What trading is NOT
What is the first image that comes to mind when you think of a stock trader? If it’s fancy cars and bags of cash, think again.
Trading is NOT easy money. Trading is NOT a get rich quick scheme. It’s not lambos and yachts and private jets. At least not for everyone, and never right away.
So many new traders enter the markets with daydreams similar to the ones about winning the Powerball lottery.
Success in trading takes time, education, experience, discipline, and persistence.
It takes years to become an overnight success
Mark Minervini, 1997 U.S. Investing Champ, trader, author, and 37 year Wall Street veteran lost money for six years before finding consistent profitability. With years of study and practice he found amazing success. You can too.
Successful trading means treating it like a business
And successful business needs a plan. So you must make a trading plan. Then you must be disciplined enough to stick to it.
Every plan must have these three components.
#1 Risk Management
Risk management is job #1 for a trader. Stop loss orders and proper position sizing are the first line of defense. Each and every position should have a stop determined before entering the trade.
#2 Position Sizing
Consistent position sizing allows for quick risk management calculations and decision making when formulating a trade game plan.
Don’t let emotions change the plan. Thoughts change when your faced with a position going swiftly against you. This leads to mistakes.
Be disciplined. Stick to the plan that was made before the trade was entered, when emotions were low and clarity was high.
You can do it
There are different paths to trading success. There is no singular right answer or holy grail. But there are many quick paths to trading failure. All of them lack the three items listed above.
Avoid the traps. Forget the illusions of easy money. Be disciplined.
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