Top Challenges You’ll Likely Go Through As a Trader – Introduction
In business, you will always go through challenges. Big businesses face the challenge of attracting, training, and retaining talent. They also face the challenge of regulations and taxes. Startups on the other hand face a challenge of attracting capital to fund their businesses. As a trader, you will also go through challenges. Although I am an experienced trader, I continually face challenges on a regular basis. In this article, I will highlight a few of the key challenges that you will likely face in your trading career.
- Low Volatility
Volatility is an essential aspect of any day trader. This is because we make money by being short and being long stocks, currencies, and commodities. Therefore, our profit comes from the scenarios where the market is volatile. Unfortunately, periodically, the market will lack volatility because of various reasons. For example, this year the level of volatility has been weak across all the segments. The stock market has reached and broken new records. To make money in such periods, you need to look at the individual stocks, commodities, or currencies.
As a day trader with a trading floor, you will only succeed if you have the best team. The team that you have will play an important role in ensuring that you have the best performance. This is where many day traders go wrong. They hire people, not based on their background but because of other issues, like friendship. To solve this challenge, you need to do a few things. First, you need to interview the right people. Secondly, you need to give them the right instructions. Third, you need to set clear rules and regulations. For example, the rules of firing the staff should be stated well. Finally, you need to remunerate them well. This should be based on their performance.
- Strategy not working
As I have mentioned before, it is very important to have a strategy as a trader. Without having a good and tested strategy, it is not possible for you to succeed. The challenge comes in the creation, implementing, and testing of the strategy. Many traders go through the challenge of having a strategy that is not working out. To solve this problem, you need to be patient. You need to take your time to develop the strategy and test it before you implement it.
- Power issues
This is also another challenge that you will likely go through. We live in a world where power generating companies are becoming inefficient. We have also heard of likely scenarios where power sources are hacked. To stay safe in this, you need to do several things. First, if you can, you should live in a house with a backup power source. Second, you need to have a power saving UPS. This UPS will keep your platforms running even when there is no power. Third, you need to have a backup platform. A good way to do this is to have your trading platforms in your mobile devices. This gives you an opportunity to quickly manage your account when there is no power.
- Conflicting news sources
As a trader, having the best news sources can help you make good trading decisions. However, in many occasions, you will find news of the same instrument but framed in different ways. For example, the unemployment rate might be positive but news sources offer different opinions on their impacts. To prevent this, you need to use quality news sources like Reuters and Bloomberg. Also, you need to always make decisions based on your own conviction.