Should You Start Trading?
Should You Start Trading?
I get asked this almost weekly by folks learning about trading. “How do I get started?” “Should I start trading?” “What does it take to trade?”. Anyone who is new to the trading game has questions about what they should do, and what they should not do. These feelings are common, so please read this blog completely.
The truth is that you may be wondering if you should start trading because you’re nervous or if maybe it’s too overwhelming for you. If you are the type of person who freaks out over loosing money. NO Trading is not for you.
Trading is really a game, I often hear folks say this is a gamble. But so is starting a new business, buying a house etc. These are all a gamble in one form or another.
How do I Start Trading
One of the first things you will want to do is open a paper trading account. In other words, you will not be trading real money. Now with that being said, I will stress that sometimes folks paper trade and then shift to real money and freak out.
So, if you are this type of person, you might just want to stay away from trading all together. Trading there will always be days when you will have a winning trade and days where no matter what you do, you just can not make a buck.
Finding A Trading System
Once you start Trading, and you’ve opened a paper trading account, it is time to set your trading system.
This is a very important step in trading. I have made the mistake of not setting a system for months at a time. And it doesn’t work. I suggest that you keep the following rules for your system:
Always trade with the same funds . This means that you can not go from 100’s of dollars to 1000’s or 1000’s to use on the same trade. In other words, practice money management.
Once you have a system that works for you, and you are comfortable with it. Then maybe consider opening a live account.
Learn To Take A Loss
One of the hardest thing for any trader out there is to watch thousands of dollars disappear in a flash. I want you to let this sink in a little bit.
Learning to take a loss and it will happen. It happens all the time. I mean how many times have you heard stories about folks who lose there entire bankroll in one trade or even worse, lose it faster than they made it?
I am going to tell you that if you have a bad day, take a deep breathe and move on. Let that money make money for you again. But when it is gone, it is gone. Learn to take a loss and let it go at that.
Wins and losses do happen everyday, for every trade know that there is one winner and one looser. That is the cold hard facts of trading. Learning to take the good with the bad is just part of the game.
How To Stay Consistent
Trading anything above a 60% win rate should keep you on the right side of the coin. Meaning, if you have more than a 50% chance that your trade will make you money. You should do just fine in this industry.
Money management is also a big part of this, always risking x amount and always staying with those numbers. One of the most successful traders I know never risks more than 3% of his account and has made well over a million dollars already this year.
Nobody talks about money management enough, but it is a key to make it long term in this industry.
If you really have a passion in life for the markets, then yes you should educate yourself and join in the fun. But just like anything else in life, you really do need a passion for the markets. Anything short of that you just might be wasting your time and money.