Plenty of people will try their hand at the trading markets each year, but without the proper knowledge and skill, many will walk away a little poorer than they started, albeit a bit wiser. Those who fail tend to have something in common: they have failed to master the basic skills needed to succeed.
It takes time to learn, and you can certainly increase your odds of success. It just takes patience and a lot of education.
Van K. Tharp is an international leader in the market trading industry. He has been helping others become the best trader possible since 1982. He has written multiple bestselling books on the subject.
“When you understand what’s involved in winning, as do professional gamblers, you’ll tend to bet more during a winning streak and less during a losing streak,” Tharp said in his book, Trade Your Way to Financial Freedom.”However, the average person does exactly the opposite: he or she bets more after a series of losses and less after a series of wins.”
Going in with a preconceived notion of what the market will be like and your financial outcome without the proper education could leave you disappointed, and with significantly less money than you started. Luckily, there’s information out there to help you improve your trading process.
Step one: Open a trading account
An obvious first step, but a vital first step, nonetheless. Find yourself a good online stock broker and open a stock brokerage account. Even if you have a personal account, it’s beneficial to have a separate trading account for the sake of tracking your money. Get familiar with the app and the trading tools that come with it. A number of these online brokers will offer virtual trading. You can also check out reviews to see which broker you want to go with.
Step three: Take the time to read
Like any field of study, there’s plenty of literature, website tutorials and articles out there with a wealth of information on how to get into market trading. Much of it is free to access. However, it is important not to get stuck on one single aspect of trading, and explore various trading styles and the market, including ideas and concepts you might feel aren’t terribly relevant. Having a detailed understanding of the market will come in handy over time, even in the case where you think you “know everything.”
Matt Choi, a successful, self-taught professional trader has over 16 years of experience in trading the markets. He is a Chartered Market Technician and the founder of Certus Trading, a small trading education company.
In an interview with neoadvisor.com, Choi said: “a large part of achieving longevity in the trading world is having the inspiration and belief in what you do.”
In the article, he warns traders of allowing emotions to get in the way of their own success. Instead, he recommends removing emotion from the equation and finding trades much faster as a result.
“I teach traders how to find high probability trade setups using fixed parameters. What this means is that if the stock is showing A, B, and C, then it is a buy. Or if the stock is showing X, Y, Z, then it is a sell,” said Choi. “And the best part is, we can program the A, B, Cs, and the X, Y, Zs in trading platforms, and it literally takes seconds to identify trade opportunities based on a set of fixed criteria.”
Step Three: Learn to Analyze
Studying the basics of technical analysis and comparing price charts, as many as you can, at all times, is vital. Never stop reading company spreadsheets, they offer a good trading edge over those who don’t bother to acknowledge them.
Bolstering your experience with charts and technical analysis is what you need to enter the realm of price prediction. Securities can go higher or lower, encouraging either a long-side trade or a short sale. However, prices can be unpredictable, sometimes going sideways for weeks or whipsawing in multiple directions.
Financial markets go through trends and trading ranges with fractal properties that generate independent price movements on a short, intermediate, and long-term interval rate. Rather than complicating prediction, most opportunities will come through interactions between time intervals.
In an article with finetunedfinance.com, Choi believes that based on his experience with trading, successful traders spent the time to really understand the industry. He places emphasis on the idea of developing a “trading personality,” a term used to describe a personal approach any trader has to develop to be successful in the long term.
Whether you’ve been trading for years or are just getting started, these steps will help you develop the trading skills you need to be successful. As long as you continue to learn, you too can be a successful trading professional.