Start Trading in the Zone

When most people start trading, they never consider whether they are well prepared and have the necessary skills and attributes to be successful. This is likely to be one of the last things on their mind. Somewhere along the path of trading however, most people come to a realisation that trading is probably not as easy as they first thought.

With this humbling realisation comes a search and investigation in to what makes a successful trader. They seek out what they need to do and learn about, in order to make all of this money they initially dreamed of. They attend courses, converse with other traders further along the path of trading than them and make a committed effort to learning this new craft.

Whilst all of the tools may be gathered together including the new piece of charting software, data provider, new broker account opened, magazine subscription started, successful trading still has it foundations deep within the individual themselves. It is probably only when people start trading for real with their own real money, that they begin to feel the emotional strains and pressures and then realise that they themselves may be a bigger part of the overall equation than initially thought.

OK, so we have reached this point in our trading lives. We have become very interested in trading, saved some money for our trading capital, gathered some tools together at our disposal, started to trade and then lost some money. Now we start working on ourselves; preparing ourselves to make all of this work so we can achieve our ultimate aim in trading – to make money! Isn’t that why most people start trading in the first place?

Now we widen our search – we need to now work out what we need to do differently in order to start trading and making money. Rightly so, people then seek out the most important character attributes of successful traders. Great idea! What will they find however? What are the most important character attributes of successful traders?

In my trading time, I have heard numerous responses to this question. Not just one or two, but more than 10. It certainly seems daunting to new traders when they are exposed to all of these different responses.

What are some of the responses I have heard?

Perseverance or stick-to-it-tive-ness was a common theme. As Calvin Coolidge, the 30th President of the United States said in one of my favourite quotes, “The slogan ‘Press On’ has solved and always will solve the problems of the human race.” Other similar terms include perseverance, commitment and determination. For traders, this provides us the ability to continue on in the toughest of times even when everything appears all too much. It is the edge that allows us to climb the walls that are obstacles when everyone else around us, turns away from the wall and does something else.

Another important attribute is humility. All traders enter trades that lose money – you can’t simply get every trade right. You will find the very best traders are very humble and they are the best losers. Successful traders never move stops and accept losing as part and parcel of trading. They are also not afraid to learn from others and admit they don’t know everything.

One attribute I don’t hear a lot about is patience. You are not provided with great trading opportunities every day and the best traders are patient enough to wait long enough for high probability trades to come their way. Financial markets are here to stay – they underpin the corporate arena in every country around the world, so they are not going anywhere. Trading success is not going to happen overnight. For most people, this is a life long endeavour so does it really matter if it takes you a few years to start trading profitably

Another attribute is responsibility. Successful traders make their own trading decisions based on their own analysis and trading plan but more importantly don’t blame anyone or anything else when it doesn’t work out and they lose money in a trade. In a world nowadays where there is a clear trend of people looking for someone else to blame for their own actions, this is probably becoming less obvious. The key is to be an adult and take responsibility for your own actions – you are solely responsible for your own success.

Successful traders are also conservative and very defensive. Even though their primary motivation is to make money (as it is for all of us), they adopt a very defensive mindset and focus not so much on making money, but moreso on protecting the money they have. This means they set and stick to stops and risk very little of their account on any individual trade.

With anything in life, confidence is important – trading is no exception. Confidence in your self and the trading plan you develop. One thing that will help with your confidence is your own knowledge and understanding of the markets, the products you are trading and various tools you use in your decision making. Most importantly however, competence yields confidence. If you are not competent at something, it is highly unlikely that you will be confident doing it.

There are many other attributes that could also be listed here to include emotional control and stability, organizational skills and honesty.

There is no doubt that all of these are correct and valuable to possess, however I think there is none more important than the big D – Discipline.

Discipline is the level of self-control you have. Trading all boils down to decision making and often the decisions that need to be made are difficult. Let’s consider the options we have. For any individual decision, there are often two options available to us. The first option is the decision that will make us feel most comfortable and the one that we really want to take. The second option is the one that follows our trading plan. Most often these will be two very different outcomes.

There is one thing that assists us to take the second option and not the first – discipline. I believe a key separator between successful traders and the rest, is they will act first upon their trading plan and not what they feel like doing. Most traders make the decision that makes them feel the most comfortable whether this is letting a loss continue or to cut a profit short in order to realise some money.

When they feel super-confident about a trade, successful traders don’t allow greed to consume them and commit more money into the trade. They trade according to their trading plan – they adhere to the money management rules in their trading plan.

“Discipline is the bridge between goals and accomplishments.”
Jim Rohn – motivational speaker

Here is what happens … we have our mind set on long term successful trading however other things influence our actions/trading decisions like emotions, our short term needs and our present mood. These tend to overpower any long term goals we have, so we will often pursue short term pleasures and by doing so, avoid short term discomfort, at the expense of our longer term goals and rewards. It’s human nature.

I was contacted recently by a colleague in Malaysia who had just watched a workshop DVD by psychiatrist Dr Ari Kiev on discipline and trading plans. He asked the audience the question “What is the most important quality to be a successful trader?”

As there were many professionals in the audience, some said discipline, other a plan, some risk management. Dr Kiev answered, “Yes, they are important but the most important thing is to tell the truth. With integrity and truth in the way you approach the market and follow it, and run your trading business, you will be successful.”

My colleague continued and asked me what I thought about Dr Kiev’s comments. Well, I can understand where Kiev is coming from with telling the truth, however I still believe that discipline is the most important. Can you have honesty/integrity without personal discipline? I would argue no. If you lack discipline, then you probably won’t have what it takes to be truthful all the time. Take that another step further, can you have any of the attributes listed here without discipline? For example, can you be patient without a certain level of self-control?

Personally, I will be the first to admit that my time in the military starting way back at the Royal Military College, Duntroon has provided me some great skills and attributes to trade well – none more important than discipline. Discipline has helped me greatly with my trading as well as other areas in my life. It is discipline that makes me feel comfortable with deciding on what has to be done in accordance with my trading plan, as opposed to what I really want to do.

Whenever I talk about risk management in my workshops, I will always show a quote from Dr Van Tharp which says:

“Most successful market professionals achieve success by controlling risk. Controlling risk goes against our natural tendencies. Risk control requires tremendous internal control.”

For me, his ‘tremendous internal control’ equates to discipline. Therein lies the key, doesn’t it? If you want to achieve trading success, you need to manage your risk. However, the problem is that to manage your risk goes against all the things we naturally want to do as people. Often, we don’t want to cut losses and we do want to commit a lot of money to a trade that we feel super-confident about. In other words, to manage your money well, you need to be disciplined – this is how your mindset and money management are linked together.

By having your mind tuned into the trader’s mindset, you will be disciplined and committed to making all the right decisions. Be disciplined and make it happen – it is a key to starting trading.

What Do I Need to Start Trading Forex?

There are a few things that you should know before you embark on the long learning curve of becoming a forex trader. To start trading forex one needs to first look at their personality traits and decide whether forex trading is really for them. A successful forex trader is disciplined, of sound mind and above all has patients. There are various tools that a forex trader will use to aid their trading decisions and software to initiate the trades; these are the things I would like to discuss in this article.

It is a misconception that one needs thousands of pounds or dollars to speculate on the forex market, it is however a successful traders opinion that one should have a plan of loss management. Loss management or money management normally follows the simple rule that one will not risk more than 5% of their trading balance on any one trade. This is a concept to bear in mind when you start to trade forex.

The software used to initiate forex trades is called spread betting platforms; there are many companies to choose from although some have been considered not to be completely legitimate. It is important to choose a spread betting company that is registered with the financial services authority for peace of mind. From your spread betting platform you will be able to place instant trades on all the major currencies and a lot of the minor ones. You can also place orders for trades to be activated at a certain level. You will notice that different spread betting platforms have different spreads; a spread is the cost of getting into a trade, for example, to go into a trade on the GBP/USD may cost you 3 pips in which case you will start your trades 3 pips behind your price which you must make up in order to be in profit.

The most important thing to have access to be forex trading is charting software. Charting software is the tool that will display all the technical data that will help you make the decision on where to enter and exit trades, without this software you might as well put your money on a roulette wheel because you would be essentially gambling. A good spread betting company will provide you with charting software for free or for the understanding that you place a certain amount of trades with them a month.

Before you start trading forex with real money it is advisable that you learn all you can and trade with a demo account first. A demo account will also be provided by a good spread betting platform that allows you to trade real time with play money to test out your trading theories.

How to Get Started Trading Online For a Living

This article discusses the challenges associated with trading online for a living. It talks about some of the things that you need to know in order to prepare yourself for life as a day trader. In addition, it offers points of caution that you need to keep in mind if you want to be successful.

With the internet taking over in this day and age, many people are looking for ways to make a living from home. One of the new phenomenons for those individuals looking for a home business is stock trading. The markets are coming out of a down period and right now is a great time to invest. But doing it for a living is a difficult thing if you don’t know what you are getting into. It takes a special amount of preparation and the right type of capital to make this a reality. Here are some tips on how to get started trading online for a living.

Getting your finances in order

One of the biggest hurdles in the way of those people who want to start trading online for a living is that they don’t have enough capital to begin with. If you are going to make this work, you have to have enough money to support yourself and to cover yourself if thing’s don’t go the way you planned. Day trading has some inherent risk involved, so you need to be prepared for down runs. The stock market is somewhat predictable, though, and people who are smart will have the ability to come out on top. But it will be impossible to make enough money to support yourself and your family if you aren’t properly bankrolled. What good is making 5% on a stock if that only means making a hundred dollars?

Choosing the right online broker

One of the things that you have to be aware of if you want to start trading online for a living is that there are some hidden costs associated with doing this. You might think about the capital needed and inherent risk, but you should also consider the cost of each transaction. Day trading requires you to make lots of moves very quickly, so you need an online broker that will provide this at a low cost. Checking out the many online brokers before you start trading online for a living is a must. In the end, you need to find one that provides both a low cost and the ability to make quick, real time trades. That combination is difficult to find, but it’s incredibly necessary.

Studying the markets

Many individuals don’t understand the amount of effort that is required if you want to start trading online for a living. They think that it’s all going to be easy stuff and they’ll be able to make successful trades without really putting in too much effort. This is categorically false. If you want to start trading online for a living and actually be able to make it, then you need to treat it like a real job. You need to wake up in the morning and put in the time and effort to actually research the stocks. You need to read as much as you can on the different options and always be open to different sources of advice. This will ultimately help you come out ahead.