13 Jan How to Become a Competent Trader – Learn from the Pros

Working from home, not having to answer to anybody, having a good deal of financial freedom – all these things may seem fairly compelling, but not everyone can achieve the level of success they need to live comfortably in such a setting. There is a reason why most people get by just fine, and some even thrive, in your classic nine to five business setting: the old carrot and stick method is a really good motivator, and an overwhelming majority of the population just doesn’t have the patience, drive and courage to jump into the deep end and face the high risk-high reward nature of trading.

Now, if you believe you have it in you to face a bit of uncertainty and risk on a daily basis, there are several important basic rules that you can pick up from the pros that have been in the trenches and have successfully made trading their primary career choice.

Research, Research, Research

When you talk to people about trading, you’ll often hear comparisons to gambling. The thing is that I agree with the comparison to a small extent, but not for the reasons you might think. No, trading isn’t just blindly going in and trying to fight the odds, but this is not even how the pro poker players make their living – the top tier players will have done tons of research before stepping up to play for big money, learning about probability, psychology and the strategies that yield the best results. However, traders have excellent trading software at their disposal and access to plenty of useful information about the market that they can interpret and make educated guesses.  Before you decide to step up to the plate and invest your hard-earned money, make sure you have read the right books, gone through training courses and gained a solid understanding of how things work. It may very well be a couple of years of just researching and learning about the market before you start getting into trading on a more serious level.

Establish a Strategy Based on Your Personality and Preferences and Stick with It

While learning about the market and the different approaches to trading, take the time to ask yourself what kind of a trader you want to be. Ask yourself how much do you wish to earn, and how much you are willing to risk. Think about how many hours a day you want to spend or how many trades you will need to make in a month to meet your goals. There are a lot of factors that go into creating a trading strategy that works for you, and there is no perfect strategy, so make sure that you don’t just focus on those that have worked for others, but actually base it around your lifestyle and personality. Make sure that you are comfortable with whatever plan you come up with and set realistic goals.

Find the Right Tools and Learn to Use Them

The most essential tool in a trader’s toolbox will be the trading software of his or her choice. You’ll need to be able to create and effectively read charts, receive alerts and get used to quickly finding all the important pieces of information and ignoring the irrelevant ones. With a good laptop and good Wi-Fi connection, you can have a great deal of freedom in terms of your actual location, i.e. you can do some traveling and still be on top of things and make the right trades at the right time. With a right tool at your disposal, you can do all the market research that you need, develop and backtest strategies based on the data you have analyzed, but for all this to become a routine and a smooth process, you’ll need to spend hours in front of the screen learning the ins and outs of your chosen trading software and honing your skills. This brings us neatly to our last point.

Practice Makes Perfect

No amount of research and familiarization with the essential trading tools will enable you to get a “feel” for the market and develop good instincts. Remember, our brains are the equivalent of natural supercomputers, making tons of complex calculations every second, constantly looking for patterns based on previous knowledge and first-hand experience. Using a demo account is a nice little stepping stone that enables you to see how things work without risking anything, but in the end, you’ll need to dive in and start making trades to get that much needed experience. Take things slowly at first and strive for a psychological balance between cautious and optimistic.

Stick to these rules and devote some serious time to research and practice, and you will have a good chance of slowly becoming a competent trader.