Trader is a demanding career choice and requires a specific skill set, as well as the basis to adapt to changing market conditions. If this is a tempting challenge, pour yourself a coffee and read on.
Table of Contents
Before anything else, ask yourself why do you want to be a Trader?
– Get financial freedom
– Be an Investor or Be a Gambler
This is like gambling in a casino. Unfortunately, these individuals are like most other gamblers and end up by burning the account.
If you are trading to get rich quick, chasing the market, eventually greed will take over and take over your ability to control your emotions (it’s an important part of trading)
Successful traders have a clear purpose: to make money. They don’t trade to feed their egos, impress their friends, or for a daily adrenaline boost.
Several interviews with successful traders show 10,000 hours of research to be true, at least for the majority.
Mastering this craft takes time, discipline, hard work, and commitment.
So, with the above in mind, can anyone be a trader and reach a level that allows profit? Arguably, this ultimately depends on the individual’s willpower and determination.
- Why do you want to be a Trader?
What type of transaction are you?
While each trading style varies in terms of holding time and frequency, the four most common types of trades operating in the market are: the scalper, day trader, swing trader and position trader.
Many people believe that trading the scalper, day trader is a similar style of trading. While both take place in one trading day (H1 to M5 timeframe.). Scalpers, on the other hand, aim to profit from relatively small price changes. Scalpers typically open and close a larger number of trades using the M1, M3 and M5 timeframes, with the goal of catching many small wins.
Swing trading is, as the name implies, a medium-term trading style designed to chain market swings ranging from days to weeks. Rely on their trading signals through technical analysis, although fundamental analysis can also help form ideas. Popular timeframes in this area are the H4 and the daily chart.
Position trading involves holding long-term trades, from weeks, months, and even years for some people. Traders in this category tend to glean information from both fundamental and technical analysis, and often focus their energy on slower timeframes: the monthly and weekly timeframes.
Learning how to navigate psychological conflicts is just as important as developing a well-defined money/risk management strategy and trading methodology.
If you do not have the ability to adjust your mind when operating in the market, no matter what the success rate of the trading method, the odds of being profitable are extremely low.
Probability is an important factor. Learning to think probabilistically is to find a high success rate like a professional trader.
How to become a professional trader
Learning to accept a loss and not let it affect your next trading decision is an important skill.
A patient trader is a wise trader. Patience is also one of the most overlooked attributes of a professional trader. Patience is not doing nothing; It’s about doing the right thing at the right time.
- How to become a professional trader
Common mistakes of traders
Not having a defined trading plan with a clear set of rules. Without this, you will be like a gambler. At the very least, the risk, system rules and maximum allowable disbursement should be calculated. Nearly every mistake traders make is not having a plan or not following it.
– New traders often use the wrong margin ratio (excess leverage). Trading this way tends to end up being one-sided, and it is rarely favorable. If used correctly, leverage is an invaluable weapon.
– Refuse to take advice/education from experience.
– Do not accept loss. Taking losses is part of trading. Think of it as a business expense. Not accepting losses is a good way to lose your account. A protective stop loss is there to protect you and let you know when you’re wrong. Use it.
– Trade on emotions. Unless you’re a robot, getting rid of emotions is impossible. If you are not able to adjust your mind when operating in the market, no matter what the success rate of the trading method is, the odds of being profitable are low.
– Unrealistic expectations. Expecting to become a millionaire within a year with a $1,000 account is not a reasonable expectation. Thinking this way causes unnecessary pressure. Trading is not a get-rich-quick scheme.
Where do I start?
- Take the time to learn the basics.
- Sign up for an unlimited demo account (try it out): see if you’re suitable for this profession. This allows you to trade live markets using simulated money. Here you can also experiment and familiarize yourself with the exchange’s functions.
- Start building a trading strategy. Consider price action research.
- Trading psychology research
- Practice, practice and practice.
Once you have tested your chosen method and are satisfied with the results, you can consider opening a live trading account with real money. With IC markets you can open an account for as little as $200.