Trading is the latest craze and rightfully so! A well-known secret is that profits are better than wages and that no one has become a millionaire by putting money under the mattress or into a standard savings account, one should make their money work for them. Here are 6 points I have compiled that I wish someone had told me before I started my trading journey.
1. “I love it when a plan comes together”
A line commonly used in ‘the A-team’. The same applies when you trade the markets. The people that make money on the markets are the ones that have planned their trades, as they say “Plan your trade, trade your plan”. Planning your trade will give you an idea or expectation of how the trade will playout and should it not go as planned, it will help you to understand where you went wrong. That is why there is great importance in keeping a journal of your trades to follow what you did wrong… or what you did right!
2. Trading comes with risks
One thing to keep in mind, if you are having a hard time sleeping at night because of a trade you are in, then you are over exposed. Trading should be fun and not a cause of heart failure or insomnia. That is why it is essential to have a risk/reward system in place that will limit your losses should the trade go against you. Managing your money is a key part of trading and I suggest that you take the time to understand money management disciplines, losses are part of the game, which is why you should develop a structure to manage your funds. Do not allow your emotions to get the better of you when it comes to trading, if you make a loss, take it and live to trade another day.
3. Celebrate the small wins
You should set daily profit targets for your trades. Take the wins, as most people tend to get too confident when they are ahead and fall into the trap of over trading. No matter how small your profits, nobody ever lost money taking a profit! The point of trading is to grow your funds, no matter how small the amount is. The golden rule is to not lose money and the best way to do this would be to take profits when you feel the time is right, or most importantly… following your plan.
4. Focus is key
When starting out, stick to one instrument. Only once you understand that specific instrument would I recommend expanding your instrument universe. Avoid spreading your attention too thin when you start trading, as this will be overwhelming and cause confusion when trying to understand what is or isn’t working. Keep it simple to start off, stick with what works and don’t be swayed by someone else’s opinion, as I mentioned above, “Plan your trade, trade your plan”. You should never doubt your ideas and analysis.
5. It’s harder to swim against the current
As the saying goes, “the trend is your friend”, trading against the trend is like swimming upstream… tough, with a greater probability that the stream will eventually win.
6. The law of averages
First thing that you must understand is that, when it comes to trading, you will not be buying a Ferrari in a month’s time. Trading is a skill that is developed over time, not overnight. The more you do something, the better your chances of success will be and by following my above steps, you will be giving yourself a better chance of becoming a successful trader
At the rate of which technology is progressing, trading is going to be the norm in the near future as has been seen with likes of Henry Ford and the car industry and Thomas Edison with electricity. However, like driving a car, if you don’t practice or put in the hours to teach yourself, your chances of having an accident are far greater, but once the skill is embedded in you, it will stay with you for the rest of your life. My solution is to keep in touch with someone within the industry, who can assist you in getting started and learn the skills required. I’d be very keen to assist, so give me a shout via the GT247.com social media networks.
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