Top Lessons From My 7+ Years as a Trader – Introduction
As many of you know, I started trading more than seven years ago. I have also been writing in these pages for more than four years. In this article, I will share a few lessons I have learnt in my life as a trader.
Markets are made up of people
If you are new to trading, you have your own thinking and perspectives about the market. A common perception is that the market participants are geniuses who knows everything. As you will soon realize, the market is made up of people who often make mistakes. For example, if you pay close attention to the economic calendar, you will see that the estimates are usually not all that accurate. In addition, what the market does is not always perfect. For this reason, you should always follow the price action of the security in addition to using other techniques.
Always Follow your own Research
As a trader, you will often read articles and wonderful opinion pieces about the asset classes that you trade. While the ideas shared might be excellent, you should take time to do your own research. One of my biggest mistakes as a trader was to do what an analyst recommended without doing my own research. This decision cost me more than 25% of my total account value.
Time and Practice
As a trader and mentor, I have seen many people fail. In fact, most of the people that I have talked to about trading fail. European Securities and Market Authority (ESMA) estimates that more than 80% of all retail investors fail. The reason for this is that these people don’t take time to practice. They just start their trading careers without much learning and practicing. Ultimately, they fail and lose most of their initial investments.
Talk Less, Do More
A common mistake I see from many people is that of talking more about their trading successes. This is also common among large investors. For example, Bill Ackman spent many years building his empire silently. He did it without a lot of TV and magazine interviews. In 2015, after a very successful year, he was announced by Forbes as the next Warren Buffet. He offered many interviews to the media. He even bought the then most expensive apartment in New York. Then things started to change. In the next three years, his fund started falling and he lost more than $6 billion. The same has happened among many traders I have interacted with.
Take Time Off
While I consider myself a relatively successful trader, I also have my down moments. Many times, I open trades and see them go south. The key to my success when this happens is to take time off. There are periods I have gone without opening a trade for days just because I did a mistake. By doing all this, I am able to assess my trading and recharge. Failure to do this can see me make many trading mistakes.
I don’t take being a successful trader in an industry that many people fail for granted. For this reason, I try my best to be very grateful. I express this gratitude by setting aside a part of my income to charity. Giving away some money that I work so hard to get is a really great thing. You should try doing so too.