Like all things in the world of finance, investing is about making a profit. The number one rule that all investors live by is: buy low and sell high. A simple online currency trading tip that all market players live by, there are a different group of participants that are trying to do the exact same thing – but in a different timeframe, using a different methodology. They’re called traders. While investors generally consider themselves to be above traders in the hierarchical scheme of things, there are a few trader skills that they would do well to emulate.
Here are 3 top trading tips that investors could learn from traders:
- You only make money if your stocks go up. A logical trading tip that even investors can’t argue with, many would still insist that a well-performing company is the key to a successful investment. Unfortunately, that isn’t altogether true. To put it in layman’s terms, no matter the improvement of a business’ annual earnings its stocks can still drop. In this case, investors need to appreciate the trader’s ability to recognise moving averages and bearish reversal patterns that indicate whether a stock is likely headed lower.
- There is value in technical analysis. Traditional investors love to poke fun at the trading tip that is technical analysis. Done right however, chart watching, behavioural analysis – call it voodoo if you will – it works. It’s a system with flaws, and it certainly doesn’t hold any certainty; but it is a useful tool that can help weigh the odds when it comes down to making an informed decision. And at the very least, any investor should know the potential altercations or return enhancements that proper chart analysis can provide.
- The market doesn’t cater to egos or emotions. Traders don’t take things personally when it comes to the crunch. In their success and their failures, they acknowledge that the market is a game of odds – something that the average investor struggles to come to terms with. The logic of an investor’s ratios and strategies will not work out in a market where logic doesn’t prevail. This trading tip is essential to investors coming to terms with their own fallibility.
The financial industry loves to treat traders and investors as two altogether different specimens, when in fact they are quite similar. If investors stop perpetuating this cycle and recognise that they have a common goal to their fellow trader, they will start to see better portfolio returns upon incorporating the above forex trading tips. In this case wisdom needs to precede ego.
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This is a guest post. Bella Gray is a financial blogger who highly recommends her metatrader 4 download. An expert in forex trading and an avid consumer of market trends, Gray is the perfect go-to-gal for all your investment advice and solutions.