Everyone want to make money. Altho there are a lot of ways, trading is the first thing that comes to mind for many people and I was one of them. I began trading in the stock market after I lost my job thinking it's simple. Clearly I was WRONG and learned my lesson the hard way after continuously blowing up my account. Here are some of the errors I reversed to stop losing money in the volatile market.
1. Do not attempt to make trading your primary source of income I put all my eggs in one basket when I started off. Altho I had a little beginners luck, but that did not last me very long. I was over invested in the market, and this caused me to trade with emotions rather that trading my plan. If you know anything about trading, this is extremely dangerous. If you are new in trading forget about going full-time trading right away. You will not do good. I am telling you this from experience.
2. Always be sceptical of what you see and hear online Here’s a rough statistic: 97% of traders fail. In my opinion, there is such a high fail rate because everyone does the same thing. Now there is so much content online for you to learn this new skill, its overwhelming. Most of the education providers teach similar strategies and technical analysis. To be successful in life and with stock trading, you need to start thinking for yourself. Sure, you can rely on all of the 'secret strategies' on youtube that comes out over time, but if all of it were accurate, don’t you think everybody would be throwing their money into the market to make money?
3. Learn from your mistakes quickly Trading is all about learning from mistakes, start doing what works and ditch everything else. I wish I learnt this sooner. Even the best traders in the world make mistakes on a daily basis. But it isn’t about not trying to make mistakes. Instead, it’s about the knowledge they gather from their mistakes to prevent themselves from making the same mistake again that is critical to their overall progression. It is extremely important to keep track of all your trades especially the bad ones. I started using a journal to track my trades and my results have improved significantly.
4. Stay out of the market as much as possible "Less is more". When you are new to trading you can fall into the trap of trading extensively. I believe trading less is way more profitable than trading every day. I believe in quality rather than quantity of trades. Whole retail trading industry is built around message of “Trade as much as possible”, which I believe is a conflict of interest as this is how your brokers make their money.
5. Be patient. Good things take time Trading is not get-rich quick scheme, so avoid everyone who is trying to sell you this. You cannot become a doctor, lawyer or an engineer within a week. So why do trader expect to become pros and make millions in a very short amount of time without putting in the effort and cutting corner? Trading is just like any other career, if you want to become an expert you need to put in the effort to gain knowledge.
6. Never give up When facing huge losses, it’s only natural to feel a sense of doubt. But just remember those successful traders that you emulate and follow today. For sure, they had their fair share of setbacks early in their careers. They didn’t back down and give in into their doubts.
Please like and comment below if there is any other advice from you to all the beginners reading this post.
Thank you for the advise. Very useful and I agree with most.
I'm trading for the past 1,5 year. The first year I was trading while I had a full time job. When I was coming back home did all my research and opened trades. The result was 112% gains in the first year.
Then the COVID thing came and everything changed in my country with the market and the jobs. So for a little more than 5 months now I trade like if it is a full time job (8-9h/5d). First month excellent 40% gains, second month almost blew up my account. Had a hard time turning the thing around during summer, spending ridiculous amount of time each day (15/5) almost non-stop (this is the never give up and learn from your mistakes you mention).
Went back to build my knowledge and improve my pitch. Did my research, read and watched the “experts”. All that with free tools. I paid nothing so far.
So for the past few weeks I’m trying hard to convince myself that this not the “right job” with the fear that I might lose again what I gainned during summer.
Frankly again and again I prove myself wrong. With all this uncertainty in the “real market” I found this to be the perfect career. Hard yes. Dangerous to lose money yes. But what isn’t these days? Trading is “COVID proof” and knowledge intensive. Needs a fraction of the capital any other real job would require and the running costs are not even worth mentioning. Let alone the fact that you have your money (okay or even lose your money) with a press of button when in the “real market” you have to get into tremendous trouble to get your work’s money!
So if you are into economics, statistics and business as I am, you will have a hard time finding something better right now.
This is the only point I have a slight disagreement with your excellent post. Sorry for the long story.
Trading_Dynamics
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@A_Bouras, I agree with you. Trading can be a rewarding career if you are good at it. Becoming good at something takes time and my advice was more for the beginners to not take trading as the only source of income because a few bad trades can cost you all your money. It's a great side hustle atleast at the beginning
without_worries
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Sounds like you've learned a life lesson - sometimes those are the best teachers. I've learnt so much from my mistakes I'm thinking of making a few more, as the old saying goes.
1) Primary source of income is achievable through trading. It is entirely possible. Keep 1-2 years of living expenses on the side in cash that is never used for trading and you'll be fine.
2) 100% correct. Never pay attention to the news, youtube, they are never part of your decision making process. Your decisions come from your strategy.
3) Agreed - however I would add.. trading is about measuring probability of risk and reward, rather than what is possible. Journal usage is an excellent skill to adopt, I do the same myself. Now it is like having cheat codes ;)
4) 101% correct. Never never day trade. Just don't. You could have turned 10k in the last six month to 100k on just 2-3 crypto's, easily.
4a) Take profits. You'd be amazed just how many traders cannot cash in at the top or near for the hope of more. Greed is a money killer.
5) Very true.
6) Absolutely - believe in yourself. Ignore the opinions of others. As you become successful the 'others' will hate even more. As Mahatma Gandhi is alleged to have said:
"First they ignore you, then they laugh at you, then they fight you, then you win”
Trading_Dynamics
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@without_worries, absolutely agree with you. The harder you work, the luckier you get. You can't be very greedy or try to cut corners in the beginning, you will be humbled.
backto432
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@without_worries, "Never day trade"....Your potentially leaving a lot on the table. If you allocate percentages of you portfolio to obvious intraday corrections you can do just fine. A prime example is yesterdays SPY low. Buy at 1:30/2 and out before close. Quick 30% gain on 10 day out calls. It's pretty easy if you stay disciplined and wait for the opportunity. Day trading does not have to mean that you trade everyday all day.
without_worries
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@backto432, for sure - I think you have to have balance - I value my free time.
SgtBlackGold
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finally, someone who says it the way it really is period I have been following the markets since 1998 back in arbitrage options and when things were still in fractions it took me 20 years till learn how would it be profitable period it takes time consistency and patience and more importantly discipline and the same trade like a Vulcan and not like a human is very valuable. nothing but success. trade well, Thomas N.
BoujeeBahamian
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This was written with soo much thought I love it
cheawick
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I stopped the day trader thing and became a dividend/swing trader. My primary goal is dividend investing, no it's not flashy nor a quick way to get income. Should you be interested I'm writing a booklet on my experience, which is horribly incomplete but should have enough info to help you build monthly income. I'm currently pulling in $855 monthly dividend and $985 quarterly dividend income. I can try to post my PDF documents here or just post a link to my MeWe Group if you wish.
Yes, it's tough, but hang in there and try your best to stay out of debt.
Short Stock Watchlist.ods
I don't know if that will post, but it is my active OpenOffice spreadsheet of my monthly and quarterly short lists.
I'm trading for the past 1,5 year. The first year I was trading while I had a full time job. When I was coming back home did all my research and opened trades. The result was 112% gains in the first year.
Then the COVID thing came and everything changed in my country with the market and the jobs. So for a little more than 5 months now I trade like if it is a full time job (8-9h/5d). First month excellent 40% gains, second month almost blew up my account. Had a hard time turning the thing around during summer, spending ridiculous amount of time each day (15/5) almost non-stop (this is the never give up and learn from your mistakes you mention).
Went back to build my knowledge and improve my pitch. Did my research, read and watched the “experts”. All that with free tools. I paid nothing so far.
So for the past few weeks I’m trying hard to convince myself that this not the “right job” with the fear that I might lose again what I gainned during summer.
Frankly again and again I prove myself wrong. With all this uncertainty in the “real market” I found this to be the perfect career. Hard yes. Dangerous to lose money yes. But what isn’t these days? Trading is “COVID proof” and knowledge intensive. Needs a fraction of the capital any other real job would require and the running costs are not even worth mentioning. Let alone the fact that you have your money (okay or even lose your money) with a press of button when in the “real market” you have to get into tremendous trouble to get your work’s money!
So if you are into economics, statistics and business as I am, you will have a hard time finding something better right now.
This is the only point I have a slight disagreement with your excellent post. Sorry for the long story.