Most people that write about the stock market will tell you what you MUST do to be successful. Some or all of what they say is often good advice but the fact is in order to trade profitably you have to know what NOT to do. The reason for this is quite simple. If you lose all your money before you learn how the stock market functions, then trading becomes kind of impossible, doesn’t it? For this reason I am going to go over a few things that you DO NOT want to do if you would like a shot of earning consistent profits in the market.
1. DO NOT trade with real money until you know what you are doing:
Everyone is anxious to jump into the penny stock market and start “earning while they’re learning. The fact is trading is the only business that you can start up and learn without committing real money. Nearly every business requires that you take on risk by putting up cold hard cash, but in trading you can learn without risking anything. You do this through demo trading (a.k.a. paper trading), which is basically just trading with fake money. The reason it is called “paper” trading is because in the past before computers, people would write down there fake trades on paper and you can still do this today without the need for a paper trading platform. While paper trading certainly isn’t the same as trading with real money (due to the lack of emotions involved), it allows you to define your plan, start testing a trading system and fine tune it as needed. This really is invaluable since the main reason people fail in trading is because they lack any or all of the above.
The next question is how you determine when you should start putting real money into the market? The is answer is basically when a system has proven to you that it actually works. From my experience this means trading profitably for at least 2-3 months (and a statistically significant # of trades which is generally greater than 30). If you don’t take at least 30 trades, or can’t stick to your system while paper trading then there is almost no chance you will be successful trading with real money. Why would you want to risk real money if there’s a 95% chance you will lose?
2. DO NOT Trade Without A System Or A Process In Place:
A system gives you a basis for when to buy and sell. In trading it is extremely important that you time your trades correctly because a fraction of a second can determine whether you win or lose. If you are trading without a system you are almost guaranteed to lose no matter what. I am serious. This is because fear and greed rule nearly every decision that you make. What I mean by this is when a inexperienced trader gets luck and has a profit, but no system and plan in place, they will let greed overcome their decision to lock in a profit before their luck runs out and a trade goes against them. At the same time, if a new trader get’s lucky and win’s on a trade, they will become overconfident and will go in too big on the next trades, setting themselves up for failure by over exposing their trading capital. If a inexperienced trade has no plan they will have no way of knowing when the odds are in the favor. The fear of losing (and lack of confidence) will cause them to miss trades. It will also cause them to hold on to losing trades too long (rather than cutting the short), which will ultimately result in big losses. You must remember a system doesn’t mean you have to have some super computer crunching numbers or an automated day trading robot, but you do have to understand how other traders think and how they are extracting profits from the market, in order to take your share of the pie.
3. DO NOT Attempt To Go In Big Too Quickly:
When you first start out with real money, things will get “real” very quickly. You will soon realize what I meant when I said the emotional side of trading is completely missing when you paper trade, but despite this fact you MUST NOT skip it. If you follow a set path, learn a system, create your trading plan, and then test it by paper trading, and come out ahead, you have the potential of making a large sum of money faster than any other profession out there, (besides a movie star or professional athlete), but successful trading isn’t a game and it won’t come in weeks or a few months. This is not an exaggeration in any way. The money you can make in trading is far different from every other normal job which pays an hourly salary. Trading even puts the salary of a lawyer, doctor or an high paid executive to shame because you can literally earn thousands or tens of thousands of dollars in minutes. Even better you get to be your own boss and work from the comfort of your own house, instead of working for the man.
The big question here is not the potential but rather whether you have staying power because the money earned in trading comes from compounding the money you make over hundreds of small to midsized profits. Contrary to what people believe you won’t be successful if you shoot for home runs, but rather focus on singles and doubles. Therefore you must start out very slowly and only risk a small percent of your money until you know what you are doing and start to generate tiny profits. Increasing your “take home pay” in trading literally comes down to simply doubling, tripling or quadrupling your position size, but if you do it too soon, you can literally lose all your money before you ever have a shot at profiting.
Remember creating your own system is a major process. It can take years of testing and there’s no guarantee you’ll be successful, but don’t worry because I have your back. I’m willing to let you test out my own proprietary trading system (risk free) which I use to trade the market for a living ever day. If you want to give it a shot, click here.
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