I've decided to write this little tips for people just starting out, well i don't even feel qualified to give tips so lets call it some advice. note I'm writing this as a beginner to other beginners, nothing more, I'm was losing now slightly profitable earlier doors yet.
Firstly during my adventures, i wanted to learn, a lot of posts on this forum seem to be asking about whether someone is a good teacher? My experience in trading is this, i don't believe you can be taught to trade by a person, the only teacher you have is the market, you can be taught how functions of trading work. during my start out phase I was constantly looking for tutors, none of the people who advertise themselves as a teacher are going to teach you to become a great trader because they aren't , they are selling "training" because they can't cut it in the market and it seems open season for sucker hunting. as new traders we are vulnerable creatures, note the less internet savvy amongst you might believe the postings of people claiming to have learned from such teachers typically all profiles have 1 post no picture and never post again, yet they say how brilliant it is these are usually the teacher trying to garner business, in an unscrupulous fashion. so in my opinion a better move is to burn your money than to give it to the snake oil salesman.
You will lose, it will suck, you won't like it, but you must do so in order to learn, better to learn with money because paper doesn't hurt at all.
in my travels i have found a great deal of help from literature, for such a widespread industry their is surprisingly little information on it. A list of books i think you simply must read are reminisces of a stock operator, honestly after reading it i could have shot myself at the amount of mistakes i had made, exactly the same as in the book, perhaps if i had read it sooner my trading would have had a happier beginning, it lists mistakes so common, however it also has a positive outlook and i made a list of things to take from it. Market wizards, is another one pretty much the same as above a great source of encouragement. high probability trading is great too it showed me a lot of where i was going wrong, why some trades are dog crap, why I was losing money. a guide to technical analysis, is a must bit heavy reading though, but dedication matters. if you want to learn buy these books, great experiences in all of them (high probability trading does get a little preachy and dull ).
I've made a few rules for myself that i have garnered from my experience and my reading, these rules may suck but i feel they are beginning to work for me, actually i wouldn't mind some constructive feedback from some of the older traders just so i can gain some knowledge.
1. be properly capitalised, make sure you can afford to be wrong, make sure you can afford the market to turn against slightly should you mistime your entry.
Know the risk you are taking, my early manoeuvres far outweighed what i should have been risking.
2. make sure you know which way the market is going, this sounds sooo stupidly simple and it is, i used to sit watching the 5 min charts thinking time to be a bear, only to check the daily charts and think damn bull market territory, go with the overall trend not what is happening on the day, this was so hard for me to realise.
3. don't over trade, this nearly killed me and i must have killed so many profits in this, i thought that trading was like the movies, buy buy buy sell sell sell... it isn't.i must have wasted hundreds trying to short something for a couple of points then try to catch the bounces later you don't have to trade if you can't find an entry point then don't, enter a trade.
one of my biggest mistakes was thinking i needed to return regular income, like a 9-5 job.
4. NEVER take advice from someone else, trading must be done off your own bat, you must make your own choices, all the faults lie with you, reading stock tips is fine, just do your own homework, learn from the companies, remember a lot of analysts tipped enron as a strong buy... however reading share magazines may alert you to new companies.
5. Trade what you understand, do your research, i have absolutely at current no idea how soybeans work exactly, so i am not going to trade them. seems simple but one of my first trades was chf/gbp, i made money but i didn't understand what i was doing.
6.stop losses in reasonable distance goes back to rule 1. be realistic on what can be gained and make sure your winners have trailing stops.
7. possibly the most important, the market can be wrong longer than you can stay solvent, markets are irrational things, they will rise and fall on the same news explained differently, go with the trend not with what you think.
8. fundamental and charts are not enemies they compliment each other very well, charts can't predict earthquakes but neither can fundamentals show good entry points.
9. Cut your losses/winners run, this is the most difficult part of trading, Its all down to discipline, that imo is the essence of trading, its easy to be right but its hard to not want to snatch profit. if your having a bad day, take yourself out of the market, emotion is awful, don't add to losers, i found myself sitting on a fairly substantial loss one day and double up my position... only to get slaughtered rightfully. stop losses help, but if you move them yourself... what use are they?
10. trading can be long and drawn out, don't treat it like an FPS i wanted all action, i lost money trying to be rambo. patience is great.
anyway those where just some little things i have picked up, some may be bad habits , i just wrote this because as someone getting into trading, I wish someone had wrote a little thing like this, i am probably the wrong person entirely to do it, someone like flasheart (read lots of his posts) should probably do one, please go gently, I'm just learning.
Firstly during my adventures, i wanted to learn, a lot of posts on this forum seem to be asking about whether someone is a good teacher? My experience in trading is this, i don't believe you can be taught to trade by a person, the only teacher you have is the market, you can be taught how functions of trading work. during my start out phase I was constantly looking for tutors, none of the people who advertise themselves as a teacher are going to teach you to become a great trader because they aren't , they are selling "training" because they can't cut it in the market and it seems open season for sucker hunting. as new traders we are vulnerable creatures, note the less internet savvy amongst you might believe the postings of people claiming to have learned from such teachers typically all profiles have 1 post no picture and never post again, yet they say how brilliant it is these are usually the teacher trying to garner business, in an unscrupulous fashion. so in my opinion a better move is to burn your money than to give it to the snake oil salesman.
You will lose, it will suck, you won't like it, but you must do so in order to learn, better to learn with money because paper doesn't hurt at all.
in my travels i have found a great deal of help from literature, for such a widespread industry their is surprisingly little information on it. A list of books i think you simply must read are reminisces of a stock operator, honestly after reading it i could have shot myself at the amount of mistakes i had made, exactly the same as in the book, perhaps if i had read it sooner my trading would have had a happier beginning, it lists mistakes so common, however it also has a positive outlook and i made a list of things to take from it. Market wizards, is another one pretty much the same as above a great source of encouragement. high probability trading is great too it showed me a lot of where i was going wrong, why some trades are dog crap, why I was losing money. a guide to technical analysis, is a must bit heavy reading though, but dedication matters. if you want to learn buy these books, great experiences in all of them (high probability trading does get a little preachy and dull ).
I've made a few rules for myself that i have garnered from my experience and my reading, these rules may suck but i feel they are beginning to work for me, actually i wouldn't mind some constructive feedback from some of the older traders just so i can gain some knowledge.
1. be properly capitalised, make sure you can afford to be wrong, make sure you can afford the market to turn against slightly should you mistime your entry.
Know the risk you are taking, my early manoeuvres far outweighed what i should have been risking.
2. make sure you know which way the market is going, this sounds sooo stupidly simple and it is, i used to sit watching the 5 min charts thinking time to be a bear, only to check the daily charts and think damn bull market territory, go with the overall trend not what is happening on the day, this was so hard for me to realise.
3. don't over trade, this nearly killed me and i must have killed so many profits in this, i thought that trading was like the movies, buy buy buy sell sell sell... it isn't.i must have wasted hundreds trying to short something for a couple of points then try to catch the bounces later you don't have to trade if you can't find an entry point then don't, enter a trade.
one of my biggest mistakes was thinking i needed to return regular income, like a 9-5 job.
4. NEVER take advice from someone else, trading must be done off your own bat, you must make your own choices, all the faults lie with you, reading stock tips is fine, just do your own homework, learn from the companies, remember a lot of analysts tipped enron as a strong buy... however reading share magazines may alert you to new companies.
5. Trade what you understand, do your research, i have absolutely at current no idea how soybeans work exactly, so i am not going to trade them. seems simple but one of my first trades was chf/gbp, i made money but i didn't understand what i was doing.
6.stop losses in reasonable distance goes back to rule 1. be realistic on what can be gained and make sure your winners have trailing stops.
7. possibly the most important, the market can be wrong longer than you can stay solvent, markets are irrational things, they will rise and fall on the same news explained differently, go with the trend not with what you think.
8. fundamental and charts are not enemies they compliment each other very well, charts can't predict earthquakes but neither can fundamentals show good entry points.
9. Cut your losses/winners run, this is the most difficult part of trading, Its all down to discipline, that imo is the essence of trading, its easy to be right but its hard to not want to snatch profit. if your having a bad day, take yourself out of the market, emotion is awful, don't add to losers, i found myself sitting on a fairly substantial loss one day and double up my position... only to get slaughtered rightfully. stop losses help, but if you move them yourself... what use are they?
10. trading can be long and drawn out, don't treat it like an FPS i wanted all action, i lost money trying to be rambo. patience is great.
anyway those where just some little things i have picked up, some may be bad habits , i just wrote this because as someone getting into trading, I wish someone had wrote a little thing like this, i am probably the wrong person entirely to do it, someone like flasheart (read lots of his posts) should probably do one, please go gently, I'm just learning.
