new to trading, page-4

Welcome

I have been in the market for two years so I am a 'newer' trader - compared to many professionals. Therefore, this is my anecdotal experience and not in any way financial advice.

Based on my experience developing as a trader requires being a good learner. No matter how much you learn there will always be more to learn and the market is always changing. Trading although challenging is a wonderful insight into your own character, and if you are up to the task you will grow in order to perform in the market. This also requires an attitude of curiosity in the face of disappointment. For example, if your thesis on a trade is wrong instead of saying 'oh i lost x damn' you need to ask yourself why did the opposite happen, review it and learn from that experience. In every trade is both a lesson as a trader and communication of important information about the market.

So some brief tips:

1. Learn before trading (both technical and fundamental analysis). Charts + Depth of Market, Volume etc.. There are many different aspects to technical analysis that are foundations for both intraday and shorter / medium term positions. I personally started mostly with order flow trading (the tape) as it made the most sense to me and I really like reading the tape? From there I built my charting skills as I progressed. I think a healthy level of obsession is required to really improve. If you look at any top performers in anything they do it takes hours of practice and study to develop a consistent skill and perform at a consistent level.

2. Have a plan and practice the habits of sticking to that plan. Trading relies heavily on discipline and patience. This includes having set rules of how, when, why to enter, how, when, why to sell. Also what might change to alter this plan. I believe here the best traders have these rules but also know how to pick up on circumstances where they need to adapt.

3. Start small. Basically don't risk too much capital when you first start. From experience I can tell you that If you have trouble managing a small position you will also have trouble managing a larger position. I have heard many people say they need more capital in order to make more money but the reality is that if you are consistent on smaller positions you can scale up from there. Contrary to perceptions of trading it is about managing risk and ratios. Therefore, review your trades so you can identify where your skills are in the market and where you can improve.

4. Risk management. An equity or a share is a small piece of risk in a company so essentially you are for a short period of time leveraging a small amount risk in the form of capital for a piece of extra value from that company in a future moment. That value, changes through market movement and swings. In fact there is a whole other discussion about intrinsic vs market value to be aware of. In day trading, TA will inform you of the market value in a particular moment. So you want to understand that in a trade you will be profitable in the long run if you are risking a lower percentage of what you stand to profit in a trade. As a trader you are looking for opportunities where you can risk less capital for a greater upside.

5. Manage money well and with discipline. Need to be aware of what is moving and where at all times and maintain the account bottom line. As a beginner keeping the money is very important, you can stay in the market longer and the longer you can keep learning and trading the more you improve and grow the business. Too many quit/ lose too much too soon. It's a marathon not a sprint.

This is getting a little long. So my favourite books for any new trader which I WISH I read when I started are One good trade (great overview of being a trader essentially) and the Playbook.

In one good trade the premise is that each day is about One good trade and then another good trade and then another good trade. Essentially, trading is about consistent measured process. It is okay to start simple, to focus on a few things consistently and develop over time. Its like any skill the more you practice, review, learn and repeat many things become second nature.

Best of luck and hope this is somewhat helpful.