Get Off To A Good StartAll The Necessary Steps To Become A Successful Trader
Are you interested in working as a trader? Before investing money you’ll have to spend some time studying!
But before we start ... remember that the goal is not just to become a trader, but a profitable one.
What does it mean to be profitable? It means going through a phase of mistakes, adjustments and improvements that will lead you to steady profits.
In order to become a successful trader it is paramount to follow the 6 steps we’ll be discussing below. The path we’ll analyze may seem overwhelming, but it's fundamental to achieve your objective.
1st basic study
Before we start trading we need to study the basic subjects that make upthis profession. The fundamental subjects are:
- "Financial Markets": i.e. know the structure of markets, the concept of supply and demand, brokers and trading tools.
- "Macroeconomics", which allows to understand the health of nations thoroughly, and a correct evaluation of the economic news spread every day on the markets.
- "Technical analysis", which is indispensable to understand asset price dynamics. This subject is important as it allowsanalyzing price movements directly on graphs by using patterns, indicators, oscillators, supports/resistances, etc.
Generally the first two subjects aren’t taught by trainers; therefore we’ll just have to study them by ourselves either online or even better on specific books. The third subject can be deepened using video tutorials, webinars or industry blog posts.
2nd Simulated Trading Practice
This phase is more operational, and requires a period of a few weeks of virtual money trading simulations in a trading platform (for example, metatrader), in order to become confident withthe technical analysis tools. First of all, you’ll need to select a simple and well-defined trading strategy online that you’ll be focused on for some time, until you get positive results consistently. Next, add new strategies to your training, with different techniques and tools that you can then compare.
3rd Work on the psychological aspect
After a period of trading simulation with positive results you can switch to real money trading. The main difference between simulated and real trading is the psychic component. For those who want to start this career, the 1st most important aspectis the psychological one.
The emotional stress created by the trading gives troubles to the individual: it’s easy to shift from a positive mood to a negative one, therefore we advise to start trading with reduced capital at the beginning.
Working by yourself means trying to best manage your own personality, especially these features:
- Have patience and self-control
- stay focused and precise,
- Recognize and avoid overtrading,
- Maintain an emotional detachment from losses
4th Study the statistics
When working with real money it’s important to prepare a trading plan. Once it’s ready, you have to follow it and avoid the classic mistake of changing it halfway through. Once we follow our program, you can compile data and perform statistics that can be analyzed on a monthly, quarterly and yearly basis.
The information included in the trading plan includes:
- number of completed trade transactions
- comparison between gains and losses
- trade timetables and days
- asset and timeframe/deadline
- type of strategy
- mistakes made or the reasons for the loss
After the first few days you may improve and personalize the analysis by preparing statistics for a single strategy, a single asset, for hours of the day, or deadlines, etc. as well as makingall the necessary corrections to your trading plan.
5th research and testing
Being professional means having consistent results, and above all being prepared for shifts in the market. For this reason it’s important to have a diversified portfolio of strategies.
In order to do this you’ll haveto simultaneously work using multiple strategies, different in timeframes, assets, and especially opening method/logic. By doing so our results won’t be influenced by a specific market situation, but will be balanced.
Every quarteryou should get rid of strategies with negative performance,and replace them with new strategies that need to be tested properly before being put into practice (see the testing article). This research method must be used throughout our career as traders.
6th compare and improve
There’s always something new to learn, so it’s important to keep improving your training by following advancedcourses, even for a fee.
Another very important source of knowledge that can benefit our training comes from websites, blogs and specialized forums (also on our website) as they allowgetting in touch with other traders, and by comparison you can improve your trading strategygreatly.
This training process will accompany us throughout our entire career as traders
the Analyst's answerJean Grossett - Financial analyst
Trading requires discipline, organization and detailed study. The training process should be slow and followed step by step. Skipping just one essential step may expose you to risks that could endanger your career in this field. Asa matter of fact most aspiring traderstend to rush things, and after losing their capital they step back and re-evaluate all of the steps above.
the Manager's answerRobert Danvil - Investment Manager
In order to be successful, a trader must adopt a systematic approach to trading, following chart patterns, with a statistical edge.
Is paramount to fix a daily, weekly, monthly action plan, with strict rules which won’t be changed halfway through:
– Working hours
– Rules of money management
– Techniques you’ll use
– Number of operations to be carried out,