10 THINGS TO KNOW BEFORE TRADING WITH REAL MONEY
1) TREAT YOUR TRADING ACCOUNT LIKE A START UP BUSINESS!!!
How you would treat your trading account and how you would treat your growing business is pretty synonymous. You have to analyse daily, weekly, monthly and quarterly performance – you also have to be persistent in order to create the growth you desire. Most crucially, you have to be able to understand risk – whilst ensuring your only risking a minimal of your portfolio.
2) ALL EMOTIONS OUT OF THE WINDOW
There is a huge difference between trading with real money as opposed to trading with a demo account – as you might expect. This is the emotional attachment to money itself that has been adopted into our subconscious from infants. Negative emotions when trading the financial markets are fear – which often leads to coming out of positions too early or not entering into clear and visible profitable trades at all!
Conversely, the positive emotions that are highly recommended to be adopted is the fearless emotion. Understanding that you are in control of your risk and you are not emotionally attached to the money at risk.
3) PLAN AHEAD
Anything meaningful to you should begin with a plan. Plan out your daily routine in terms of what times you wake up – if you are located in the UK your day should naturally begin from 6am as this is the time for the European opening.
4) CONSTRUCT A TRADE JOURNAL
Now this isn’t compulsory, however it is highly advisable. I have come to the realisation that most traders have specific securities/instruments as most instruments are all correlated in a way.
This is crucial if you would like to record your strengths and weaknesses when it comes to your trading (which is important) – this will also enable you to discover areas of improvement going forward.
5) HAVE PATIENCE!!!
As they say, patience is a virtue. It really is. Patience is primarily what a trader has to adopt into his or her habits if he wants to even get anywhere close to success in the long run.
6) NEVER SIT ON YOUR SCREEN WATCHING PRICE WHILST IN TRADE
If you are an FX trader, remember that you are trading EXCHANGE RATES of various fiat currencies against each other. With this being said, prices will fluctuate quite frequently – and it may not do what you intend it to do instantaneously. Staring at the screen watching what price is doing every 5 minutes does not go hand in hand with increasing the patience you are requested to have in the previous statement.
7) SET AND FORGET!!!
The term ‘set and forget’ refers to taking your trade with your stop loss and take profit price set and forgetting about the trade or trade(s) throughout the day.
(if you are a intra-day trader then this may not apply to you)
The habit of adopting this actually removes any attempt to watch the screen every 5 minutes whilst in the position – and increases the habit of patience as a result.
8) DO YOUR OWN THINKING
As humans, the majority of us permit others to do our thinking for us – not just with trading but with every other aspect of life. The reason why doing your own thinking and not allowing others to do it for you when trading is crucial is due to the simple fact that you have to BELIEVE in your analysis and trades.
Refrain from listening to where others think price of specific instrument is going – even if it profitable. The reason I say this is simply because earning profits from someone else’s analysis and trades diminishes your self-reliance which can potentially have detrimental impacts on the growth of your portfolio.
9) KNOW WHEN TO GET IN THE MARKETS, KNOW WHEN TO STAY OUT OF THE MARKETS
You can judge people purely from the questions they ask, as oppose to the answers they give you. It actually enables you to get a glimpse of what is on their minds. (Amongst other methods). Furthermore, in my experience in the field of trading the financial markets – the most frequent question is ‘How much money can I make’. The main question one should ask is what the risk is and what kind of exposure does the markets bring to his/her capital.
Market conditions shift. This means whenever price action on this specific day or day(s) is quite messy and un-readable – it’s advisable to stay away from it until it gradually shifts back into the normal conditions.
10) FOLLOW ALL THE RULES
If you are Golden Seeds FX member, you should know how often I mention that all of you should follow all the rules. The most important rule being risk managing your account size to a maximum of 2%, some traders even risk less.
Other than risk management, staying obedient to all of the rules above amongst many other important ones are imperative.