Trading for a living is a dream of many. If you are a part-time trader, you no doubt dream of this every morning you have to get up early and face the endless traffic before getting to the office. You dream of becoming a full-time trader every long hour you sit at the office doing work you hate. You dream of it every time you have to look at your boss's angry face.
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.
Likewise, if you don't have the discipline to leave a winning trade alone and "let it ride", if you sell it the moment it becomes profitable, this weakness will eventually destroy your trading career. If you do this every single time: hang on to a losing trade and sell a winning trade before it matures, you will end up with a string of large losses and a couple of small wins. And you will make a net loss - guaranteed.
You second important step will be to decide what type of trader you want to be. A day trader, a swing trader or a longer term trader. Day-trading is extremely alluring. You can start with little money, and you can sometimes make a lot of profit in one day. Statistically it is however much more difficult to predict the market movement for a share or a currency during the next 8 hours than to predict it for the next year.
You will also have to decide which market instruments you will be trading in: commodities, shares or currencies. Each one of them will require a different skill set and different tools. They also require a slightly different approach to trading. With share trading you must get intimate with the financial statements of the companies you want to trade in. You have to know the market for their products or services. With currency trading and commodities you have to study the underlying factors causing price movements in these instruments. Things like droughts, surpluses, inflation and interest rates.
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
Furthermore you need to register with a company that will provide you with the latest prices for the instruments you want to trade in. Many free services provide delayed prices - which is good enough if you trade in a longer time frame. If you want to get involved in day trading, you absolutely have to make sure you get live prices though.
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. - 31987
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.
Likewise, if you don't have the discipline to leave a winning trade alone and "let it ride", if you sell it the moment it becomes profitable, this weakness will eventually destroy your trading career. If you do this every single time: hang on to a losing trade and sell a winning trade before it matures, you will end up with a string of large losses and a couple of small wins. And you will make a net loss - guaranteed.
You second important step will be to decide what type of trader you want to be. A day trader, a swing trader or a longer term trader. Day-trading is extremely alluring. You can start with little money, and you can sometimes make a lot of profit in one day. Statistically it is however much more difficult to predict the market movement for a share or a currency during the next 8 hours than to predict it for the next year.
You will also have to decide which market instruments you will be trading in: commodities, shares or currencies. Each one of them will require a different skill set and different tools. They also require a slightly different approach to trading. With share trading you must get intimate with the financial statements of the companies you want to trade in. You have to know the market for their products or services. With currency trading and commodities you have to study the underlying factors causing price movements in these instruments. Things like droughts, surpluses, inflation and interest rates.
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
Furthermore you need to register with a company that will provide you with the latest prices for the instruments you want to trade in. Many free services provide delayed prices - which is good enough if you trade in a longer time frame. If you want to get involved in day trading, you absolutely have to make sure you get live prices though.
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. - 31987
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