Japanese proverb "If you want to know the way, ask those who have traveled it"
Remaining calm under pressure has a direct link to performance. I wish I knew this when I first decided to become a professional trader.
Things could have been much easier. However, things don’t always happen the way we wanted them to.
My interest in the financial markets started when I was a teenager. I remember my older brother showing me a financial website and passionately saying “People make a living buying and selling stocks on a regular basis, you know”.
Naturally, curiosity struck me so I started looking for more on the subject;
Despite this, I cannot say that this research was fruitful.
Those were the early days of the internet, and access to trading-related information wasn’t easily available with a single click of a mouse, and it wasn’t as cheap or free as it is nowadays.
After, I found what Enough information to spark my interest more strongly, and sow the seed of trading/investing within my head.
I remember being very fascinated, from such an early age, with compound return tables,
and quotes, and news related to the market.
At the time, making money in the markets certainly seemed easy – just like hanging low fruit waiting to be picked. So I thought!
Two years later, I had saved quite a bit of money from the various jobs that I did She has run it over the years, and has continued to invest it all with a buy-and-hold approach.
Despite favorable market conditions during that period, this approach did not look good for me Lee. This led me to Conclusion that the buy-and-hold approach is not working.
Since this strategy does not address Never the real problems of winning in the markets – like buying how much? At any price? hold to when? Have you ever sold? how and when? How can you make money in a bear market?
By definition, it does not fit into a positive expectancy template. Unfortunately, by the time I realized That being said, I had already lost a large portion of my investment capital. However, it has I gathered enough knowledge in this field to slowly move into trading in a time frame shorter, which I thought was more suitable for my personality and general aspirations.
This transformation helped me In the time frame and the basic methodology also to better define my advantage in the markets, It allowed me to create a large number of trading cases. More on this later.
I wish I could tell you that the transition went smoothly but that is far from the truth. Before To be able to get consistent results in the markets as a short-term trader, I went through a major capital downturn – both monetary and emotional.
From trading with “scared money” ‘, to betting everything on one deal, to changing methodologies like changing Underwear, she made all the mistakes you could possibly imagine.
Those times made me difficult but very useful in the end realize that success in the markets is 50% psychological, and 30% money management, 20% system only.
Of course, these numbers are subjective. Some people like to see These three components are equal. Some like to give more importance to risk management and money.
But I personally really believe that psychology is the deciding factor and deserves the most attention.
Without proper psychology even the most powerful system is doomed to fail. Similarly, the Managing risk and money will only guarantee “death by a thousand paper cuts”, assuming we can Getting to the point where we can efficiently manage risk in the first place.
No matter what kind of positive expectations our system displays, if we can’t follow our rules Executing our trades correctly with minimum trading errors, we will surely find that Trading is an exasperating endeavor.
Proper psychology also includes proper work ethic. trade -or should I say successful trading – requires a lot of work, dedication and sacrifice.
Frankly, I must admit that I am glad that things are this way. If things were easier, Everyone – neighbors, uncles, grandmothers – would be successful traders and achieve a great deal. from money.
“The greatest enemy of knowledge is not ignorance; it is the illusion of knowledge.” Daniel J. Borstein
Anyone starting their path to becoming a trader wants to achieve consistency in their results as soon as possible
But few of them can achieve it in the end.
In fact, several studies show that most individual traders are worse off financially after their first two years in the financial markets than they were before they started trading – that is, if they can get through those early years without going bankrupt in the first place.
This is an amazing fact that resonates in most of the world’s financial markets. Naturally, this begs the question: Why do so many people fail in the markets?
Retailers by definition are self-employed. To succeed as a working trader
For a freelancer, you need two very distinct skill sets:
Firstly as a freelance business owner, and secondly as a professional trader. Both skills work in unison
Perfect, one cannot be without the other. Therefore, there is no doubt that for
For some, trading may not be suitable at all because it requires a lot of work.
Trading is a real business, although few treat it as such. in reality
The thing is, any activity that is done on a regular basis with the intent of making money is a business
Approaching our trades from a business point of view means that:
1-We have to develop a concept or idea aimed at satisfying market inefficiencies, diversifying risks and making money for our benefit.
2-We have to test this idea and see how it performs over time.
3-We carry out an inventory. These are our current positions. We have to buy it for less than we intend to sell it.
4-We manage our employees. Our current jobs can also be considered our employees. We have to keep the people who are doing well, and fire the people who are not doing well.
5-We have to take insurance. Our business must have insurance to manage risk because losses will happen. It is not a question of ‘if’; It is a question of ‘when’. Therefore, Stop Loss, Hedging and Position Sizing are our insurance against significant losses in our trading business.
6-We have to use the strategic allocation of capital. We try to buy things at a lower price than
We intend to sell it. We also try to diversify what we buy so that our risks are uncorrelated and dispersed.
7-We have to conduct our business where there are a large number of buyers and sellers so as not to get stuck in deals (stocks) that no one wants.
8-We actively maintain our capital. If we lose it, we are out of work. Therefore, we have to make sure that we don’t “do it all” at any conceivable opportunity.
9-We have to work to expand our business. This can only happen after it becomes profitable.
For a business, this translates to trading more vehicles, and perhaps an experience
A new strategy, and/or adding more trading capital to our accounts so that we can increase our trading volume.
All these steps must be outlined on paper before starting to trade through a process called Develop a trading plan. To treat the markets with an abstraction or a vague concept of what we ought to do does not work; Therefore, it is necessary that we develop a trading plan.
We all want security, a reliable source of income and wealth generation, but how can one expect consistent results from any business that was not properly organized in the first place? This is the main reason not to
Listen to venture capitalists even for the best business ideas if a person doesn’t have one
It provides a well-defined action plan. The basic assumption is that if you can’t build it
On paper, how do you expect to build it in the real world? For this same reason, it is considered a plan
Trading is an absolute necessity for any aspiring trader.
Besides serving as support to describe the inner workings of your business, a trading plan is another way of acknowledging the fact that you cannot predict the future.
In turn, it is there to help you take an orderly approach to the uncertainties of the markets.
Your trading process is no longer an abstraction – it has become well organized. Your rules and processes are clear on paper, all you have to do is implement.