One of the most important challenges that new traders face is how many trades they should make. This issue can be the result of different types of experience – fresher traders might have a cautious approach and do less while they gather a bit of confidence. They could go for the guns blazing approach too – more trades one after the other to get more experience from quickly getting into the thick of things.
More seasoned traders could be looking for a change in their style. A more conservative trading style could be getting unsatisfactory results, or a volatile instrument could be offering more opportunities than usual.
But first we think it would be best to clear up the meanings of the words “more” and “better” in this article, when it comes to trades. It’s not about a certain number that distinguishes the two, the focus here is on how much time it takes to track one trade from it’s open to it’s close. It’s about being able to monitor their development without missing vital moments that make it a winner or a loser.
Better trades are the ones you can follow without being distracted, so that you can analyse them while they are still open. Creating a detailed description in a diary of these trades – your actions, decisions, the market’s behavior and how you adjust to it – is at the core of the winning trader. You could try doing it without the writing part and rely on your memory but in today’s world, full of distractions and boredom virtually disappearing, we think it would be better to write this stuff down. It’s one of the 6 Habits of Successful Traders.
The sums that you’re trading with have no impact on the number or quality of positions you trade. Although larger positions can possibly let you keep trades going on for longer periods, so that you don’t get cleared out by an unexpected turn.
From all the things we shared above we’ve gleaned two tips on how to open more trades without compromising quality:
- Select the smallest size possible for trades.
- Choose instruments that need less money to trade. Smaller margins can be used as indicators of where you can get more experience with less money risked.
Something else that you need to pay attention to (constantly!) is how many pips are won and lost on every single trade. At the end of the day these are the nuts and bolts of trading. If you went for a more calm approach and made a small profit, or haven’t made a profit at all, then it might be better to “go for it”.
The opposite also holds true – if an aggressive trading style was chaotic and broke down your decision making, then doing things a bit slower might be best.