Advice From A Newbie At Trading
Let's start by saying that day trading is hard- real hard. I do really believe that it will take years, and many, many hours of practise, learning, testing, and yes- loss of money, to figure it out. And I'm not even halfway there.
For those who think that it's easy to make money in the long-term by day trading, I have news for you. Of course you can do it, but it will take a lot of discipline, and even more emotional / psychological will, to ignore that incentive to go for short-term cash. Anybody can make money in the short-term. All you have to do is get lucky a few times, have an asset takeoff the minute you buy it, and you're off to the races. But that's the whole thing, it is luck. It's like going to a casino and winning big on your first bet. The question is, do you have the discipline to maintain your profit, get out whilst you're ahead, or do you go for more, with the possibility that you might give it all back (and then some)?
To be a successful trader, I genuinely believe that you need to have a good trading plan, and you only make trades when your plan tells you to make trades. Not because you have a gut feeling, or because somebody told you to. And if the trade goes sour, you've got to have a plan to get out and cut your losses, even though it goes against everything you know (ie. don't sell something for less than what you paid for it- although you do this all the time with cars right?).
There are a million reasons why your head (or your heart) tells you to buy an asset. Maybe you like the brand, or you've made a nice profit from it when you invested before. But it doesn't mean now is the right time to buy it again. And what to you do when you hit the buy button, and within minutes, you're down $500? Surely it will go back up if you just hang on a little while longer right? Wrong. If you lose all your money, there is no chance you'll progress. You'll just be another person who thought they could, and all you ended up doing was making other people rich.
As a small fish, we need to take small bites. Make some profit, get out. Make some profit, get out. Rinse and repeat. Forever. The lure of the home run (ie. having your asset go up 1000%) turns wannabe traders into gamblers. But let me ask you this: do you know when to hold'em, and when to fold them?
I anticipate that my journey will be a long one, and ultimately I will only be successful if I stick to the plan and not let "logic" get in the way. I know that the market doesn't care about me (or anyone else for that matter), and doesn't care that I want to make it. I've made tons of mistakes already and I've only been doing this for 8 months. Name it, and I've done it. Trade against the trend, ignore stops, not set profit targets, revenge trade, have a really crap risk to reward ratio, hope, try to reason with the market, chickening out. And each and every time I did it, I lost money. And what's worse, it chipped away at my confidence for making the next trade. Without being able to push the buy button, I saw the asset rise, and then I kicked myself for not doing it. And then I get a little desperate, and then it's a horrible, vicious cycle.
Hopefully, my video will help you get your head around some of the important basic principles of trading as a newbie. Once you develop your trading plan, have faith in it (unless you can confirm that it doesn't work, in which case you fix it) and don't look back!
Trade well, friends. And please, seek the advice of a finance professional before making any investment.