Start Trading – How to Be Profitable in 10 Years
We all want to make a lot of money, retire early, and then travel the world. To be honest, that was the dream I used to have growing up. I was motivated by a number of documentaries on rich people that were always on Bloomberg TV. I made the decision to try my best to be as rich as they were and retire by the time I hit 40. In this article, I will explain a few steps you should take to achieve this dream and start trading.
Start as Early as You Can
In the investment business, the best time to start investing is now. You should not keep on postponing the time you will start to trade. Remember, the earlier that you start trading, the better it will be for you. If you start learning how to trade when you are 20 years old, by the time you are 30, you will have 10-years’ experience as a trader which not many people have it. Remember, you will go through the five stages that every trader goes through which are:
- Unconscious Incompetence – where you know its possible to make money but you don’t know how. So you open the trades without any analysis, make some money, and then lose it all
- Conscious Incompetence – where you realize that you need more time to learn how to trade. You learn a lot of things from different sources.
- The eureka moment – where you realize that you don’t need all the information you are feeding yourself with. You realize that you can make money by just using a simple moving average.
- Conscious competence – where you start making money while paying a very close attention to the indicators. Here you make a few pips on a daily basis.
- Unconscious competence – You have now become a pro and simple losses does not mess up your day.
As a trader, you will have to go through these steps. Therefore, the earlier you start learning about trading, the better it is for you.
Creating the Strategy
As you navigate the steps above, you will find yourself at a position of creating your new trading strategy. This is where you combine a few strategies which will tell you what to do when something happens. For instance, if you use a double moving average strategy, you will only trade when the two lines cross one another. In this stage, you should use what you have learnt to create a strategy that combines both technical and fundamental analysis. As a young person that start trading, this strategy will help you master it before you get to 30. After you create the strategy, you should test and backtest it as well. This will help you make accurate and informed decisions in your trading.
Chances are high that as a young person in your early years you don’t have a lot of money. You will need to raise funds from family, friends, and other people to trade. The good thing is that you don’t need millions of dollars to make a lot of money as a trader. With about $10,000 you can be at a good place of making good money for the long-term. For instance, you can decide to make just $200 every day using your strategy. From your $10,000, you will be making $4,000 every month which is not a bad thing.
The best thing to do to raise funds during this time is from your parents, friends, and relatives. Ensure that you warn them that the funds could disappear within days. Once you break even, you can go ahead and trade with your own money. This will be advantageous for you because you won’t have a lot of pressure in your investment.
To achieve this goal, follow the following principles:
- Aim for small profits.
- Trade only a few times a day.
- Always have a stop loss to mitigate your losses.
- Always hedge your trades.
- Write all your trading moves.
- Take time every day to look at your wins and losses.