You Must Find YOUR Way of Trading

The opportunities for Trading are so vast and cover so many possibilities that you can choose which particular market you want to trade within. So you can choose a part of it that fits with your personality, with your strengths, with your sleep patterns, with your timeframes and your thresholds, using strategies that suit you.

While there are some basic rules you need to adhere to, you can develop entirely your own personal rules and personal strategies to make money.

This is one of the beauties of Trading for a living. You get to choose the instruments and the risk levels and the timeframes that suits your personality.

I am continually reading Trading books and interviews with top traders. They almost all emphasis this point, that you must find a way of trading that suits you. This means that just because your friend or uncle or colleague trades in a certain way does not mean you have to follow suit. It is far better to start with a clean slate and decide exactly how you are going to make money on the financial markets.

I also mentor a number of beginning traders and I see them over time gravitating to what most suits their personalities.

To speed up the process I suggest you:

1. Read up on all the different markets, and strategies, and instruments you can.

2. Think about how much time you can devote to trading.

3. Work out what time of the day you are most comfortable doing analysis and actually taking trades.

4. Think about your anxiety and risk levels. If you cannot sleep with an open position you might need to be a day trader. Or if you don’t like taking multiple trades in one day you might need to be a multi-day trader.

Cautions

1. Never “fall in love” with a market or an instrument. Remember all you are actually dealing with as a trader is pieces of paper. They go up in value and they go down. I know a number of traders who like gold and they can’t bear to go short gold, ever. This is a weakness. You are not actually buying and selling yellow metal, you are buying and selling pieces of paper that go up and down in value.

2. Successful trading is almost always boring! Yes it’s true. If you are getting in to trading for the excitement, you are gambling and you are better off at the casino. Your sole reason for entering a market is to dispassionately take money our of the market. I am not saying you cannot be pleased with your gains. Of course you can, but that is a byproduct, not the reason.

3. Most human beings have a psychological phenomenon known as “Dollar Fear”. This is when the pain of losing $1 is greater than the pleasure of making $1. For most people this means that trading losses are more painful than the enjoyment of an equivalent trading gain. You need to examine your personality to see how averse you are to losing money. Losing money is one of the cost of doing business as a Trader. You cannot quickly take off a losing position just because it is losing. Many profitable trades are under water for at least a short period of time.

Conclusion

Before you start trading, examine your personality and work out how, where, when and you are going to trade. Also work out your risk thresholds.

For more detailed information download my FREE Guide:

www.Tradingbook.org/free-guide

 

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