I do not think traders start making money until they mature and understand the big picture. I have been on this journey myself and went through the wild excitement of the internet bubble, day trading and the experience of making a few hundred dollars in a few minutes the first time and the delusion of the get rich quit trading scheme and the expectations of doubling or tripling an account within a year. The game of trading has large amounts of money flowing through the markets that we want to capture for our accounts and can give rise to emotions that make us act immature through the delusion of ignorance, ego, and greed. We can easily become unrealistic and go down the wrong road, it is crucial for success that we stay on the right road.
1. Quit believing all the riches of people promising that you will be rich if you just sign up for their newsletter, seminar, or join their premium service. Look for realistic resources to learn from. The more hype the more the probability of a service being a scam.
2. Quit thinking you are going to double or triple your account in less than a year, even if you do that just means in almost all situations you are taking on too much risk. If you can achieve a 20%-25% annual return then you are among the best traders in the world, these are close to the annual returns of legends like George Soros, Warren Buffet, and Paul Tudor Jones.
3. If you do not know what your edge is then you do not have one, do not trade until you figure it out.
4. If you have to ask others what they think you should do on a trade stop trading and develop a trading plan. A great way to be in the 90% of traders that lose money is to just trade your opinions or the opinions of others.
5. If your search is for “Hot Stock Tips”, stop looking for tips and start learning a trading methodology. Stock tips are for waiters, entry and exit signals filtered through a methodology are for serious traders.
6. Stop getting so excited about one winning trade, you may give back the profits on your next trade. You should be trading a positions size where every trade is just one of the next 100 and has little impact on the big picture. If you see a trader celebrating after one winning trade like they just won the Super Bowl they either don’t have very many winning trades or they are trading way too big and risking too much.
7. Stop thinking you can trade for a living with a small five figure account. You will need a multiple six figure account and minimum debt and bills if you want to have a chance to make it work.
8. If you are more concerned with making money than risk management and managing your emotions you will eventually be in trouble.
9. Stop confusing one good stock pick or a bull market with being a great trader, a trader won’t know if their system is robust until they are able to successfully execute their method through a bull, bear, and sideways markets and be profitable and limit draw downs. Also they have to see if there system and position sizing can survive a 1987 Black Monday plunge or a fall like 2008 without blowing up.
10. If you are not willing to put in the serious work of learning how to trade you simply won’t make it. You will only get back in profits what you put in with effort and that could take months and years.