If you want to become a successful stock trader, there are some essential guidelines you ought to stick to. This article will outline six of the most important ones. While there is no foolproof way to achieve success in the markets, following these tips should put you on the right track. So, without further ado, let’s get started.

Rule one: do the research

Choosing the right stocks is crucial, and that involves thorough research before making any purchases. This includes examining a company’s financial statements, management team, business goals, business model, and short- and long-term objectives before investing your money. Armed with this information, you can better identify the best growth stocks for the next 10 years or even longer.

Furthermore, while it might be tempting to invest in the latest and hottest stocks, sticking with more established companies is often a wiser move. Established companies typically have a more reliable financial history and are less prone to sudden drops in value. It’s a strategy that emphasizes stability and long-term growth potential.

Rule two: understand market trends

To be a fruitful investor, you need to know which trends are popular in the market. What stocks are rising? What stocks are falling? And more importantly, why? These are all questions that you need to be able to answer before you make any investment decisions, and it goes without saying that you need to be able to read market charts and identify trends and patterns as a trader.

Luckily, there is an abundance of online resources available that can help you keep on top of the latest market trends. Financial news websites, stock analysis tools, and even social media can be used to track the market and better understand where it’s headed. If you are trading with a broker, you can very often also find they will provide educational content of their own, such is the case with Saxo.

Rule three: stay disciplined and patient

To be successful in any field, it is essential to maintain a high level of discipline and patience. This is important because it allows you to focus on your goals and work towards them without being sidetracked.

Staying disciplined and patient in stock trading means not selling your shares immediately whenever you see a tiny drop in the market. It also means sticking to your choices reasonably and not being over-excited and purchasing hot trends as they come.

Maintaining discipline and patience can increase your chances of achieving long-term success in any field, and this does not exclude in stock trading.

Rule four: use stop-loss orders to limit your losses

As we get down to the nitty-gritty of stock trading, stop-loss orders are a vital tool for investors.

By placing a stop-loss order when you trade, you can limit your losses on a security to a predetermined amount. For example, if you purchase a stock for $100 per share and place a stop-loss order at $90 per share, you will sell the stock automatically if it falls to $90. This can be favourable if the stock price falls sharply, and you cannot sell it manually.

Stop-loss orders can also help ease your anxiety about potential losses, as you know your loss will be limited. However, it is essential to remember that stop-loss orders are not guaranteed, as they may not be executed at your desired price in fast-moving markets. Despite this, when used correctly, stop-loss orders can be a helpful way to limit your losses and manage your risk.

Rule five: don’t overtrade

Over-trading is a common mistake made by novice investors. It occurs when an investor trades too frequently, often to seize opportunities in the markets. Over-trading can lead to a trader having too many open positions to properly manage, increased transaction costs and fees, and emotional decision-making. When you are tempted to seize any opportunity that comes your way, you may end up making rash decisions that hurt your portfolio in the long run.

When trading stocks, it is fundamental to remember the rule: don’t over-trade or trade impulsively. By sticking to this rule, investors can help avoid common pitfalls that can lead to poor investment decisions.

Rule six: have a solid investment plan

When it comes to investing, there is no one-size-fits-all approach. Every trader has different goals, risk tolerance, and time horizon. As a result, it is crucial to develop a solid investment plan tailored to your unique needs and objectives before you begin to place any trades.

In summary

Anyone can become a stock trader, but it takes discipline, research, and expertise to be a successful stock trader. If you are dedicated to learning and practising the strategies outlined in this article, you can increase your chances of becoming good at trading stocks.

After having enjoyed almost two years of value increases, the cryptocurrency market is experiencing heavy losses across the board. The values of crypto assets are plummeting, cryptocurrency investors are stuck with really expensive – yet downgraded crypto coins, which they cannot sell and the real economy is once again seeing cryptocurrencies as something that causes toxicity in the financial world. The longer this situation develops, the more investors are wondering if there is something that can put an end to this historic “crypto winter”.

Investing in cryptos is a little bit like playing games of chance. You can play your favourite games at an online casino and potentially win real money, but at the same time, there can be a day during which Lady Luck will not be on your side. After all, the odds are not always in one’s favour and in the case of cryptocurrencies, there is no “Return to Player” setting that can restrict the amount of money one can lose. Bitcoin investors saw BTC’s value reaching the 70,000 USD mark a few months ago, but now they are seeing the asset underperforming while being under the 20K mark.

With Bitcoin trading lower and lower over the last six months and with the coin’s value dropping at its lowest during the first days of September, crypto traders are trying to understand where the situation is going. Many are hoping that this downward momentum is going to end towards the end of the year and that BTC will start recovering at a very high pace, but there are also those who believe that all the new restricting policies taken by the Central Banks of the world’s biggest economic powers, will push “high-risk” assets even lower.

Can New Technologies Be the Way Out for Struggling Cryptocurrencies?

It is no secret that crypto assets are built on relatively modern technological foundations. This means that their advanced technology allows for further developments, which can be replicated and implemented in multiple industries. The more these assets are switching to more efficient and sustainable technologies, the more things are going to improve in terms of their value. However, if those who develop this technology continue to avoid being “extraverted”, the situation will continue to remain as unstable as it is today.

The global economy is not very big on trusting new assets and when the most powerful people in the crypto world are communicating with closed cameras, through avatars or through private networks, things can only get harder. The “crypto” part in the name of these assets does, of course, make a point about the nature of the product, but at the end of the day, earning trust comes by allowing the world to get to know you.

If the world’s economic leaders work together with those who have built the foundations of the crypto coin technologies, then the changes that will come to the global economy will be ground-breaking. All it will take is a little bit more extraversion from the crypto-front and a little bit less conservatism from the front of the real economy.

Elon Musk, a man who has been in the headlines recently, tweeted the following financial advice:

“Buy stock in several companies that make products & services that *you* believe in.” 

He added:

“Only sell if you think their products & services are trending worse. Don’t panic when the market does.”

It was hardly an original sentiment from the new owner of Twitter. Many successful investors preach that you should only invest in products that you believe in. But Musk’s statement raised an interesting question about investing in products that not only might we not believe in but that we might not fully understand. And the most typical example would be cryptocurrency. 

Now, you can take it as a given that many of those who invest in cryptocurrency do so because they believe it will make them money. The product, in many cases, isn’t important to them. Instead, it’s the fact that they believe those lines on the charts will continue to go up. 

2022 has been terrible for crypto so far

Of course, in 2022, many of the lines on the charts have been trending downwards. Almost halfway through the year and Bitcoin, for example, is about 40% down from its highs of 2021. The same can go for all the other major cryptocurrencies, including Ethereum. As economic conditions worsen around the world, and many are tipping a recession, you can be sure that we will see many crypto investors cut their losses. And many experts will – once again – predict that the party is over. 

It should be noted, however, that cryptocurrency does not only exist in the mainstream investor ecosystem. In fact, it’s created its own ecosystem. If you consider things like lending pools and yield farming, for instance. Those are methods to make crypto work for you without relying on the value of the underlying asset to always increase. Yes, some might compare yield farming to the offering of casino bonuses, in that there is no underlying guarantee of success – it’s a gamble, despite the initial reward you receive. But it’s a fair example of how crypto can work outside of the traditional buy & sell on the market. 

Always invest in what you believe in

But getting back to what Musk said about investing in stuff that you believe in. When it comes to cryptocurrency, it means you are, therefore, looking for crypto assets with utility, i.e., that actually do something beyond being digital money. And there are many examples of this. Filecoin, for example, works as a cloud storage solution; MANA is the currency for the ever-growing gaming metaverse of Decentraland; Ethereum, well, it’s the backbone of the decentralized web3 movement. 

Now, the point here is not to say that these cryptocurrencies – battered as they have been in 2022 – will eventually succeed. Instead, it’s to go back to what Musk said and state that they represent projects that many people believe in. People don’t buy MANA simply because they think the hocus pocus of the market will see it keep rising over time; they do so because they believe that Decentraland will be one of the most significant ‘metaverses’, perhaps even rivalling the Horizon Worlds from Meta/Facebook. 

Conversely, many cryptocurrencies do nothing beyond existing. You can also put some – the stress is on some – NFT projects in that bracket, too. A lot of the investment in these projects is placed only because the investors think it will make them money. There’s nothing wrong with wanting to make money, of course. But it goes back to what Musk said about backing projects you believe in. Whether it’s Dogecoin or some badly pixilated NFT ‘art’, can you really say that you believe in the product?

In the end, if you are one to follow Elon Musk’s advice, then it can be applied to crypto. You should invest in projects that have utility – those that can make a significant impact in the real – or virtual – world. Crypto is likely here to stay, but those projects with little worth will likely fall by the wayside. If they are good enough, the others might weather the storm that has hit them in 2022.