in article about novice traders, a hand on a laptop with finance charts on the screen

7 Hacks for Novice Traders

If you're new to trading, it's easy to get lost. Here are some tips.
September 27, 2022
6 mins read

Are you a new trader who’s looking for a few effective ways to increase the chances of making profitable transactions? If so, there’s good news. For years, online buyers, sellers and even long-term holders of securities have employed a dozen or so tactics for increasing their bottom line. Of course, not every hack works in all cases, but many do have high degrees of success. The point is that you’ll never know until you try one or two of them in daily trading; there’s no better way to get a feel for how the strategies work for a particular portfolio, trading style, account size and asset class.

What are the most popular approaches in late 2022? In addition to doing deep research on brokers to find the best ones, trading enthusiasts are leveraging the power of demo accounts to hone their skills, learning technical analysis, writing detailed trading plans, practicing diligent money management, specializing in one or two kinds of assets and making very small initial transactions. Here are details about some of the hacks that are currently at the top of the list

Know Your Broker

Knowing your broker (KYB) means doing due diligence in selecting the company that will hold your capital. Following the KYB principle is about doing research, reading the fine print on websites, checking verified customer reviews at legit sites, and identifying a brokerage firm suited to your particular style, preferences, and budget.

Practice, Practice, Practice

Those who take advantage of demo account trading get the most out of what their brokers have to offer. Demo platforms let you use fictitious funds but take part in the live marketplace. It’s a great tactic for learning how to place orders accurately and develop a comprehensive understanding of the entire transactional process. If a broker does not offer demo accounts, consider crossing them off the shortlist.

Learn Basic Technical Analysis Tools

Technical analysis is not rocket science, but it does require an investment of time and effort. After a few days of studying technical analysis methods like moving average and momentum analysis, most people discover that the entire world of securities becomes less confusing. There’s no need to be a math whiz because all the best technical analysis strategies can be employed via built-in apps on any platform.

Write a Trading Plan

Make a few simple rules that express your own strategy. Some only buy an asset when its current price has risen above the 200-day moving average. Others employ more complex rules that get them into and out of every position. The goal of writing the plan is to follow it for at least one month. Rules are the cornerstone of excellent trade management. Without them, you become susceptible to every trader’s enemy: emotion-based trading.

Practice Effective Money Management

In addition to a trading plan, you’ll need a separate set of rules for money management. The list can be as simple or as complex as needed. For many newcomers, the one-percent rule suffices. That means never risking more than one percent of available capital on a given position. For some, the rule feels too conservative, but it can work to preserve capital accounts rather effectively. Experiment with the guideline for a while and see whether it works for you.


Don’t try to become a jack of all trades early in your career. Instead, consider working with just one or two asset classes, like stocks, CFDs (contracts for difference), commodities, forex or cryptocurrency. Specializing helps people develop a level of comfort and expertise relatively quickly.

Go Small at First

For so many smart account holders, their universal rule is no big trades until you get the hang of live market action. It’s human nature to want to dive in and go big on those first few transactions. Those who do their homework, learn about their favorite asset classes, do due diligence when shopping for a brokerage firm, and acquire some technical analysis skills can fall into the trap of wanting to earn large returns on their initial positions. It’s a mistake that should be avoided.

What’s the solution? In nearly every case, the hack that saves traders money and helps them preserve their capital is to make small purchases for the first few weeks out the door. Modest position sizes will not earn you huge returns. The upside is that going small is an excellent way to minimize losses as well. Think of the tactic as a more advanced form of using fictitious funds in a demo account.

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