I’ve been trading in the “old days” (that is the late ’90s) in the stock market of my country. Back then you had to call your broker. If you managed to get through to him you gave him a range of prices and then he would call the guy in the dealing room and if you were lucky he would buy or sell your stock with profit. Sounds crazy to the young guys now, I guess.
1)Trading can be your new full-time job
Trading is not for everyone. Apart from being comfortable with “numbers” you need to have some relative background. Maybe someone is a natural and does not need that, but I find it hard to imagine someone who does not know how credit cards work for example to become a successful trader!
So if you have what it takes then trading this period in history where everything else is collapsing can be a dream career.
You don’t need substantial capital investment (leverage can be your best friend when you know where to place your stop loss).
You define the risk you are taking and more or less you know it even from the early stages of being a trader.
You have close to ZERO running costs for this occupation.
The tax-man is kinder to investors than it is to small businessmen....at least in my country and perhaps in Europe as well.
Also trading is COVID-19 proof (no commuting, no colleagues around, no customers to visit etc)!
Of course it is time demanding and despite what I read by my favourite “experts”, I think that being there at the right time exponentially improves your chances of remaining green.
Finally for this point if you wait to live your family from day one with trading you better forget it. I think that you should have at least 1-2 years of living expenses on the side to get into full time trading.
2) Use a training/demo/paper account before you go real
I highly recommend before you commit any real money into trading to use a demo account. Treat it as a basic training course. How long it’s up to you.
I used it for 3 full months 4-5hrs a day. It saved me a lot of money and I was testing whatever I was reading about trading strategies back then.
3) Understand risk management
The first goal is not to blow up your account!
In order to do that, you have to understand risk management and how this thing works. It’s not rocket science but many (including me sometimes) forget about it.
In order to stay in the game you have to keep the odds in your favour. It requires discipline, patience and basic understanding of statistics. Maybe take a course or ask the opinion of a pro if you feel weak on this.
Just remember to ask yourself every time you place an order: What my potential gains will be (Take profit-TP) and what my potential losses (stop loss -SL) if this does not work. It is called risk to reward ratio (R/R).
4) Learn your indicators
There are hundreds of indicators out there. No one can know what each one of them represents. It is advisable to start where everybody that I know of and is still in trading did. Support and Resistance. Learn this well.
Once you fully understand Support-Resistance then choose the indicators that fit your trading style and try to understand them in depth. Put as a learning target for you to learn a new indicator say every month. 5-10 should be enough.
Once you understand them go back to your demo account and practice trading using them. See what it works for you and how you can incorporate those in your trading decisions.
It takes time and as I found out and when you think you understand what your “favourite” indicator shows, then you realize that you are missing something!
Well welcome to trading, since you are no bot, nor a deep-learning machine you have to go back to your study room and do your homework. Even if you do it correctly remember it is a chances game. You might be right but the result might be against you.
5) Plan should be above emotions
This is the hardest part. Especially when you are close to blowing up your account. It happened to all of us. Some lucky ones managed somehow to change the tide and got back to green. But be sure that you will get there and it doesn’t fill nice.
The antidote to this is to have a well thought plan for each one of the trades you open and you stick to it. Keep monitoring your indicators and the reactions of the market after you open a position. Don’t just open a position and forget about it. I found this to be a recipe for disaster. At least at my level of knowledge of trading.
You have to train your brain to focus on the facts rather than your expectations. Some are by nature optimistic, some pessimistic. A trader just sees the data in front of him and he decides what to do based on that data. I know it’s hard and many times I made and keep making this mistake but I had to point it out here.
....But then again things are not always like this. Sometimes ending a trade early can save the day for you. In order to do that you have to be there.
6) Choose wisely your “experts”
We are living in the digital age where the “clever” person of our time is the one who knows how to make the right questions to...Google!
So be a clever person and look around for your expert/s. There are thousands out there. Some of them might be compatible with your style or have this “gift” of explaining hard to understand things in simple words that you find easier to understand.
Many of them don’t ask anything more than a like or a comment on their channel or idea from you. Use them.
7) Narrow down the financial products you trade/monitor
On tradingview it is called a watchlist. Try to make a portfolio of financial products you want/like to trade. I would say not more than a dozen at any given time.
How you decide on them might be based on ethics, your broker’s fees, leverage, conditions in the market and many-many more.
Try to analyze the financial products in your watchlist and understand the factors that affect their behaviour. You will be surprised after a while how your confidence on a stock or future will increase and how much more accurate your predictions will be.
I know traders that trade just one, yes one, stock or future and they are very successful, as they know everything there is to know for this particular financial product.
8) Don’t be afraid to experiment
There is no right or wrong in trading. You might be right and the market moves against you so you lose money. You might be wrong and the market moves for you and you make money. That’s how it is. However in the long run you have to be right in your assessment of a situation to take the right position and keep your wins.
With time you will develop your trading skills and then it is the time to experiment. Experiment with indicators, with different strategies or financial products.
Incorporate experimentation in your trading and you never know you might find out that you are better at something you did not think you were.
9) Keep records/journal and go back to them again and again
I strongly suggest to keep a journal. It will help you become a better trader. You will be able to spot your mistakes and the things you are better at. For example you might find out that your sell positions give you more profit on average than the win ones. Try to explain it, ask yourself the “why”.
Keep track of the trades you make each month and year in full detail.
Things to track are wins-zeros-losses actual and percentage, average gains-losses per position, the holding time of your trades, the kind of positions you make the most out of, the financial instruments that give you the most etc.
10) Majorities are most of the times wrong (Socrates)
Well as ancient philosopher Socrates put it, “majorities are most of the times wrong”. For trading this might be a rule.
Once you develop your skills and you are confident enough with your level of analysis then you will realize that following the crowd does not pay off.
So please devise your own strategies and make your own decisions. After all you are the one who will pay the bill if you fail.
Sorry for the long text.
I hope I helped some out there.
1)Trading can be your new full-time job
Trading is not for everyone. Apart from being comfortable with “numbers” you need to have some relative background. Maybe someone is a natural and does not need that, but I find it hard to imagine someone who does not know how credit cards work for example to become a successful trader!
So if you have what it takes then trading this period in history where everything else is collapsing can be a dream career.
You don’t need substantial capital investment (leverage can be your best friend when you know where to place your stop loss).
You define the risk you are taking and more or less you know it even from the early stages of being a trader.
You have close to ZERO running costs for this occupation.
The tax-man is kinder to investors than it is to small businessmen....at least in my country and perhaps in Europe as well.
Also trading is COVID-19 proof (no commuting, no colleagues around, no customers to visit etc)!
Of course it is time demanding and despite what I read by my favourite “experts”, I think that being there at the right time exponentially improves your chances of remaining green.
Finally for this point if you wait to live your family from day one with trading you better forget it. I think that you should have at least 1-2 years of living expenses on the side to get into full time trading.
2) Use a training/demo/paper account before you go real
I highly recommend before you commit any real money into trading to use a demo account. Treat it as a basic training course. How long it’s up to you.
I used it for 3 full months 4-5hrs a day. It saved me a lot of money and I was testing whatever I was reading about trading strategies back then.
3) Understand risk management
The first goal is not to blow up your account!
In order to do that, you have to understand risk management and how this thing works. It’s not rocket science but many (including me sometimes) forget about it.
In order to stay in the game you have to keep the odds in your favour. It requires discipline, patience and basic understanding of statistics. Maybe take a course or ask the opinion of a pro if you feel weak on this.
Just remember to ask yourself every time you place an order: What my potential gains will be (Take profit-TP) and what my potential losses (stop loss -SL) if this does not work. It is called risk to reward ratio (R/R).
4) Learn your indicators
There are hundreds of indicators out there. No one can know what each one of them represents. It is advisable to start where everybody that I know of and is still in trading did. Support and Resistance. Learn this well.
Once you fully understand Support-Resistance then choose the indicators that fit your trading style and try to understand them in depth. Put as a learning target for you to learn a new indicator say every month. 5-10 should be enough.
Once you understand them go back to your demo account and practice trading using them. See what it works for you and how you can incorporate those in your trading decisions.
It takes time and as I found out and when you think you understand what your “favourite” indicator shows, then you realize that you are missing something!
Well welcome to trading, since you are no bot, nor a deep-learning machine you have to go back to your study room and do your homework. Even if you do it correctly remember it is a chances game. You might be right but the result might be against you.
5) Plan should be above emotions
This is the hardest part. Especially when you are close to blowing up your account. It happened to all of us. Some lucky ones managed somehow to change the tide and got back to green. But be sure that you will get there and it doesn’t fill nice.
The antidote to this is to have a well thought plan for each one of the trades you open and you stick to it. Keep monitoring your indicators and the reactions of the market after you open a position. Don’t just open a position and forget about it. I found this to be a recipe for disaster. At least at my level of knowledge of trading.
You have to train your brain to focus on the facts rather than your expectations. Some are by nature optimistic, some pessimistic. A trader just sees the data in front of him and he decides what to do based on that data. I know it’s hard and many times I made and keep making this mistake but I had to point it out here.
....But then again things are not always like this. Sometimes ending a trade early can save the day for you. In order to do that you have to be there.
6) Choose wisely your “experts”
We are living in the digital age where the “clever” person of our time is the one who knows how to make the right questions to...Google!
So be a clever person and look around for your expert/s. There are thousands out there. Some of them might be compatible with your style or have this “gift” of explaining hard to understand things in simple words that you find easier to understand.
Many of them don’t ask anything more than a like or a comment on their channel or idea from you. Use them.
7) Narrow down the financial products you trade/monitor
On tradingview it is called a watchlist. Try to make a portfolio of financial products you want/like to trade. I would say not more than a dozen at any given time.
How you decide on them might be based on ethics, your broker’s fees, leverage, conditions in the market and many-many more.
Try to analyze the financial products in your watchlist and understand the factors that affect their behaviour. You will be surprised after a while how your confidence on a stock or future will increase and how much more accurate your predictions will be.
I know traders that trade just one, yes one, stock or future and they are very successful, as they know everything there is to know for this particular financial product.
8) Don’t be afraid to experiment
There is no right or wrong in trading. You might be right and the market moves against you so you lose money. You might be wrong and the market moves for you and you make money. That’s how it is. However in the long run you have to be right in your assessment of a situation to take the right position and keep your wins.
With time you will develop your trading skills and then it is the time to experiment. Experiment with indicators, with different strategies or financial products.
Incorporate experimentation in your trading and you never know you might find out that you are better at something you did not think you were.
9) Keep records/journal and go back to them again and again
I strongly suggest to keep a journal. It will help you become a better trader. You will be able to spot your mistakes and the things you are better at. For example you might find out that your sell positions give you more profit on average than the win ones. Try to explain it, ask yourself the “why”.
Keep track of the trades you make each month and year in full detail.
Things to track are wins-zeros-losses actual and percentage, average gains-losses per position, the holding time of your trades, the kind of positions you make the most out of, the financial instruments that give you the most etc.
10) Majorities are most of the times wrong (Socrates)
Well as ancient philosopher Socrates put it, “majorities are most of the times wrong”. For trading this might be a rule.
Once you develop your skills and you are confident enough with your level of analysis then you will realize that following the crowd does not pay off.
So please devise your own strategies and make your own decisions. After all you are the one who will pay the bill if you fail.
Sorry for the long text.
I hope I helped some out there.