Crucial Stages for Better Trading – Introduction
As a person who is involved in trading on a daily basis, I find it being one of the best things to do. Even in days when am in the red, I find it quite fulfilling. This is not because I hate losing money but because I understand that money cannot be made on a daily basis. Therefore, in every trade that I initiate, I am certain that I might make or lose money. Trading can be brutal as well. You can have a losing streak for a full month. I am often asked by young people about how I became a trader. In this article, I will highlight 5 key stages you must follow to become a better trader. From the onset, I will mention that there is no perfect trader (or investor). Cases of Wall Street high flyers who fall are so many to mention. Remember the Long-Term Capital Management firm I have written about here? This was a firm managed by prominent Nobel prize winners which disintegrated in the 90s following huge losses.
Crucial Stages for Better Trading – Is Finance your Area of Interest?
This is an important question to ask when determining whether you want to become a trader. Can you spend a day looking at charts, reading ‘boring’ websites such as CNBC, and watching ‘boring’ TV stations such as Bloomberg (where when Christine Largade speaks is breaking news)? The fact is if you are not interested in these fields, chances are that trading is not for you. Trading demands that you must have a lot of interest in finance.
Crucial Stages for Better Trading – Read
If you believe that you have a lot of interest in finance, then maybe trading is the thing for you. The next stage you must commit yourself is learning. To become successful, you must read a lot of books about trading. Early in my trading days, I used to read so many books. Today, I still read a lot of books. I just completed a book that I recommend to you about the journey of a hedge fund manager. He narrates how he started and how he ended up shutting down his fund. You must commit yourself to reading.
Crucial Stages for Better Trading – Practice
Before you risk your own capital, you must be ready to practice. Luckily, today you have access to hundreds of brokers who provide a free demo account. This demo account will provide you with all the tools and data that you need to trade. MT4 is a good software provider which is used by most brokers. Use the tool to implement the key information that you learn from these materials.
Crucial Stages for Better Trading – Create a trading plan
Early in my trading career, I used to open the trading platform, look at a chat and then open a trade based on my own thinking. In many times, I was wrong and I ended up losing a lot of money. The success of a trader is determined by the plan that they use. After reading, you should now create your own preferred trading plan which will help you open and close trades at the right time. Once you have created your trading plan, you should backtest it to see whether it performs as required.
Crucial Stages for Better Trading – Trade and learn
Every trade that you open will teach you valuable lessons. The beauty of trading is that you get to learn new things every day. There will be no day that will be similar as another day. As you trade, you should take time to ensure that you learn. By doing this, you will be at a good place to have a long trading career.