Practicing accountant :Ask yourself why you want to trade in the...

Practicing accountant :

Ask yourself why you want to trade in the first place ? It’s not as simple as it sounds.

Weigh up the pros and cons ?

Analyze yourself as a person in other words self assess your character

Do you have the psyche to commit as a disciplined trader ?

What type of markets are you going to trade ?

How much capital do you have to commit ?

The liquidity of the stocks you are dealing with

What is your position sizing method ? is it loss based or volatility based ?

What is your exit trigger or (STOP LOSS)

What is your entry system ? do you really understand what has been presented to you in the first place.

Market volatility is another consideration, consider your experience. A lot of traders and investors look @ potential rewards and fail to analyze risk which is no different from that of a gambler. Traders must look at each situation they encounter in order to determine the risk involved and act accordingly. Many people have made money on the way up in a bull market, many have $**t themselves on the way down by not managing their risk appropriately. Having an edge and keeping intact is vitally important.

Your confidence should be balanced against your expectations , more importantly your expectations must match your experience and skill set. Learn how to trade effectively in markets that go sideways as well as up and down. Learn how each provides levels of uncertainty as well as opportunity.

Exuberance can lead to overconfidence which can lead to mistakes. Losses from mistakes can lead to a lack of confidence. Negativity can lead to pessimism. Consistency and sticking to rules is vitally important. Psychology plays an important part with leading sports men and women traders are no different. Plan your trades , trade to a plan, treat it as a business. Learn to expect losses , more importantly learn how to deal with them . Anticipate making mistakes , more importantly learn by them. I used to keep a journal in my early stages which allowed me to reflect on why and how I entered a trade as well as how I exited the trade. Reflection allows me to self assess my own performance.

Learn to trust yourself rather than trusting others to formulate your opinion. Each time I trade and a profit occurs I reward myself in some small way as well as donating a small portion to charity (Good Karma).

You must be consistent in your approach. There are rules for everything and these rules have to be consistently followed in order to maintain longevity as a trader. By having a trading system this will encapsulate your approach to your work , it also defines everything from your objectives as a trader to which markets and time frames you will trade. Your trading system is in essence your business plan. It is therefore imperative you have a rules based approach to the market.These rules can be used to guide you as you trade for two reasons.

First there are no rules for trading imposed upon you by the market . Any rules you generate are your own , and as such they have to suit your objectives as a trader and your personal approach to the market. The second is by having rules to guide you removes emotion from your trading . Trading is a disciplined profession , the moment emotion creeps in problems can and will arise as most traders will understand.

Manage information , beware of paralysis analysis. Be selective and more importantly how you process your information. With reference to reading once again be selective too many trading books will see you more confused rather than receiving direction. Get a mentor someone who actually trades for a living and has done so successfully over a long period of time. If this costs you money then so be it. What you may learn over a short period of time will not only save you money in the long run it will also save you time in reading books that may not be necessary in your quest to trade full time.

Learn from their mistakes as well as your own. The object of the exercise is to stay in the game rather than sit on the sideline. Know your instrument. It’s all very well to purchase a product that scans to certain criteria given, yet how many people really understand what has been given to them and more importantly how to act upon it. For instance twelve stocks may have been given to you, when exactly do you enter the trade and when does one exit . Which trade provides a good risk reward ? Understanding the process is important. Many traders will try and look for the perfect indicator. There is simply no perfect set of indicators.

This is a small snippet of what I posted sometime ago regarding indicators.Most indicators attempt to smooth price out in order to make it clearer. From my perspective I want as much information as I can possibly read, without that it's like reading a book that's had every second word removed. You may get some understanding, but you'll never get the whole story!!All indicators are lagging, as they are derived from historical data. the degree of the lag being determined by the parameters in the set up of the indicator. PRICE ACTION NEEDS TO BE UNDERSTOOD David Vassallo is a good one to look at in this regard. Levels are also important . In equities I mainly trade /invest ASX 300. I occasionally pop in here to discuss a speccy that’s all. This thread just caught my eye by sheer chance.

In closing learn to understand risk and more importantly how to manage it correctly. Every trader has his /her own style. The only constant in the market is risk. IF YOU FAIL TO PREPARE, BE PREPARED TO FAIL !!!!. There is perhaps more to be said , nevertheless I sincerely hope this has given you a small insight of what to expect. Good luck in your journey.

cheers

PS: A good book to read first off would be Jesse Livermore: Reminiscences of a Stock Operator.