So you've heard it all before how some guy who had no
knowledge of any financial market took $100 and turned it into $5000 in just 2
months from the comfort of his own home. These ads are littered all over the
internet just waiting for some naive person to buy a “service” which falsifies
the ideals around the field of trading.
The harsh reality is most traders don’t make it see their
full potential. The failure rate of new start-ups is amongst the highest in the
world and it doesn't help that the barriers of entry are very low. However the
field of trading is more about skill and mastery than it is about money.
I decided to write this post today because I believe some
traders are sold on the notion that trading is a way in which their wealth can
be grown in astronomically percentages in a relatively small period of time.
What they don’t know is that it’s far more difficult to be a consistent trader
and being sold under the idea that it’s easy has the chance to ruin them
financially.
Don’t get me wrong, trading
does have potential to grow your wealth provided you put hard work into it, but
it’s not a decision which should be considered likely.
Recently a fellow trader and I were discussing the topic, in
which I thought he summarized it quite well and I quote “If someone came to you and made you a promise to become
a professional golfer or a brain surgeon with just a tiny amount of investment
in time required, you would automatically write the idea off as lunacy”.
I couldn't agree more.
So here are some things you
should keep in mind when thinking about trading:
1. Risk
Management
Always understand the risk which
trading entails. Remember you are working with money, something which can be
hard to come by. When you do trade, do so with money you can afford to lose.
Also remember to control your trading losses, keep them to the minimum. The
better you control your loses the better your chances of staying in the game.
2. Having adequate
time to dedicate to learning about trading.
Trading sometimes leaves a
trader with more questions than answers. That’s the nature of trading and if
you don’t have the desire or willingness to learn then simply don’t commit. The
more information you have at your disposal the better position you’re in to
make the right decision.
3. Accept that
your emotions are going to confront you.
One of the hardest things about
trading is dealing with the emotions that the markets can stir up inside you.
It can leave you feeling confused, upset or even lost. Don’t give up; instead
learn how to master your emotions. By
dealing with your emotions rationally you’re able to clear up your path to
success. There are many books about trading psychology, don’t be shy to get
stuck into them.
4. Have
reasonable goals that you can follow.
If you expecting to amass a
fortune in 6 month, after which you going to retire to some exotic beach
location, then you might as well stop trading. Trading is not a get rich quick
scheme, it’s about persistence and consistency and setting realistic goals is what
keeps you in check. Strive to meet your goals and stick to them as your
guidelines.
The above list is some of the
things I battled with when I first started trading and there most certainly
more things you can add to it. If you would like to add something else to the
list, drop me a mail at cadetrader@gmail.com
or follow me on twitter: @CadeTradeR
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