How to Outperform 99% of Traders [7 SECRETS] (2024)

FAQs

What is the 3-5-7 rule in trading? ›

The 3–5–7 rule in trading is a risk management principle that suggests allocating a certain percentage of your trading capital to different trades based on their risk levels. Here's how it typically works: 3% Rule: This suggests risking no more than 3% of your trading capital on any single trade.

With a $10,000 account, a good day might bring in a five percent gain, which is $500. However, day traders also need to consider fixed costs such as commissions charged by brokers. These commissions can eat into profits, and day traders need to earn enough to overcome these fees [2].

The emotional aspect of trading often leads to irrational decisions like panic selling. When the market moves unfavourably, many traders, especially those who are inexperienced, tend to panic and exit their positions hastily. This panic selling often occurs at the worst possible time, leading to significant losses.

It's important to note that while there are many different strategies available, not all of them will be suitable for a 100 percent trading approach. Some strategies may be too risky or require more diversification than what is possible with a single trade.

"90% of traders lose 90% of their money in 90 days"

That's right, statistics show that 90% of people who start trading lose the majority of their money in less than 3 months.

Rule 1: Always Use a Trading Plan

You need a trading plan because it can assist you with making coherent trading decisions and define the boundaries of your optimal trade. A decent trading plan will assist you with avoiding making passionate decisions without giving it much thought.

A common approach for new day traders is to start with a goal of $200 per day and work up to $800-$1000 over time. Small winners are better than home runs because it forces you to stay on your plan and use discipline. Sure, you'll hit a big winner every now and then, but consistency is the real key to day trading.

Earning Rs. 1000 per day in the share market requires knowledge, discipline, and a well-defined strategy. Whether you choose day trading, swing trading, fundamental analysis, or any other approach, remember that success takes time and effort. The share market can be highly rewarding but carries inherent risks.

According to research, the consensus in the forex market is that around 70% to 80% of all beginner forex traders lose money, get disappointed, and quit. Generally, 80% of all-day traders tend to quit within the first two years.

Why do most day traders fail? The reason why 90% of retail traders fail is that they ALL think, trade, and gamble the same way. It is a harsh statistic but is very very true. Not many retail traders last longer than 6 months as they do not understand this game at all.

How many traders actually make money? ›

Approximately 1–20% of day traders actually profit from their endeavors. Exceptionally few day traders ever generate returns that are even close to worthwhile. This means that between 80 and 99 percent of them fail.

The best trade in history is often considered to be George Soros's shorting of the British Pound in the early 1990s, making over $1 billion. This trade, along with others by notable investors, involved highly leveraged currency exploitation.

One of the ways beginners can implement the most profitable trading strategies effectively is by embracing the buy-and-hold strategy. This involves researching companies with solid fundamentals and stable earnings, then holding their stocks for a long time without being swayed by short-term market fluctuations.

A simple method which doesn't require any analysis or indicator: Open a trade in the direction of the daily candle any time during the day in your own time zone. Don't put a limit. Put a stoploss equal to the length of the candle.

In investing, the 80-20 rule generally holds that 20% of the holdings in a portfolio are responsible for 80% of the portfolio's growth. On the flip side, 20% of a portfolio's holdings could be responsible for 80% of its losses.

Let profits run and cut losses short Stop losses should never be moved away from the market. Be disciplined with yourself, when your stop loss level is touched, get out. If a trade is proving profitable, don't be afraid to track the market.

The 11am rule in trading refers to the idea that if the current market does not reverse by 11am, a reversal is unlikely for the rest of the trading day. This rule is often backed by history, and it helps traders make better investment decisions.

Just as how long you have to wait to sell a stock after buying it, there is no legal limit on the number of times you can buy and sell the same stock in one day. Again, though, your broker may impose restrictions based on your account type, available capital, and regulatory rules regarding 'Pattern Day Traders'.