term price movements that occur on an hourly or 15-minute chart. And vice versa.
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Use a combination of analysis methods
Avoid relying too heavily on one approach. If you’re analyzing a stock, use technical analysis to identify short-term price patterns and trends and use fundamental analysis to understand the company’s financial health and growth potential. Both have their merit and shed light on the asset.
Sometimes, technical analysis indicates a potential bullish trend. At the same time, fundamental analysis suggests that the company’s financial health is weakening. Without either of these insights, you wouldn’t know that the uptrend is probably not sustainable in the long term.
Keep up with news and events
It’s crucial to note that not all news and events are equally important, and you must be selective in the information you use. Focus on news that is relevant to your trading strategy, e.g., economic indicators, earnings reports, and major announcements from companies you’re interested in.
Let’s assume you’re interested in trading currencies. Then you want to pay attention to central bank announcements, GDP reports, and political developments in the countries whose currencies you’re trading. Another tip: use a variety of sources to cross-check and verify the news.
Backtest your strategies
Before putting your strategy to good use, take the time to identify potential weaknesses and improve its effectiveness. Use a large sample of historical data and simulate various scenarios but avoid over-optimizing the strategy to fit the historical data too closely. This is because historical data doesn’t necessarily reflect future market conditions.
In summary, building a profitable trading strategy requires lots of preparation and dedication. But the rewards can be worth the effort.
Sources:
Beginners Introduction: Technical vs. Fundamental Analysis, My Trading Skills
Multiple Time Frames Can Multiply Returns, Investopedia
Backtesting – Overview, How It Works, Common Measures, Corporate Finance Institute
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