Trading is more about the trader than the markets. The markets are neutral; they have no agenda and no evil plots to take your money. Each random entry has a 50% chance to win or lose, even with no method attached. The key is getting an edge in your trading. Knowing who you are as a trader, what your plan is, and sticking to your own method, is the best place to begin. Everything you learn now will help you create a trading plan that fits your personality. Educating yourself will give you the necessary confidence to take your trading method live, using real money.
- New traders do not need trading ideas, they need a trading system. A single trade has no meaning unless it is made inside a robust trading system that contains a good risk/reward ratio and proper risk management.
- New traders should understand their own stress tolerance level for position sizes and losses. Trading the right size is crucial to keeping emotions on the sidelines.
- A new trader has to decide who they are: day trader, position trader, growth investor, CAN SLIM investor, momentum trader, option trader, trend follower, or a combination of these. An edge is gained over the market by mastering a specific method and sticking to it so you can benefit when the market environment is conducive. The environment may dictate your entries, exits, or if you just stay on the side lines, but it should not dictate your method, or change who you are as a trader.
- New traders should look for answers through systematic research and study, rather than the opinions and predictions of other traders. We can all learn from the principles of great traders, but at the end of the day, we have to rely on our own systems.
- Success in the markets is based on work ethic, discipline, focus, risk management, perseverance, and pain tolerance. No newsletter, seminar, book, stock pick, or Holy Grail trading method is a magic elixir that will make the new trader successful. Real learning and trading success takes place in the markets, when real money is on the line.