Like most traders I know, me also had a rough start when I first started trading.
From being highly over leveraged to almost destroying my marriage by staying glued to the screens for days and weeks, I’ve gone through the whole Via Dolorosa.
If I could have done things differently and start all over again, there are five important things the I would have changed and I want to share these insights with you in this blog post:
Technical Analysis isn’t enough!
Most of us reached the trading world following some courses/lessons learned about technical analysis and its use in the financial markets. Usually these courses (mostly offered by the brokers themselves) cover the basics of technical analysis and hardly touch other aspects of trading.
What we do not know when we start, is that understanding technical analysis and learning to chart is probably the easiest millstone on a trader’s journey towards success.
Anyone can draw some lines on a chart (some do it better than others but the basic is the same), or read signals basic indicators like RSI and Stochastic, but unless you really understand price action and learn that there are other things like the way that market is moving movement, its rhythm, how to time the markets, time frames analysis and market’s sentiment, you are doomed to focus on the wrong lines and the wrong trade signals.
It doesn’t end with that. What about trade execution? Does anybody in these basic courses ever teach you above how to execute your trades? Probably not…
Setting realistic targets and keeping proper Risk/Reward is a crucial part of trading. You can be the best analyst in the world, but if you do not know how to manage trades, you’ll constantly lose money.
When I started, I knew how to spot the right turning points. I was mostly right with my analysis and yet I lost money.
The reasons were (among others) tight stop loss orders, I was constantly thrown out of the trades by False Breaks and Spikes and when the price did turn as I expected, I was so anxious to take profits and cover my losses that I hardly kept my positions open to actually generate income.
Understanding the way price moves takes time and a lot of practice. Either you take the time and put the effort to learn it by yourself, or you join services like The Elite Zone, and learn from pros, the most important thing is to understand that technical analysis alone isn’t enough.
Over Leverage and Over trading – Grinding and accumulating profits is much better than trying to hit a home run
Why do we start trading? To make money..to generate income.
Why do we need money from trading? Cause we don’t (or can’t) have enough of it
The need for money is what brought most of us to the world of trading but.. Greed is what ultimately destroy our trading performance in our early stages of trading.
Most traders are fascinated by the false publicity of fast and easy money in the financial markets. That fast and easy supposedly comes thanks to the high leverage that the brokers offer us, but the truth is that this high leverage is the reason 90% of the traders blow up their accounts over and over again.
Me personally, in my early trading days, whenever I felt like I’m on a roll or whenever I sensed (assumed) that some major turn is coming, I used to go “All In” and used the highest leverage possible to maximize my potential profits and hit the Jackpot…
But.. as you well know, the markets don’t always comply with your desires and it isn’t that easy to be spot on with your call for tops or a major bottoms.
The result most often is that you end up with a situation that every tick/pip that the market makes against you against you cost you a lot of money! Much more than you can handle. In such scenarios you become a slave to fear. Fear paralyzes you and you either exit the trade early (just to watch the market move in your favor without you) or, even worse, turns you blind and you find yourself holding on to a losing trade hoping that the market will turn, letting the price eat your account till you are out of the game!
You have to consider that just like in Baseball in which hitting a Home Run is a rare occasion, also catching weekly turns right at their tops or bottoms is a rare occasion as well. You don’t have to score a Home Run to win a game. You can do it by moving from base to base. Also in trading, you can accumulate small and profitable positions and see that constant growth of your equity.
Grinding is much better than trying to hit the home run and if you have statistical edge, you’ll be able to earn more than you lose and therefore become profitable.
Patience is the key
I know and sure you already heard and read it many time before, but I have to repeat it again cause its the absolute truth- Being patient is the key to success.
At start you tend to be anxious and want and do everything and fast. Here are some examples of common mistakes newbies do:
- You force trades even when there’s no reason to trade.
- You jump into trades way before you get a signal to do so.. only to not miss it
- You book profits earlier than you should.
- You want your account to grown fast, aiming for 20-50% a month (which isn’t realistic of course)
- You focus on short term trades to get more action.
With time you learn that it is patience that lead to success:
- You wait for the patterns to be complete
- You wait for proper trading signals
- You let your trades run till they reach target zones
- You settle with realistic gains of 3-5% per month (Can reach up to 60% per year!!)
- You focus on the bigger picture and avoid the noises.
I’m considered to be an Aggressive Trader. That doesn’t mean I’m impatient. Don’t mistake between patience and the lack of ability to take trading decisions when you need to.
Be patient, don’t be scared.
Get your surrounding support
Yes, every trader has sort of a lone wolf personality.
We sit alone with in front of our screens, manage our own business solely responsibility for our success and failure.
Being your own boss is the dream of many. That’s one of the main reasons people turn to trading in the first place.
But being your own boss doesn’t mean you have to be aloe out there. You have to have the support of your surrounding (family, spouse, friends etc..)
Some of you may be young and unmarried, some of you may already have families, wife, children.. etc.
Share your trading life with them. The success stories… and the failures.
Don’t shut down. You’ll find it much more liberating to share your stories than to keep them for yourself and also you will eventually learn how good it does to your mental state.
At start, when I lost a lot of money, I used to hide the truth, I was ashamed. I hid everything till the point I couldn’t hide it anymore and I had to confess about the “new financial situation”.
There’s nothing wrong with failure. You shouldn’t be ashamed of losing money by trying to become something that you are not – A successful trader. Those who do not try, won’t succeed.
The same goes for time when you experience success – Share it (don’t gloat!), take your wife out for a good dinner, buy your children a gift, share it with friends and be proud (not cocky).
Some of you may not understand that now, but if you’ll try it, you’ll see what I’m talking about.
Learn from the best
Look.. there are lots of self claimed Gurus out there. The internet is full with people that claim that make tons of money trading and they can teach you how to do the same.
Learning from the right people is the key if you can’t make it on your own.
Here are some tips for choosing the right guidance:
- Stay away from those who gloat about having lots and of money and achieved quick success – Although there are some lucky or very skilled people out there that achieved quick success in trading, usually most of those who claim so are just putting on a show in order to sell. I’ve found modesty to be a key quality in most successful traders I know.
- Don’t go into automated trading if you intend to truly learn how to trade – If you really wish to learn trading as profession, don’t go into automated trading and managed accounts at start. Though Automation may be great solution to deal with human emotions, when you’ll know how to trade, you’ll know how to test automated systems and know which automated system fits with your trading style.
- Alerts service are nice but they don’t teach you anything – Alerts service may be great to make some money (if they truly are successful), but it won’t teach you anything. Look for services that offer detailed analysis and detailed trading plans. That way you’ll learn to understand the thinking process of a pro trader.
I hope that this post will help you to direct your trading career into the right path. If you liked it, please share it with you fellow traders and if you are looking for a guidance that will not only provide alerts, but also reveal the logic behind the trades, try my Elite Zone service by pressing the link below