How to Trade Smarter

How to Trade Smarter

If you want to become a better trader, you need to trade smarter.

Just because you’re sitting in front of your computer for long hours doesn’t mean you’re actually achieving more. Smart trading is about how effective you are when you get down to business.

Becoming a good trader takes plenty of time and effort. You’ll need to consistently put in long hours of research and analysis, and there will be plenty of ups and downs. But that doesn’t mean it has to dominate your entire life and all of your energy.

Download a PDF version of this post as PDF.

These eight tips can help you trade smarter so that your hard work can pay off sooner rather than later.

1. Wake up earlier. One of the easiest ways to streamline your trading process is to wake up early. When you’re an early riser, you have extra time to prepare for the day and to mentally prepare for trading.

How you choose to set up your routine is up to you. Maybe you’ll use your extra time to get daily tasks and errands out of the way so that you can focus on trading once the morning bell rings.

Or maybe this is the time that you devote to doing pre-market research on StocksToTrade so that you’re poised to take advantage of morning breakouts.

No matter how you set up your early morning routine, it will have the positive effect of helping you get in the right mindset for success, which can help you trade smarter.

2. Take some day trading classes. How many things in life have you been good at without practice? Probably not many. So why should day trading be any different?

Day trading classes are well worth the investment and time if you want to trade smarter. By taking the time to gain an understanding of how the market works, key styles of investing, and other technical aspects of trading, you can reduce your learning curve in a big way. This can help make you better able to identify potential trades, do your fundamental analysis, and effectively research stocks and companies.  

3. Streamline your routine. Do you make a to-do list? Great. Now it’s time to consider making a to-don’t list. Say what?!

Basically, this is a list of things that aren’t productive and steal your attention during trading hours. Usually, they’re tech related — you know, things like checking Facebook every five minutes, getting lost in the YouTube wormhole, or shopping online when you should be doing research.

Be honest about the things that are sapping your time, and work hard not to indulge during trading hours. This takes discipline, but when you remove these distractions, you’ll be able to trade with greater focus, which can likely deliver better results.

4. Learn something new every day. Sure, you’re a busy person. But if you want to be a successful trader, you must make a commitment to learning. After all, knowledge is power in trading. The more you know, the more likely you are to be nimble and intelligent in your trading decisions.

Become an eternal student. Try to learn everything that you can by reading books, listening to podcasts, staying current with the news, and taking classes. Not only will it make you a more well-rounded individual, but you never know when something you’ve learned will inform a future trade or help you identify a business opportunity.

5. Seek out mentorship. A mentor is your secret weapon to more intelligent and smarter trading. This is someone who is further along in their career than you, who can offer guidance and advice from a place of greater experience.

By seeking out a mentor, you’ll gain a career ally who can help you avoid common mistakes and pitfalls. They can help you gain success faster by learning from the lessons they had to learn the hard way. A mentor can help you trade smarter and more effectively!

6. Set specific trading goals. While setting major life goals can be a huge motivator, it’s also good to think about specific goals that can improve your trading process.

For instance, short-term goals might be things like “incorporate VWAP in research” or “learn how to sell short.” Longer-term goals might be “go above the PDT” or “try forex trading”. By setting these specific trading goals, you’ll give yourself sources of motivation that can improve your trading repertoire and knowledge base, which, in turn, can make you a smarter trader.

7. Keep a trading journal. A trading journal is an invaluable tool in helping you trade more intelligently.

When you keep a log of your trades — including what setups you employed, how you determined entry and exit points, and how the trade worked out — you can begin to gain deep insight to what’s working and what’s not in your investments.

Over time, as you review the results, you’ll be able to focus on what’s making you money and abandon methods and trading styles that aren’t. By letting go of what’s not serving you, you’ll trade smarter — and your success rate will probably thank you.

8. Take time off. The most successful trader isn’t necessarily the one sitting at their computer the longest. There can be diminishing returns. Sometimes, if you work for too long, you become far less effective at completing the task at hand.

Do yourself a favor: Know when to say when. If you’re spinning your wheels and can’t even tell what a stock chart means anymore, it’s time for a break. Take some time to rest, so that you can clear your mind and come back to trading with a fresh outlook.

Conclusion: Instead of spending more time on trading, focus on trading smarter. By streamlining your process and improving your habits, you can make every one of your efforts more effective. Try adding some of the tips offered in this post to your regular routine, and chances are you’ll see an increase in overall productivity.

Do you trade smart?