Congratulations on taking the step to be among the 9.6 million people on earth trading online! Becoming a trader is a big step. It takes a lot of courage and hard work to get to this point, but the journey is only just beginning. It’s easy to get discouraged when things don’t get off to a smooth start, but as a new trader, it’s important to stay positive. There are a lot of factors and emotions that can drain you. The good news is you can survive your first year as a trader. You just have to know how to deal with the ups and downs.
To help you survive your first year as a trader, we’ve compiled a list of some tips that will help you get through those rough patches.
1. Keep your hopes neutral
When starting trading, it is important to avoid having unrealistic expectations. It is possible to become profitable within a few years, but it is more likely that you will lose money in the beginning.
Even though it may not sound appealing and could be a downer for some people, it’s important to realize that you likely won’t make a lot of money in your first year or two as a trader. If you can trade around break-even and not lose money, you’re already better than 99% of all traders and are off to a great start.
As a beginner, do not put all your energy into not losing money, if you do, you won’t be able to focus on learning and trading. When you start with the wrong expectations, you can easily get frustrated, and this can lead to bad trades, too much leveraging, and eventually quitting. Be sure to avoid unnecessary expectations at all costs.
2. Get busy with the right things
If you won’t be making much money in the first year, what are you going to do? The initial stages for a trader are to become familiar with the market and its dynamics, find a good mentor, and begin learning as much as possible.
There are several methods of trading, in this period, you can choose one suitable for you and center all your efforts and focus on it. As you go deep and learn more about trading, you’d usually meet several approaches and systems, and you might try these out as your knowledge increases. This is normal for long-term traders, but as you’re just starting, try to avoid jumping from one system to the other, or changing approach and method every month. Be consistent and master just one method or approach. Over time, you can explore others.
It’s critical to cultivate the right mindset and avoid get-rich-quick schemes. Focus on building a good routine and learning as much as you can about one method rather than on making money.
3. Avoid demo trading for long
Demo trading has a place in the trading world and is highly recommended. It is necessary to spend your first few months on a demo to acquaint yourself with the trade fundamentals and market dynamics.
However, staying on demo for too long can have a negative impact. Demo trading removes the emotional side of trading and does not teach you how to deal with the pressure of real money trading. Nonetheless, getting your feet wet by opening a small live trading account is a good way to practice.
4. Build your trading playbook
You should give your trading approach at least 6–9 months before entirely modifying it. Also, make an effort to grasp the tools and concepts you’re working with. The majority of traders employ indicators or trading systems without completely understanding what they are doing. If you want to become a full-time, professional trader, you must dedicate yourself to learning your skill and digging deep.
Take screenshots of comparable configurations, take notes, and study the same scenarios repeatedly with a playbook. You’ll notice similarities and trends over time, and your knowledge will grow as a result. Trading is a game of pattern recognition, especially when utilizing technical analysis.
Many traders solely focus on getting huge results at first. It doesn’t work this way. You need to first develop a consistent method for trading before you can have steady results. Don’t fall for the trap of changing your strategy all the time!
5. Learn about losses
The first thing you might have to deal with as you start is loss. Many traders have a very poor mindset about losses.
Firstly, you must be ready to welcome losses and understand that they are normal occurrences in trading just as winnings are. No matter how good a trader is, losses are inevitable.
Secondly, you have to understand that there is a difference between normal loss and evitable losses. In normal loss, everything was done right, and a plan was set up and followed to the later. When a loss still occurs, there is nothing more you could have done, you have to come to terms with the fact that the marker had a mind of its own. Don’t stew in it, just shrug it off and keep going.
6. Have a good mentor
Just as having a good trading mentor is very important, sticking to one mentor is also very vital. You don’t want to get pulled from different directions that you end up confused and frustrated.
As you start, look out for a mentor who has appreciable knowledge and results and submit under. Stick to his or her methods and diligently follow their teachings and avoid their mistakes.
7. Avoid overconfidence
You have a solid mentor, and you feel your methods are top-notch. You have practiced both demos and live accounts, now you’re ready to launch full-time.
If you’re not careful you can get too confident and think you know all it takes to ace the bag. But one thing traders have come to learn over time is that they can never be too confident of the market. You can get your indicators and strategies right and still make losses.
In conclusion, to survive a challenging first year or any year, it’s important to realize the challenges that will come your way.
- Accept that things may go wrong. No matter how careful you are, you cannot be perfect. This is normal. Learning to accept this is important.
- Having a plan is also important. It is your roadmap to success. Follow it religiously.
- Accept that trading is not easy. The learning curve is steep but try not to get discouraged.