Be a more effective trader, all because you learned three very important lessons, and the specific reasons why these are so crucial.
I have worked for some of the biggest brokers and I have seen numerous scenarios but the fundamental things the successful trader does is the following.
Before I continue, the most important word is “you” simply put, everyone is different, like snowflakes and DNA, no two traders are the same.
1.There is no perfect formula.
If you are a trader or want to start trading, the natural thing to do is go online and type in trading, or learn to trade, make money trading, best system of trading, best signals for a trader, how to trade, make profits trading. The list is endless, and the web is saturated with thousands, if not millions of opinions, systems, strategies, signals, platform, and news.
Lesson one, you can only decide what you are by beginning to trade, no I am not asking you to invest and lose your money, I am emphatically stating that you need to open a demo account with a reputable broker and look at what this is about and practice.
There are numerous opinions about a demo/practice account, “try to pretend it’s your real money and trade”, is a common theme.
I strongly disagree, a demo is to get to understand the system, how to navigate the chosen platform, how to execute a trade, how to close a trade, how to activate, stop loss or take profit, how to read a chart, how to put some indicators on your chart.
That’s it, it will not teach you the markets. That will come from experience and knowledge. Most beginners trade and either win or lose and think that is it. The markets change all the time and so must the trader. They must adapt strategies, systems, even assets that they trade to get an overall feel of potential opportunities. Remember, in retail trading online with ETFs, CFD’s, Forex, there will always be opportunities, so you don’t have to jump in straight away, unless, you have an idea that you believe will work for you.
To open a demo account, you will still need to verify the account, if the broker is regulated and reputable, so you will need proof of who you are, proof of residency, it doesn’t take long but forms part of the transparency between both parties.
Each day will bring different scenarios, so practice the system makes perfect, if there was a perfect formula, I would have retired by now.
2.Everyone Loses Sometimes
Ok, once you decide to trade your money, you will have good trades and bad trades, no doubt.
So, stop hoping, and start accepting the fact that you will lose. A good trader is one that makes money in the long run, not a system that makes money with every trade – that is dreamland. And you will only start making money once you accept that you will lose money.
A simple way to look at it is, make better good trades, than bad trades, ok that sounds obvious, but it is true, you want to get a return on your money over a period, it is very rare to make massive gains immediately. Trading is not investing, this type of trading online, is making short gains over a short period and then going again.
This is the essential lesson I have observed from great traders, they know how to use their money.
Here is the simplest form of money management: When you are up, take the profit rather than waiting to make even more money. Fight the greed. Remember, it’s about your return over a period of time.
Use stop loss and take profit; you can practice this on your demo and most brokers have great webinars or articles showing how to do this.
Finally, be realistic about the returns, the risk to using leverage is big, but if you learn to take decent profits and not be greedy, you can develop into a successful trader.
There is no magic formula, you will lose trades and you need to control your money, if you can do this you are on the right path, I repeat, I have seen this done by the successful traders, consistently. Trading is not an exact science so enjoy, there are no exams at the end.
If you have read this blog until here, you are probably a trader or want to start.
We work with some great brokerages all offering demo accounts, with no commitment to invest.