Trading For A Living - Fool's Paradise Or Realistic Possibility?
Thousands of part-time traders dream of trading for a living every day. They dream of it when they face the endless traffic queues in the morning. They dream of it when they open the office door and face the pile of files on their desks every morning. They dream of it when they sit staring out of their office windows at the people on the street....
It doesn't have to stay a dream forever. There are a couple of things you need to keep in mind before you will ever be a successful full-time trader though.
The first prerequisite for a full-time trader is that you have to realize something: you are not actually trading against other traders, or against the market. You are trading against yourself. If you are unable to overcome your inherent weaknesses as a trader, you will never be able to trade successfully over a long period of time.
What exactly does that mean? It means that you can study all the rules, you can intellectually know the right thing to do in every possible set of circumstances. But if you have a tendency to hang on to losing trades in the hope that they will turn around, you will lose money time and again.
Similarly: if you don't train yourself to be disciplined and stay with a winning trade longer, if you sell a trade that "goes into the money" immediately it shows a small profit, you will never make serious money trading. To the contrary - hanging on to losing trades and selling winning trades early will cause you to have numerous large losses and a few small wins - not a recipe for making money in trading!
Another decision you have to make is which time frame you want to trade in. Do you want to be a day trader, do swing trading or be a long term trader? This will also largely be determined by your personality type and your approach to risk. Day trading is much more risky, but if you like the adrenalin rush and you can stand numerous small losses while you wait for one big win, it should work for you.
You will need to decide whether you are going to trade in shares, in commodities or in currencies. Each one of these requires a special set of skills and tools. Share trading will require that you study the financial statements of the companies involved and the underlying market conditions for those companies. With commodity trading you have to get familiar with the market in that type of commodity. The same goes for currency trading.
The right tools are of course very important as well. To start off with you need knowledge. You need to get familiar with reading financial statements and analysing charts. You need to understand technical indicators, how to use them and how to interpret movements in these indicators
You will also have to sign up with a service that provides you with up to date prices for the market instruments you will be trading in. There are many free services, but they only work if you trade in a longer time frame. If you want to be a day trader you will need access to live prices.
Trading for a living therefore does not have to remain a dream forever. Start with yourself. Get the necessary training, then learn to control yourself. Finally get the right tools and you are all set to become a successful full-time trader. - 23305
It doesn't have to stay a dream forever. There are a couple of things you need to keep in mind before you will ever be a successful full-time trader though.
The first prerequisite for a full-time trader is that you have to realize something: you are not actually trading against other traders, or against the market. You are trading against yourself. If you are unable to overcome your inherent weaknesses as a trader, you will never be able to trade successfully over a long period of time.
What exactly does that mean? It means that you can study all the rules, you can intellectually know the right thing to do in every possible set of circumstances. But if you have a tendency to hang on to losing trades in the hope that they will turn around, you will lose money time and again.
Similarly: if you don't train yourself to be disciplined and stay with a winning trade longer, if you sell a trade that "goes into the money" immediately it shows a small profit, you will never make serious money trading. To the contrary - hanging on to losing trades and selling winning trades early will cause you to have numerous large losses and a few small wins - not a recipe for making money in trading!
Another decision you have to make is which time frame you want to trade in. Do you want to be a day trader, do swing trading or be a long term trader? This will also largely be determined by your personality type and your approach to risk. Day trading is much more risky, but if you like the adrenalin rush and you can stand numerous small losses while you wait for one big win, it should work for you.
You will need to decide whether you are going to trade in shares, in commodities or in currencies. Each one of these requires a special set of skills and tools. Share trading will require that you study the financial statements of the companies involved and the underlying market conditions for those companies. With commodity trading you have to get familiar with the market in that type of commodity. The same goes for currency trading.
The right tools are of course very important as well. To start off with you need knowledge. You need to get familiar with reading financial statements and analysing charts. You need to understand technical indicators, how to use them and how to interpret movements in these indicators
You will also have to sign up with a service that provides you with up to date prices for the market instruments you will be trading in. There are many free services, but they only work if you trade in a longer time frame. If you want to be a day trader you will need access to live prices.
Trading for a living therefore does not have to remain a dream forever. Start with yourself. Get the necessary training, then learn to control yourself. Finally get the right tools and you are all set to become a successful full-time trader. - 23305
About the Author:
For anyone wishing to perform trading for a living, it is of utmost importance that you start up with stock picking software and at least $100, 000 savings. Trying to enter the business with less than that will require huge returns year after year to make a decent living.
posted by Mr. Forex at
10:03 AM
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