In addition to knowledge and experience, the most important traits for a trader are discipline and mental fortitude. I can't stress this point enough. It's something that I talk about none stop! Discipline is necessary to stick to one's trading strategy in the face of general market challenges, without trading discipline, small losses can turn into huge ones. Which in term can transition your situation into a catastrophic event… a true mole hill into a mountain type of situation! Mental fortitude is required to bounce back from the inevitable setbacks market participation affords us. Make no mistake, bad trading days will occur in every trader's career. Being strong enough to bounce back is a must...if you don't have the ability to do so you're already in a ton of trouble!
Learn to Analyze Charts
It's important, mandatory even, to study the basics of technical analysis and look at price charts—thousands of them—in all time frames. Don't get me wrong, fundamental analysis is great...but traders live and die by price action on the charts. You need to build your experience with charts and technical analysis...your understanding of the technicals will welcome you into the magical realm of price prediction.
The time horizon becomes extremely important at this juncture. Financial markets grind out trends and trading ranges with fractal properties that generate independent price movements at short-term, intermediate-term, and long-term intervals. This means a security or index can carve out a long-term uptrend, intermediate downtrend, and a short-term trading range, all at the same time(what a mind fuck, I know). Rather than complicate prediction, most trading opportunities will unfold through interactions between these time intervals. Buying the dip offers a classic example, with traders jumping into a strong uptrend when it sells off in a smaller time period. Understanding multiple timeframe analysis is important to know in order to take advantage of these types of situations. The best way to examine this three-dimensional playing field is to look at each security in three time frames, starting with 60-minute, daily, and weekly charts...that obviously depends on the type of trading you're doing. If you're day trading you might look at 3 smaller time frames!
Practice Trading
Now that you have a framework of how trading works (theoretical) It’s now time to get your feet wet and just into the practice area! The key here is to do that without giving up your trading stake. Paper trading, in my opinion, is the best thing for new traders. This is where you want to make ALL the mistakes possible. This is the time to figure out all the things that don't work and build on the few things that do work. Demo trading offers a perfect solution, allowing the neophyte to follow real-time market actions, making buying and selling decisions that form the outline of a theoretical performance record. It usually involves the use of a stock market simulator that has the look and feel of an actual stock exchange's performance. Make lots of trades, using different holding periods and strategies, and then analyze the results for obvious flaws. I like to do 20 block trades then review. I want to know what my success ratio is, my average win size vs loss size etc. Those are important metrics to understand before going live with real capital.
Another Way to cut the learning curve in half, if not more, is to get a mentor and join a thriving and productive community!. Whether online or in-person, classes and live training can be VERY beneficial... More specialized live training seminars (like Ask A Trader)—often conducted by a professional trader(like Julian Lewis, a full time professional options trader) —can provide valuable insight into the overall market and specific trading strategies. Most focus on a specific type of asset, a particular aspect of the market, or a trading technique.
It's also useful to get yourself a mentor(if you can find one I know that we have a 6 month waiting list for our mentoring program)—a hands-on coach to guide you, critique your technique, and offer advice. Many online trading schools offer mentoring as part of their continuing ed programs...we do something similar. We know that a lot of people want to get into our program but we don't have the resources to support all of the requests. SO, we have created a database of information that has over 200 hours of support based information...it's the same database we offer our mentoring students. You can now access it on demand! Which is good because you're also offered access to our team's chatroom!
Feeling part of a group where you have shared values and interests can help you feel less depressed when trading isn't going your way...it's a way to increase happiness levels during trading rough patches. When people feel they have social support, they have faster recovery from trading based traumas and are better supported in healthy trading habits...Even though we have been existing as individuals with our own identities, we are always involved with some type of group or the other.
Groups are an essential part of our lives, we cannot deny the fundamental fact that we have always been a part of a group. There are 2 types of groups- primary groups and secondary groups. Primary are the ones that we choose to join such as our friend’s group, work groups and groups at organizational level and the groups in which we are born such as our family or community. These groups are an essential part of our identity. Secondary groups are the ones that are made for short term or there to achieve an aim or a motive, such as a group made for the completion of a project
I want to offer you the opportunity to get involved with the J. Lewis Trading Community...This is what I want to do to get you started…
