Becoming a qualified trader is not easy, if a beginner does not want to be eliminated, the focus is not on how to make more money, but on how to lose less. First learn to secure capital, then form a consistent profitability, and finally get the excess risk returns. Learn from successful people, learn from mistakes, and only by constantly thinking and learning can you continue to improve.
Would it be any different for financial trading? After all, they're just newcomers trying to get into one of the most difficult industries, at least I think they are, expecting to succeed immediately. Like a surgeon, financial traders have to invest a lot of time before they can expect to succeed. In fact, any specialized industry requires a proper education. Unfortunately, Harvard doesn't offer a degree in financial trading.
The first few years of trading should be seen as a learning period. During this period, do not expect significant gains; instead, the trader should focus on capital security and train himself. In other words, the novice trader should see himself as a student in school. When starting trading, because of ignorance, it is likely to make numerous mistakes.
Many beginners start out with a big plan and a lot of money, without training themselves to be the best traders. Remember, many successful traders have gone bankrupt or at least made significant losses. Even in the ninja world, taught by Richard Dennis, the initial losses are inevitable, and then some become the most prominent traders.
If you've ever read a book by a financial prodigy, you'll remember that every character in it seems to have gone bankrupt once or twice. Whether it's investing in stocks or selling bonds on the same day, it takes a lot of time to study and learn before you can gradually see the door. Although most beginners can't go through this difficult learning process, those who are trained and don't feel discouraged still have a good chance of success.
◇ Fill in the transaction instructions.
◇ Read the price chart.
It was a great experience.
◇ Understand the trading rules of different markets.
I had to go to the police station.
◇ Develop a trading system.
◇ Test the trading system.
◇ Develop strict discipline.
◇ Develop a financial management plan.
◇ Manage the risk.
◇ Learn how to admit defeat.
◇ Learn when to trade and when not to trade.
◇ Develop a business plan.
◇ Control your emotions.
◇ Lack of capital but barely trading.
◇ Trading too often.
◇ Let the losses continue to accumulate and become a disaster.
◇ Irrational attachment to the part.
I'm not sure I'll be able to do it.
◇ Taking too much risk.
◇ Trading in the pursuit of excitement.
◇ Be stubborn.
Financial trading is a process of continuous learning, not just reading a book or attending a lecture. Anyone can read five books about tennis, take a few lessons, but if you want to become a real tennis player, you have to practice on the field, and practice constantly. The same is true of financial trading, only constant practice can slowly find its way through. There may be some differences between tennis and financial trading.
No matter what you read in a book, no matter how much time you spend on a fake trade, once you actually get in, everything is not the same. The best way to prevent making mistakes is to make mistakes, and real losses only make you realise the meaning of mistakes, and only if you are careful to avoid making the same mistakes in similar situations. Real losses can make you feel the pain of a fake trade that is difficult to realize. Finally, when the pain is so severe that it is unbearable, you will not make the same mistakes again. Paper fake trades are a necessary learning process, and beginners should do a reasonable amount of fake trades before they can actually get in.
During the simulated trading process, you will not receive a notice of collateral collection, and the price of the part is the best price at the time. However, when you actually enter, the whole situation is different. Many things that will not happen in the simulated trading are happening now: reduced risk tolerance, the profit part is closed prematurely, losses and losses continue to accumulate, the transfer price difference and commission fees become a real burden, etc. Many things are not simulated on paper; however, although the actual experience is important, there should still be adequate training in simulated trading before entering the real world.
The cost of education
From what I have read, heard or seen, traders probably need two years to spend in the learning period. During this period of learning and honing skills, traders must pay tuition fees, just like a lawyer, cook or doctor pays $25,000 a year. Since there is no model school of financial trading, the tuition fees are paid to the more experienced traders, who are responsible for educating or providing lessons. After the proper learning process, the newcomer will be upgraded to a veteran and then begin to recoup the tuition fees paid in the past. Overall, the beginner should have at least the mental preparation to pay the $50,000 tuition fee. Financial trading is undoubtedly one of the most difficult industries to succeed in, and it is necessary to accumulate a lot of hands-on experience in order to master the relevant portal. Experience is the best teacher, so do not be discouraged by losses and consider losses as tuition fees you must pay.
Starting capital
Unless you're as lucky as Hillary Clinton, you're not going to be able to make a hundred-fold profit in a year trading bull futures, turning $1,000 into $100,000. In my personal pragmatic view, if you want to have a reasonable chance of success, you should have at least $25,000 to $50,000 of capital ready for three years of study, and a considerate wife (husband). Many people think that $5,000 is enough to start trading, because they already have enough money to pay the security deposit or stock reserves. They don't even consider the possibility of a loss; instead, they are confident that they will do well from the start, which is great, but it rarely happens. The vast majority of beginners make a loss in the first year. About 80% to 90% of those who start trading lose in the first year. The more start-up capital you have, the better your chances of spending the first year safely. If you are going to enter the financial trading industry and only have a few thousand dollars available, I advise you to keep the money in the bank or invest in a mutual fund.
Operating capital
The amount of capital required by financial exchanges is often more than the average person imagines. In addition to the safe passage of the learning phase, it is also necessary to make sure that you always have enough funds available for trading. The most frustrating thing is that when a big transaction happens, there is not enough capital to enter, you can only dry your eyes. I have seen this many times. I remember how many times I had to bite my teeth in the outfield and sigh in the face of a long-awaited big market for lack of operating capital. Now that I am no longer limited by money, I don't have to worry about this anymore: I'm pretty sure that when the next big market comes, I'll be there. That doesn't mean I can relax; I certainly don't want to have too many gaps to make up before the real money opportunity comes. But at least I don't have to worry about my hands empty and rushing to make money; now, I can focus on trading. You can't go into a trade with an unbeatable mindset. You have to be mentally prepared. In the first few years, the trade may not be able to provide the necessary expenses for living. The trading capital you have raised must be spent for several years, not just to deal with the first few trades. Prepare an initial capital of $25,000 to $50,000 and maintain an operational attitude.
In addition to trading capital, you must also have enough cash to pay for your daily expenses and enjoy the pleasures of life. So, having enough money is a very important condition, so that there are no confusion when trading, for example: how will I find money to pay rent, eat, watch a movie. If I start worrying about such things, the performance of the transaction will be affected immediately. Turning some of the profits into a living, this is probably the worst idea.
You have to be able to enjoy life; if you have to spend money on a vacation or buy a car, you don't have enough trading capital. Money stress will have a significant impact on your trading attitude, so your financial situation will be reflected in your trading performance. When I first started trading on the site, I was borrowing money to buy membership seats.
In addition to the need to be prepared for ample study, trading, and living expenses, one thing must be noted: the willingness to work hard, the need for prioritization, as in any other professional field, the financial trader needs a complete set of tools, including: charts, quotes, trading software, real-time news, and a good computer. The cost of these devices may not be cheap, but it is definitely worth it for a real trader. You must have money to buy these tools first, as a precaution.
Every trader is bound to make mistakes and suffer losses. The real difference between winners and losers lies in their attitude to mistakes. Winners perceive their mistakes and learn from them. Losers repeat the same mistakes over and over again. Suppose you are constantly chasing after stocks that have risen to $2 in 10 minutes, and the result is always a loss. If you are smart enough, you will eventually find that this is not a very good strategy.
Misjudging the direction of the market is not necessarily a mistake; traders will misjudge the market about half the time. Even if the result is a loss, there is still a difference between right and wrong, the key is in the attitude of dealing with the loss. Once you notice your misjudgement of the market, immediately exit, this is the wisest decision; on the contrary, if you have a good luck mentality, hoping for a sudden change in the market and get out, this is a mistake.
Making mistakes and then learning from them is part of the learning curve of financial trading. It is also why traders with capital have a higher chance of survival; they have the cost of making mistakes and learning. If too little capital is available, traders may go broke before they realize the lessons the market is trying to convey.
Don't reinforce the wrong behavior
In addition to learning from the mistakes, traders need to learn what they did right and then try to find a way to continue. Unfortunately, even if a serious mistake is made, the actual development of the market can still save us. For example, for a certain part of the loss, the trader is reluctant to admit it and expects the market to reverse the situation; as a result, he does so willingly. Such an experience is likely to result in the trader paying a heavy price in the future, which he may not want to lose.
I review my trades every day. For any improper trades, I record the relevant information in a database that cannot be repeated. Negative behavior, if it does not have negative results, not only does not provide the right lessons, but can also be reinforced as wrong lessons. By contrast, I would rather have the right trades lose than the crashes make a profit.
The Curse of Making Money
The beginning of a great trader is often difficult and can be followed by years of losses before success. Any new trader who hopes to make money from day one will be surprised by the reality. Earning money from day one is likely to be a disaster rather than a blessing. It is true that it is mainly due to luck, but these are the newcomers who are completely ignorant of the market and think they are born good. As a result, the operating attitude is overly positive; once the hand reverses, he may pay a price that is many times that of the average person because of mistakes.
Making too much money too quickly also hurt me. When I first entered the New York Stock Exchange, my initial goal was to make $200 a day, but by the second week I had a record of making $1,000 a day. After this experience, $200 seemed too insignificant. In fact, it was just luck. But it was also one of the worst things that happened to me because I tried to make $1,000 a day from then on.
Securing Valuable Capital
When I was anxious to make a profit from the trade, a colleague repeatedly reminded me: safeguard your precious capital. He wrote these words in striking type on his seat, reminding himself to safeguard his precious capital from time to time:
Don't think about making money, just try not to lose it as much as possible. Every dollar is important to you, so be sure to find a way to keep it in your pocket, or get it out of someone else's pocket.
The key to winning is not to lose too much when you lose. If the losing side is able to admit it, the profit will naturally accumulate. This reminds me of the instruction of the college tennis coach: as long as you can hit the net four times, you have an 80% chance of winning that point. He said: Don't worry about the winning point.
Playing a little bit
The task of the first year or two is to learn, not to make a lot of money, and it is necessary to figure out this. If you are trading in stocks, it is preferable to have 100 shares per trade; as for commodity futures, no matter how big your capital, you should only enter into one-sided contracts at a time, and choose markets with as little price fluctuation as possible. Keep it as simple as possible, consider only a few markets during each period, do not be greedy. Take the time to familiarize yourself with the characteristics of each market, then you can slowly get involved in more markets.
Bankruptcy
I know you don't want to hear it, but even the best traders have a lot of bankruptcies. I always think: yes, but I'm an exception. But what about the truth? I've forgotten that I've been bankrupt a few times. Among the people I know, I've seen $5,000, $25,000, $100,000, $1 million of trading accounts written off; no one can completely avoid it.
If you really want to be a professional trader, bankruptcy is often a valuable learning experience. This is the best time to readjust and see exactly why you are failing. The answer is almost certainly over-trading or under-capitalization, but the trader must find out for himself. Other mistakes that cause losses are relatively easy to overcome, but people will soon go bankrupt if they start over-trading or taking too much risk.
Determined to Invest
If you are determined to be a professional trader, you should not give up because of bankruptcy. If you are determined, even if you are unhappily bankrupt, you should try to find a way to come back. Those traders who are safe in the first few years should have a great chance of success because they have made a decision and are not willing to give up. Many people end up as losers mainly because they give up after initially encountering a setback.
Trade logs
If you are determined to be the best trader, you have to keep track of your progress. In this regard, recording a trading log is one of the best ways. A trading log can help you evaluate operational performance, highlight the special form of the trading process, to reflect rational and irrational behavior. After some time of analysis, you can see what is useful and what is not useful, and observe which market you are better at.
Institutional entities have so-called directors, managers, and trading software; therefore, every transaction is monitored. Every move of the institutional trader is evaluated, so that errors can be corrected at any time. For example, every week I receive a printed report showing my week's operations. The data in this report is statistically every half hour and shows a lot of things, including: the holding time of the profit and loss section, the winning rate of the trade, the average initial profit per trade, and the operating condition of the individual stock.
For traders who cannot be monitored by a manager or computer program, a trading log is the best way to do it. You can use it to search for information, analyze your trading patterns, and try to distinguish strengths from weaknesses. You can also find the markets or stocks that you are best at trading. You may never make money on Friday, and you may not be the best at trading news stocks. If you understand all this, you can slowly eliminate some of the hassle and only operate the markets or stocks that have the highest winnings.
Buy and sell
This part is simple: just record the stocks or commodities you buy or sell. I use the + or the
Time of transaction
Some people perform particularly well at certain times of the day. Some people work particularly badly at lunchtime. Others like the morning especially, but the last hour is bad. This is something that the trading log can reveal. For me personally, the afternoon is better than the morning; the half hour before closing is better than the half hour after opening; the time of best performance is between 11 a.m. and 2 p.m., because I am particularly sensitive to trends and reversals in this period.
The motivation for trading
The motivation for trading is probably one of the most important things in the trading log. For every trade that is made, if the reason for entering is clearly written down, the trading technique will definitely improve significantly after a while. If I feel bored or I buy ibm because it is up $ 3 in 20 minutes, I do not want to miss the remaining bullish momentum, this is not a reasonable trading motivation. If someone records these reasons in the log and feels satisfied, there is probably a long way to go.
The intensity of a particular transaction
Use some sort of scoring system to mark your trades and then analyze the results. Every night, I prepare 10 market planning trading scenarios for the second day of preparation for trading, and depending on how well the scenario develops, I mark 1 to 5 stars, respectively. Five stars represent the best opportunity. After a while, I found that the results of 5 stars were good, and one star was not good. Although the number of 5 stars is less than 1 or 2 stars, the results could have been better if I waited patiently.
Goals for profit
Setting profit targets can prevent missed profits. Before setting up the actual entry, the possible profit level should be understood. Once entered, setting profit targets helps the management department. When the price reaches the intended target, profit should be understood, or reduced. Do not doubt previous decisions because the situation looks good.
Stop by
As with profit targets, setting stop losses in advance is helpful: limit losses, so you know when you should take a loss. Deciding when to take a loss is best done with a clear head, rather than waiting for the loss to actually happen before the mood swings.
How much to win or lose
You should always know the average profit and loss of a trade to determine whether you have a good grasp of risk management. After recording these data, you may find that the average profit of a successful trade is $300, while the average loss of a failed trade is as high as $900. If you see this, it may mean that you should confess faster and the holding time of the profit portion should be a little longer.
Time held by department
Holding time is one of the important factors in determining the performance of a trade. Holding time for a losing position should be significantly shorter than a winning position. In the past, I always held a losing position, constantly waiting for the market to reverse and not willing to face my own mistakes. Now, I only allow a losing position to hold for 45 minutes at most, and then exit. Once a trade has failed, you have to admit, immediately exit.
If you are using a trading system, be sure to record the information you trade against the signals to see if you are smarter than the system or if it is better not to try to temporarily modify the system in the future.
Decision making
When it comes to your trading decisions, try to document the outcome. For example, if you often see a record of a losing position, you may want to find a way to fix the problem. If you don't, you may find that the problem is already there.
Renovation of the trading log
If there is an industry that needs continuous on-the-job training, financial trading may be one of them. Recorded trading logs are like school transcripts, both of which can be helpful, but only if you have to read them often. Simply written records are not useful, you have to read them carefully and analyze your own strengths and weaknesses. Only when you start reviewing your own trading performance do you step into the real threshold of trading.
In addition to reviewing mistakes, I also pat myself on the back for some clever reactions. For example, I lost $3,000 last Monday at lunchtime (not this part of the so-called clever), and I found that every transaction that I made that day seemed to go very badly. So I finished all the parts, went for a walk outside, and restored my mind. After returning to the office, I found that I was able to make more objective judgments.
Professional traders
Institutional traders have a higher probability of success than the average trader, partly because they have ample capital. They also make the same mistakes, but without the fear that a mistake will ruin their trading career. They have ample capital and a perfect supervisory system, so they can safely overcome mistakes. At the beginning, they receive training, someone is always at their side to guide or accompany the trade, and the account funds are not limited to causing serious harm.
Many professional traders go through intensive training. When I first started trading stocks, they told me that it was difficult for new traders to make a profit in the first two years. If you intend to make a profit at the beginning, you will be disappointed. During these two years, traders learn how to trade. For the first three months, they do not even have the opportunity to enter, only to learn a variety of trading opportunities in the classroom and simulate them on paper.
Large brokers such as Goldman Sachs or Merrill Lynch, and even the best institutes across the country, have invested heavily in recruiting the best students to participate in their financial trading training programs. These companies not only hire them to trade, but they hire them to be trained and gradually trained to be traders. Why spend huge amounts of money to recruit these best students?
Readers may begin to wonder: If professional brokers believe that their traders need years of rigorous training and considerable costs to develop, why would some retailers with no trading experience at all think they can start with $5,000 and then start making money off of the deal? Even those who are in-the-box traders don't necessarily buy a seat on the exchange; most of them work for years as clerks on the exchange before actually entering the trade.
If you expect yourself to be successful from the start, you will find that financial trading is a very bumpy road. I am deeply troubled by a lack of capital: I think my trading career should have been more successful if I had had ample capital and had been able to concentrate on studying for the first few years instead of trying to make a living from it right away. When you put all your money in and have absolutely no other income, trading becomes difficult. I was in a difficult financial situation from the start, expecting too much of myself to get rich. I was too self-confident, and although some experienced traders in my life often advised me of the results.
Suppose you intend to become the best trader, it will probably take some work, but it will still be successful if you are determined to invest, willing to pay time, and prepare enough capital. If you have nothing to prepare and do not have enough capital, do not expect to make money immediately in the market; success takes time to create. In the beginning, you have to learn from mistakes, so you need to prepare enough capital to spend this period.
Beginners must remember that if you do not want to be eliminated, the focus is not on how to make more money, but on how to lose less. As a matter of priority considerations, capital should be put before making money. How to deal with mistakes is important; everyone makes mistakes, especially beginners. Even if you do something stupid, do not feel discouraged.
In summary, let me emphasize one last thing: during the first two years, do not worry, everything is slow, pay special attention to capital security; even after five years, traders will occasionally have major setbacks.
Translated from the Zen Library