Question:
I started trading a little over a month ago. Before starting, I read as much as I could to learn all that I could. Reading charts seem to make sense. But, and this is a big BUT, everything I do, by the book, seems to work in the opposite direction. When I see a trend and my technical indicators are telling me to “GET IN,” the moment I place the order everything changes for the worse. Sound familiar? What tips can you give me?
Ribas from Newbieville
Answer:
Ribas, yes, this sounds TOO familiar, and it is disheartening because so many new traders expect consistent success way too early in their “career.” If you were to ask any seasoned trader, he or she would tell you they suffered mightily when learning to trade. This is just how it works. You will always lose, the question is: Can you learn enough about trading and yourself to win more than you lose?
Tips For A Beginner
1. Once you know what you are doing (really know), paper trade for a bit. Keep in mind, the results you achieve as a paper trader will not be the same results you achieve when you are actually putting money on the line. Putting real money down is an emotional act, and it changes your thinking.
2. Keep reading and learning, and when you feel ready, make small-dollar trades. Make a lot of small-dollar trades. Get used to putting your real money down and study what happens in your trades.
3. As you achieve some success, reduce the number of trades you make and start focusing on one or two larger dollar trades. Really study what happens now with the mechanics of your trades. Look closely at your emotional/mental mindset.
4. Make notes of your mechanical and emotional/mental errors. Fix them, or retire from trading.
5. Remember, when you feel “the market” is always turning against you, this I an emotional response to your failure. Markets are mindless entities without one iota of concern for you or about you.
6. More than technical patterns or economic fundamentals drive market behavior. Markets represent the collective will of masses of people putting their money here and there expecting, hoping for, or manipulating a desired outcome. Action and reaction to actual and perceived events often move markets in a direction different from what you logically, technically, or fundamentally would think.
7. Most important, successful trading is more about you and your action/reaction to the market than it is about the market itself.
Start with these tips and when you achieve some success, write me again and I will take you deeper into the art of trading.
Trade in the day; invest in your life …
