Here is the blueprint for a new trader to reach profitable trading step by step.
- Educate yourself on the basics of trading your market through reading online articles, books, videos, and eCourses to master the vocabulary and basic vocabulary.
- Read the best trading books of all time.
- Study the greatest traders of all time.
- Research the history of price action in the market you want to trade. Understand the up trends, downtrends, the price ranges, and the volatility cycles. This can be achieved through backtesting, chart studies, and the study of price action in relation to other technical indicators.
- You must find your own edge in trading. An edge is simply the ability to be profitable as your winning trades add up to more money made than your losing trades lost.
- Learn to develop your own trading system. This must be catered to your own psychology, belief system, risk tolerance, and return goals. This is a trading process with a watchlist and position sizing parameters with entry and exit signals.
- Your trading system must be structured inside the context of risk management with diversification to manage correlations, maximum risk exposure parameters, stop losses, and trailing stops. Good risk management eliminates the risk of ruin and the probabilities of having huge drawdowns.
- Develop faith in your system through backtesting it in all types of historical market environments like uptrends, downtrends, rangebound, and volatile.
- Develop faith in yourself to follow your system with discipline.
- Have the perseverance to stick to your system and let it play out over the long term.
- Make adjustments to your system that are validated to improve it over the long term not due to your own panic in the short term.
- Never quit learning and growing as a trader.
