Most traders like to start their trading journey from zero.
After all, it’s really easy for them to click a mouse to confirm a transaction!
This digital age has made it easy for us to trade, and the process seems simple.
But financial markets can be brutal.
Being “smart” doesn’t work in the trading market. The market will teach you a lesson over and over again.
We do have some experience here that should be used for reference by all traders.
1. Short-term trading requires extremely specialized trading knowledge.
Almost all experienced traders discourage newcomers from day trading.
Day trading carries a high level of risk and requires a certain level of expertise to assess the situation and make quick, timely decisions.
But most new traders think trading is so easy that they think they can simply trade every day and take home a little money.
They fall into the temptation of short-term trading, but the market just keeps eating away at their money.
Every day, traders log on to the trading system thinking that today will be different.
But with no trading plan, he lost more and more each day.
Day trading is like any other trading.
You need to have some knowledge of support and resistance, a good entry point, a stop loss and an exit position.
If these things are missing, do not trade at all, let alone day trade.
2. The process is more important than the result.
It is certainly true that everyone can make money in the market.
But steady profits are scarce.
Opening a trading account and making money from it is not important.
Maybe just happened to be in the right place at the right time.
This is what most novice traders experience called “beginner’s luck” and make several successful trades.
Such victories made them believe that it was easy to make money in the market.
Actually.
Your goal is not to make money all at once.
It’s about creating a steady stream of income to help you achieve financial independence.
In order to earn such a stable income, you cannot blindly trade without any plan.
Therefore, making the proper plan and then trading is a crucial process that every trader needs to learn on his own.
One successful trade does not make you a successful trader.
However, if you can repeat this success on a regular basis, you have created a solid trading strategy.
3. A good trader is a product of good habits.
So how do you create a good, solid trading strategy?
Of course, develop good habits.
When you’re new, it’s easier to pick up bad habits.
Once these habits are formed, they are very difficult to get rid of.
For example, many traders don’t think it’s important to track trades and analyze them at the end of the trading session.
I think it’s a boring task.
But when you start writing a trading journal.
He wrote down his trading plan in his journal: he wrote down everything – what to trade, what is the reason for the trade, what is the entry point, what is the stop loss, how much to trade, etc.
After the transaction, if the plan was followed, go back to the journal and write it down honestly.
But you’ll find that most of the time you don’t stick to that plan.
Either get in too early or get out too late.
Either you’re overweight, or you make a completely different impulse trade.
Only by sticking to the journaling habit can you understand your mistakes and then build the discipline to correct them.
4. You’ll never be a marketing expert, but that’s okay.
Many people believe that in order to make money in the market, one needs to become a market expert.
But markets are so complex, and there are so many factors at play at any given point in time.
No one can keep track of all the information and trade successfully.
No one can be a market expert.
This is why, when you ask any experienced businessman who has been in the business for a long time, he will tell you that he is a student of the market.
Every day the market teaches us something new.
Therefore, it is not important to become a market expert or not.
Instead, we focus on two things we can control: a) finding a system with a good win rate and b) managing risk.
Let’s talk briefly about these two points.
There are many ways to make money in the market.
Technical analysis provides a large selection of tools.
Some may opt for a trading system based on moving averages.
Others may look for Fibonacci based systems.
Traders should try all the different options to find the system that works best for them.
Extensive backtesting of the system is also required to find out its effectiveness.
But remember one thing — the percentage of wins that a backtest might bring won‘t tell you when those win percentages will happen.
It would be completely random.
For example, suppose you find a good system with a 60% success rate.
That means that for every 100 transactions you make;
Sixty trades will be profitable, while 40 will be loss-making.
But the system doesn’t tell you which trades will win the trade.
So, to take an extreme example – a trader might make 40 consecutive losing trades and then 60 consecutive winning trades.
In this case, does the person have any capital left to trade after losing 40 trades in a row?
The randomness of winning makes it all the more important for every newbie to focus on managing risk better.
Instead of trying to be a market expert, become an expert in risk management.
Therefore, the number of trades (position size) and the amount of risk (risk management) need to be determined.
You must understand the size of your position and the importance of risk management, or you will not be able to continue trading.
5. No matter how smart you are, the market will teach you the importance of humility The market doesn’t care how smart you are.
It doesn’t care what you achieve.
It doesn’t even care about your last 10 winning trades.
Every transaction is a new beginning and must be done in a new way of thinking.
There are too many factors involved in trading.
At any given point in time, any of these factors could work against you and cause you to lose your trade.
Failure is very real and needs to be accepted.
Trading is like being your closest friend.
It will reveal all the deep-seated flaws in our characters.
Occasionally we lose our confidence.
It will make us doubt our own abilities.
But every time, it also provides us with the opportunity to build our own good personality.
Every lesson we learn in the market is to become better traders and better people.
Therefore, one needs to accept failure with an open mind and keep trying to improve oneself.
