Let’s be realistic. Being a trader is complicated and challenging. It’s not surprising to learn that 90% of people give up on trading after just a few months of activity.
But living off trading is possible, even if you’ve never done it before. The reasons why so many traders give up so early and don’t see the results they seek can be broken down into 6 principles.
The following tips will help you understand what you need to know to make it through your first year as a trader and set you on a path toward a future full of success.
Tips on Moving Forward as a Trader
1. Don’t create expectations
The first question often made by traders is, “When will I start winning?” which is not an ideal approach for beginners. Yes, it is possible to earn a lot of money trading, but it is more probable that you will lose many times before winning. Thus, the better question to ask would be, “How do I not lose all my money?”
It’s true that this doesn’t sound good at all and will surely be a disappointment for many of you reading this article, but it is crucial to realize that within your first year as a trader you will likely not make very much money. If you are able to maintain a good balance while trading and break even, you will already be better than 99% of other traders and can consider it a great start.
Having inaccurate expectations also often leads traders to giving up sooner, as a result of the frustration from not seeing the results they had hoped for. Start instead by accepting that you will not be earning large amounts right away and focus on creating an optimal trading process. In time, the money will follow.
2. What to focus on as a trader
“So what can I do during my first year?” Well, the first thing you should do is familiarize yourself with the market and look for a good mentor to learn from as soon as possible.
The second is to work on a strategy and don’t stop until you perfect it. It’s normal to try out different strategies in the beginning but it is important to find one that suits you best, and to focus on it in order to continuously improve.
3. Find a mentor
A mentor is not just a provider of market signals or someone you purchase a strategy from. A mentor is someone who is well trained in the field of trading and is able to teach you exactly how it all works so that you can enter the market confidently.
A good mentor is someone with a sharp mind who understands emotional and business psychology, and will help you get through any troubles in order to prepare you for the start of your journey in trading.
Always steer clear of any messages with promises of earning quick and easy money without investing any time and effort.
Do not allow anyone else to manage your money, but rather learn to do it on your own with the guidance of your mentor.
4. Practice with the demo
Using a demo account is highly recommended for beginner traders. It is very advantageous to start out using fictitious money in order to better familiarize yourself with the platform, its functions, the nature of the markets, etc. without immediately adding the element of real monetary risk.
However, don’t get too comfortable with the demo either. Once you feel ready, give it a try with a real account, even if your investments are minimal. Spending too much time working on a demo platform can be detrimental since it lacks the pressure and emotional aspect that accompany operating with real money.
5. Understand your losses
One of the main problems traders encounter is not being able to understand their losses. Operations resulting in losses are just as normal as those that result in gains and no matter the skill level, they will always occur.
Conversely though, you must also learn to be able to differentiate between the operations in which you’ve encountered losses. These could happen as a result of the market not playing out in your favor or due to a mistake in your approach. The former is completely normal and should not worry you. The latter however, comes from human error and as such should be an indicator to you to learn from your mistakes going forward.
6. Learn to better yourself as a trader
Do you remember your last 10 operations? Do you know which errors caused you your greatest losses? Do you know which strategy suits you best in achieving your desired results?
If your answer to any of these questions is “no”, creating your own trading journal would be very beneficial.
As long as you record each of your operations, as well as their corresponding analyses, this journal will become an essential tool that allows you to review any operation you have made in the past.
Your first steps as a trader should be toward protecting your account and learning to minimize losses instead of seeking gains.
The majority of traders start out visualizing where they want to be in a few years, but often look over the fact that that dream is very much reliant on the foundation built today.