Why do we enter into trading? Well, there is only one reason, financial freedom. We have no intention of working for others for life. We are much more like an entrepreneur then we decide that we want to be a full-fledged trader.
We try to learn everything that we can. We read trading books, articles, watch youtube videos and attend seminars about trading, etc. But after a year or so, let's say three years have passed, but we are still not profitable traders.
Do you know why?
Trading is like a business. If you do not know how to be successful in your business, no matter how long you spend here you will not get good results. Just like in trading. I'm going to show you how to be a profitable trader and act like a professional trader in a simple step-by-step method.
Are you excited yet? Good! First of all we need to understand first is the Law of large number.
What does this mean?
Let's just simplify. You need a large number of trades to find out if the trading strategy you are using has an edge. Maybe at least about 100 trades. That is the minimum in the law of large number.
So what does it mean?
If you want to know if you are profitable every day, you need 100 trades a day.
If you want to know if you are profitable every week, you need 100 trades a week.
If you want to know if you are profitable every month, you need 100 trades a month.
Easy. Let's say you are a day trader, and you only trade 3-5 times a day.
When will you know if the trading strategy you are using is profitable?
About 2-3 months. If you are a swing / position trader and you traded 5-15 times a month. After a year or so, you will know if the trading strategy you are using has an edge. This means that the more trades made in a shorter period of time — the faster you will know if the strategy you are using will give you an edge in the market.
But if the trading strategy you use has no edge and you make a lot of trades, it will also consume your investment faster. Well that's really it. Once you understand these things, you will be ahead to most self entitle traders out there.
FIND YOUR TRADING STYLE
If you notice there are many trading strategies listed here in Read.cash. Because not all traders have the same trading approach. We will be different. You can be good at day trading and weak at swing trading or vice versa.
First thing you need to know is which trading style is right for you. Let's say that being a day trader is right for you, because you are a bit aggressive and can handle the roller coaster ride of the market in this time frame.
The next thing you need to do is focus on day trading.
PROVIDE BOOKS
Buy books about day trading, or download free books on the internet there are many. But make sure you also check the reviews of the books you want to read. When the reviews are good then go for it.
WATCH VIDEOS
Of course you will also watch day trading tutorials on youtube, there are many good ones scattered there. Just subscribe to them.
USE GOOGLE
Not all traders have a youtube channel. So you can always try to search for a day trading article. There are many topics about day trading and you will get great information.
SOCIAL MEDIA
There are also many experienced traders on social media, you can join groups. Make sure you join a group of traders and not scammers. Now after you read the book and watch the tutorials. It is better if you write or save the things you learned here. So that you can also track other things that you do not know yet.
TRADING PLAN
What is your trading plan? Well, I buy with support and sell with resistance. Buy a dip! Is it a business plan? No! Let me give you an idea how to make a trading plan. But before that, what benefits can we get from it?
We can focus on our trading goals.
Our trading will have an objective.
We will also know the things that work in our trading strategy and not.
We can reduce the roller coaster trading experience.
How to make a trading plan?
We have some questions that need to be answered before we can make our own trading plan. These are as follows:
What is your time frame?
You need to identify which time frame you are comfortable trading. If you are a swing trader the most likely time frame you use is 4 hour or daily time frames
What market are you going to enter?
Most of the traders who read here are in the cryptocurrency market. However, this idea is applies in any market like forex, stocks, commodities, etc.
Where do you want to trade spots or future?
Just ask yourself where you are comfortable.
How much can you risk per trade?
One of the most important things in making a trading plan is the risk management.
How much can you lose on a single trade?
1%? 2%? or 3%. Depending on your ability and risk appetite. This means that if you have a $ 10,000 account, you should not exceed $ 100 dollars on each trade.
What trading set up conditions will you use?
We have requirements for doing set up trading. Trade with a trend or a trade or a combination of both. Mostly they trade with the trend. If you are new, you can stick first on trading with the trend.
How do you enter the trade?
Will you enter the pullback or breakout? What limit, stop, or market order will you use?
Where is your stop loss?
Remember you should act like a Professional Trader. As far as I know there is no Professional trader who does not use stop loss. You will always remember. Where will I get out if I'm wrong?
Where is your target profit?
When the price movement favors you, where do you exit to take profits?
EXECUTE YOUR TRADING PLAN
When you have completed your trading plan. Its time to take it into action. You can try it on a paper trading for practice purposes. But if you can allocate even a little capital to start on a live account, it 's okay.
There are five things that can happen when we trade :
No lose, No win (breakeven)
Small wins
Big wins
Small losses
Big lose
If you can eliminate number 5 there is a good chance for you to become a profitable trader.
But before all. This is a MUST! You need to execute your trading plan consistently. Because if you trade based on your emotions and you do not follow the trading plan you made, everything will be ignored. You never know when the trading plan you created has an edge in the market.
One more thing you should keep in mind, you cannot change your trading plan just in case you experience a few losing trades. You need to control your emotions to change it. Because you are really tempted. It means, you need to reach the minimum 100 trades in the live account, before you can say whether the trading strategy you are using is working.
I hope you have learned something new especially for traders who are just starting out. Trading is difficult, but there is nothing difficult for a person who is determined and determined to learn.
Been carried away with your writing. I am thinking of tryin' trading. And see how it works. God bless. Thank you for writing such nice and helpful article.