Want to trade like a professional? Start thinking like a prop trader. If you’re going to approach trading as a business, the first thing to do is minimize your trading costs and spreads at a safe financial institution.
Trading is a serious business, so you should treat it that way. Before placing any money at risk, you should develop a workable business plan that offers a clear pathway to reach your financial goals, while minimizing risk of loss.
Most importantly, you should carefully calculate the expected drawdowns while using your trading system, then set clear stop-loss rules and adhere to them without exception.
Build a winning team
It’s best to choose a broker who will keep your money secure while offering cutthroat pricing. In fact, your choice of broker is critically important for success. The best brokers offer easy-to-understand pricing and guidelines, and they work with you, not against you.
Market analysis and fancy tools are nice, but they can quickly inflate your costs. And, complexity can make it difficult to identify and correct glitches, especially when your trading business is just starting out.
Pepperstone is where Shaun trades his personal accounts. They offer highly competitive pricing and have excellent banking relationships. Unlike inconsistent brokers who attract new customers by offering loss-leader promotions, then taking them away, Pepperstone provides consistent service on very low spreads.
Although Pepperstone doesn’t accept U.S. individuals as clients, Irish entities and other foreign corporations are often employed as corporate vehicles for trading. How? Ask and we’ll point you in the right direction.
Traders may see a variety of different price feeds and charts, based on account size and trading behaviors. The chart prices may not match live prices. This can have a dramatic impact on your trading strategy, so it’s important to understand the reasons for any pricing discrepancies before you trade.
Pricing discrepancies may be costly, and they can erode the trader’s confidence in his or her data. It’s hard to trust your trading system when you’re seeing different numbers.
The chart prices may not match live prices.
Also, be aware that some brokers run a “B-book” of price quotes that take on risk against clients with accounts that are at break-even or worse. In other words, the broker wins when you lose, and vice versa.
Yet, the best brokers, such as Pepperstone, run strictly an “A-book” with a single price feed and trading is exclusively based on that single set of prices. So, with a good broker the charts should always match your trading prices. That gives you the confidence in knowing that your trade executions are based on the same data as your signals.
Trade like a professional
For part-time forex traders who are ready to begin trading professionally, there are plenty of tools available. And, by participating in a “prop” trading style you can take advantage of top-quality trading platforms and data feeds to help you squeeze additional margins from the markets.
Next week we’ll be talking about leverage. Most traders use it as the rope to hang themselves with. But when you use a powerful tool carefully, it can be the difference mediocre and outstanding performance.