Traders are often tempted to think that they can get the edge by investing in expensive subscriptions or courses, or feel that they need to invest in those things in order to stay current.
But that’s not strictly true.
Now, don’t get us wrong: there absolutely are courses that can be worth your time and money. However, that doesn’t mean that you always need to splash the cash in order to improve your performance.
There are a bunch of strategies that can help you trade smarter without having to spend more. And these are much more than cost-cutting endeavours. Virtually all of them are recommended even for investors who are happy and willing to spend money on costly courses.
Any one of these strategies can help you to become a better investor. Put them all together, and you’ll be giving yourself a real advantage. Let’s dive in.
Understand Your Strategy
This is one of the simplest and most effective strategies, yet it remains oddly underutilized. It’s not that traders don’t have a strategy. Most do. The problem is that it’s either not understood well enough or it’s not enforced well enough.
Even having a basic strategy can go a long way towards achieving better results. In fact, you could argue that a basic strategy that’s followed religiously is better than a more advanced one that is only followed on occasion.
So, what does a basic strategy look like? It basically comes down to understanding the answers to key questions such as:
- What does a good trade look like to you?
- What is your exit plan if things aren’t looking good?
- How much are you willing to risk?
Keep a Trading Journal
Memory can be deceptive. Most traders are great at remembering their big success stories, and actually also good at remembering their big failures. But the details of trades in the middle, which account for the vast chunk of trades, tend to be forgotten. They also tend to skew towards the positive, with traders often remembering their performance in more positive terms than what actually occurred.
So you can’t rely on your memory. You can, however, rely on data. Keeping a journal for each trade you make that includes why you went for it, how the trade went, and your thoughts and feelings during the process really can help to identify patterns — both good and bad — that really can make a difference on a long-term basis.
Develop Expertise In One Thing Before Moving Onto Another
It’s generally a good thing that traders have so much that they can learn about how to improve their performance.
However, that can prove to be a problem. With so many strategies on the table, plus new trends continually arriving on the scene, there’s a temptation to move from one thing to the next.
But strategies and setups are like most other things: the more you put in, the more you’ll get out. Spending more time with a setup allows you to understand it better, and that’s often when the real payoff comes.
If you’re pursuing a new approach, then commit to sticking with it even if its benefits aren’t immediately obvious. Ultimately, it’s much better to have a truly in-depth understanding of various setups rather than having a surface-level understanding of many.
Use Free Tools and Indicators
You can understand why people believe that a trading tool only has value — or at least has more value — if there’s a high cost attached.
But it doesn’t always work that way. There are excellent paid trading tools available, but there are also outstanding free options, such as free TradeStation indicators, that allow traders to get access to quality data and information without spending a penny. Not every free tool will be useful, but the ones that are, such as those built by experienced investors, really can make a difference. The reason? Those tools tend to focus on the things that actually move markets, such as volume and market breadth.
Utilize Backtesting
Imagine if you could stress-test your strategy before putting it into practice in the live market. Well, you can — it’s called backtesting, and it allows traders the chance to test how their strategy would have performed using historical trading data. The good thing about this approach, besides the fact that it’s free, is that it really can help to see the strengths and weaknesses of a strategy before it’s used for real.
Most platforms make this tool available for free, yet many traders overlook it completely. So give it a try, just be sure not to put too much faith in any positive results you get. Success using historical data is just a good sign, not a guarantee that it’ll perform well in today’s market. On the other hand, a strategy that consistently fails with historical data will be unlikely to get results today.
Avoid the Dangers of Overtrading
Overtrading can happen for a number of reasons. Sometimes, it’s due to some excitement. At others, it’s due to boredom. Sometimes people enter trades simply because they’re trying to win back losses from other trades.
All of those scenarios can lead to poor judgment and bad decision-making, which decreases the chance of success. This kind of goes back to what we said earlier about defining your strategy, specifically the bit about deciding when a trade is appealing to you. Sticking to that approach will keep you selective about the trades you enter into, ensuring you stick to quality over quantity.
Analyze Your Losing Trades
One of the best ways to improve performance is to analyze your losing trades. Winning trades are great, of course, but they don’t tell you that much. In fact, they can actually teach you the wrong things if you win through luck rather than strategy (but don’t know it). It’s tempting to move on from losing trades, but they may contain some secrets that prevent you from making the same mistake in the future — and ultimately, that will improve performance down the line.
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