When it comes to deciding what to trade or maybe how to invest, you have many financial trading options. Some of the most common are Cryptocurrencies, Forex, Stocks, ETFs, FX Options etc. Now because each instrument is different from the other traders choose to stick with what they know, in other words, instruments they have experience with only.

The approach is beneficial since it allows for traders to focus on what they are trading the most, which ensures higher profitability with a more polished approach. The drawback is that this approach means that traders have a limited portfolio. Widening the portfolio is one of the keys to a working risk-management strategy.

Now regardless of what you prefer, there are a couple of universal rules that will apply to every asset. As a trader, you’ll want to keep the four points we discuss below in mind to enhance your trading skills.

Fundamental Analysis

As a trader, you already know that asset prices don’t move on their own; there are many underlying reasons for its movement. Often major events like COVID-19, or maybe elections in a certain country can and often does affect the market, shaking it up with some uncertainty. Sharp changes during tumultuous times across just about any trading instrument are common, though events that aren’t global may not have a cascading effect on the entire market.

In today’s day and age, keeping up with the news isn’t difficult. You can subscribe to numerous sources that aggregate economic and financial news with forecasts of asset price changes. Though we often tell investors to refrain from following these predictions blindly. However, having this information is important. If you can’t check all sources, then maybe use an economic calendar that’s built into IQ Option’s trader room where all the latest most important news is displayed.

Technical analysis

You will always want to analyze charts using technical indicators to help decide how to approach a certain asset. Using indicators can be very helpful as it instrumental in evaluating the asset’s performance history as well as make reasonably accurate predictions based on that data.

The most significant advantage of using indicators is that they can be equally useful for any instrument. Since indicators rely heavily on price fluctuations, the signals aren’t 100 accurate. Also, don’t assume that past performance is an indicator of future performance. That’s why you need to combine it with fundamental analysis which should help make the best possible informed decision.

The indicators that traders use will mainly depend on the approach that’s preferred. That said in many cases, just the fundamental indicators like MA, RSI, Awesome Oscillator and Stochastic might be enough.

Deploying a Trading Strategy

Regardless of how much experience you might have, it does not matter if you are new or a seasoned veteran, a trading plan matters. Many experts have been saying this for years, but without a trading strategy, there is next to no chance of ever being able to improve and make a significant profit.

If you don’t intend to trade for entertainment, but instead want to make real money, you need to know what to trade, how to analyze it and what the investment will look like along with having a risk management approach. You will want to follow a strategy building guide to come up with your own strategy or use a successful one by someone else.

Risk management

Risk management will help you minimize the risk of a loss. It will prevent you from being upset and overtrading. Setting the rules means that you also need to follow through. A good risk management technique should be mapped out before you start trading. It will keep you calm and cool, allowing you to think rationally.

Adhering to these rules will help preserve your initial capital and also manage losses. Using a risk management approach is very important, regardless of the assets or instruments you might be trading.

What do you think of these four pillars or components? They can and should be applied universally to any asset and followed to ensure that the trader makes money regardless of their experience. Even the most seasoned traders can lose money without a risk management strategy.

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