Before I started regularly to make money on the stock-market, I forced my way through most of trading instruments, intervals and strategy. Was it worthwhile? It was. But I’ve lost a lot of time and a little money. I don’t even regret money, because losses are a form of the learning, from which I most learned respect to own money. Definitely I more regret the time 🙂 Today about ‘Profitable trading’.
In many books regarding trading, you can find information of what stages the trader development consists. Yes, that’s all is correct. However, it only depends on you how much a particular stage will last. As well at what point your adventure with the market will end.
However, there are certain simple aspects, which you can lead into trading, and thanks to that to streamline and help to achieve good results.
The following advice is directed to persons who don’t have yet clearly defined path on the stock-market. If you just start on the stock-market, take at least some of these advices to heart.
#1 I’m not influenced by others – Profitable trading
To this day I observe traders, who in my opinion are better. Only this enables to learn, when still lays in me a huge desire to develop and to be a better trader.
Often this way begins trading. You browse somebody who shares the knowledge, and next as that person tries to play the same. It is a terrible mistake! Never, ever try to copy other traders and their ideas!
Firstly – every entry which you will receive from your guru is usually after he already has that position.
Secondly – you don’t know exactly why he opened that position.
Thirdly – your guru has own strategy of playing this position. And what is yours? Since the only argument to open it is because the guru did?
Fourthly – seeing the guru can be good, if you draw right conclusions from it and when it helps you to fine own strategy, reasons to open the positions, etc.
If you skip “the fourthly” then every loss on the stock-market you will be able to blame on somebody else – “it is the fault of my guru, rather than mine, he badly suggested”.
#2 Choose the appropriate volume of position
In this case, I will say how it is from the daytrader point of view. Somebody who plays for a long term may have a completely different point of view – for me it’s understood: investing for a long term, you also want to be rewarded appropriately for a waiting time.
In case of daytrading often the beginner traders are very impatient. They would like to gain maximum profits from the very beginning. It often goes hand in hand with opening very big positions, which they aren’t able appropriately to manage. Remember that everyone is able to open a big position. You must only have a relevant account. But to appropriate manage the given position when it is carried in your thought and not in your thought – it’s already a completely different story.
If you just start, you should begin from smaller positions and along with development constantly increase them. You shouldn’t trade position that affects your emotion, because this may clean your account, before you will learn anything.
#3 Stop being interested in analyses, opinions of others
Since I trade as for living, I’m completely not interested in what other people say about the given company that it’s supposed to increase/decrease. Believe me, it doesn’t make sense. Fundamentalists will be right sometimes, and in medium or long-term this way it will happen. As for me as the daytrader, I’m only interested in what is happening here and now, and to it I only react with appropriate scenarios to play.
Amongst observed by me traders, none tries to predict what will happen on the company and to be the guru when this way happens. It is important to have own assumptions how to play when the rate reaches an interesting level.
However, the fact that I’m not interested in what others have to say about the given company, it doesn’t mean that I’m closed to conversations. Amongst my trader friends we often exchange the opinions about crucial levels where a good position may appear. But it is a completely different than listening to explanations why it’s supposed to be this way on the market 🙂
Similarly, this applies to the news from companies. In principle, I don’t read their content – I look only to a symbol of the company in news and I look what will happen. I use of so-called price action, and what’s behind it good/bad news? It doesn’t have the slightest matter. Remember, a daytrader is not an investor. The company is on the account, and after a moment it isn’t.
#4 Get to know different markets
Before I started to meet as a trader on the US Stock Markets, I tried my strength on other markets. But without financial results, which could satisfy me. You read my site – where I’m focused on the American stock exchanges. Remember that even though I recommend to everyone these markets, not necessarily this will be a good choice for you.
It isn’t worthwhile to stick to the given market by force, because somebody else earns on it. Focus on yourself and how you perceive the given market. Not always that what is good for others will be good for you!
When I was trading on Forex I didn’t actually know what and why I’m doing there. When I started to trade on American shares – at once I understood it, and I missed the volume.
Volume and tape reading since then became a base of my trading. The change and attempts on other markets let me understand it.
#5 To be open on new!
It is great to have one strategy, which enables to earn consistently. Maybe not constantly, but regularly, because 10/10 of successful entries it is hard to erase.
But every strategy may someday stop working or results generated by it won’t already be so satisfactory. If you won’t cognizant it, you can one day catch that it is too late ;), since suddenly you aren’t able to earn on the market. How it is possible?!
Therefore, it is worthwhile, even within own trading niche, to work above permanent fitting to the market. What do I mean? If your strategy assumes mainly plays on longs, what will happen when a sentiment will change and the entire market will experience declines in this period? After all, you can add the opposite strategy i.e. playing on declines.
#6 Build other businesses apart trading
It is fully my opinion. What does it result from? As a daytrader, I got used to monthly payment of profits. I do it regularly in order to feel that I earn, that the stock exchange brings me fixed profits.
However, I know that one day I won’t already want to trade; a day will come in which I will resign completely from trading or I will want to deal with larger intervals in order to devote more time to my wife and child.
Therefore, I try for a few years to run other businesses. I certainly devote them less time than trading, however in periods of more boring sessions, I have what to do. Somebody could say – you already have trading so why to waste time for other, less income businesses. I agree, but it is simply a matter of character, approach to life and upbringing.
However, for beginner traders I recommend diversification of my profits from the beginning; even if it was supposed to be in scale of 1/10. Always when you have a worse period in trading, you can have other income business and certainly a peace of mind and heart.
Tell me what did you changed to carry out trading on a higher level? Share your methods, which enabled to develop in trading.