How to become a better trader in 2025
As financial markets continue to evolve, successful trading requires a combination of disciplined strategy, risk management and continuous learning.
Essential trading knowledge for 2025
The trading landscape demands continuous adaptation and learning to stay competitive. Understanding market fundamentals, technical analysis, and risk management principles remains crucial for any trader's success.
Modern traders need to leverage advanced analytics and trading platforms while maintaining disciplined emotional control. A well-defined, written down, trading plan should guide all decisions, helping avoid impulsive moves based on market sentiment.
Managing risk effectively
Implementing proper risk management through tools like stop-loss orders (at all times) is essential for long-term trading success. In forex trading market and other assets classes, position sizing and portfolio diversificationare key.
- Risk guidelines: never risk more than you can afford to lose. Avoid excessive leverage; risking 2 – 3% of total capital per trade is prudent, while 10% or more could lead to significant losses
- Loss management: experiencing multiple consecutive losses is probable. Risking 10% per trade risks 50% of capital in a streak, requiring a 100% gain to recover.
Testing strategies with a demo account can help manage risks without real financial commitment.
Common trading mistakes to avoid
- Chasing losses and overtrading: are two of the most destructive habits for traders to overcome.
- Emotional trading: many traders fall into the trap of ignoring their trading plan when emotions run high. A trading platform, and especially a trading phone app, should be used for analysis, not emotional decision-making.
- Basing trades on hype: proper research and technical and/or fundamental analysis should drive trades, not social media hype or market rumours.
Developing your trading strategy
- Using trading signals: by incorporating trading signals, keeping a detailed journal, learning from outcomes, and maintaining discipline, you impove your odds of becoming profitable
- Trading across different timeframes and asset classes: analyse various market conditions to diversify and manage risk effectively
- Prioritise consistent improvement: rather than quick profits
- Define clear entry and exit points using sound analysis: ensure strategies are profitable over time by making gains larger than losses or ensuring potential gains exceed risks. IG’s weekly ‘Trade of the week (TOTW)' illustrates this.
IG's Trade of the week
The idea behind TOTW is for IG’s United Kingdom (UK) market analysts Chris Beauchamp and Axel Rudolph to show potential and actual traders how to place a trade, decide on where to place stop loss and limit orders while incorporating sound risk and money management techniques.
The TOTW trade ideas are recorded each Monday morning and can be seen on the main IG UK website as an article under ‘News and Trade Ideas’, on MyIG under both the ‘News’ and ‘Videos’ sections, and also on IG UK's YouTube channel.
Even with a 50% accuracy rate, analysts achieved a 31.45% hypothetical profit in 2024 by maintaining discipline and larger average gains than losses, risking 2% of capital per trade.
2024 TOTW per trade profit and loss graph
(Note: all 2024 setups and ideas were hypothetical and not executed with real money.)
For a more detailed analysis of the 2024 hypothetical TOTW results, see this article.
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
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