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As a newer trader I would sit down and just start trading. I didn't spend much time planning and calculating my entry, stop loss, and profit targets. Today, I would never place a trade without giving all three of these aspects serious consideration.
The majority of new traders do not limit risk--meaning they do exactly what I used to do and that is place trades almost randomly. It is extremely important to develop a sound and successful trading plan before you jump into live trading. Unless you are able to successfully identify your entry, exit, and stop loss, you are taking on much more risk than you ever bargained for, and are merely gambling in the markets.
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Some traders come into the markets expecting to turn their small investment of $5,000 into a multi-million trading account. While there are freak stories of this happening, it certainly is not the norm. Rather the reality of trading is that 90-95% of newer traders end up failing and leaving the markets with substantially less money than they came into trading with.
So what does this mean for you as a newer trader? Well, it means that if you want to become a successful trader, you will obviously need to find out exactly how the professionals conduct their business. You will need to find out how successful traders make money, which sometimes isn't an easy task, and then learn from their trading style and make it your own. Fortunately for you, I have put together the Advanced Price Action Trading Course which I along with dozens of others believe is an excellent way to learn exactly how professionals trade.
In trading, you should come into the markets without high expectations, and be pleasantly rewarded when you end up finding success.
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Think back a few years to your younger days. I remember not that long ago playing a pickup game of football at a park down the street from my house. We didn't have a set or definite playbook, however before each and every play we would huddle up and discuss what each one of us was going to do.
From here, we would run our routes, each going a different direction to try and get open for a pass from the quarterback. I then noticed that no one else on my team was running the route they actually planned. We spent time and effort designing a quick play to try and complete a pass yet no one else was following the play except for me. I ran a zig-zagging route on this play, and before I knew it I was wide open. I looked over my right shoulder and saw a perfect spiraling pass coming straight for me. I put out my arms, grabbed the ball, caught it, and tucked it into my chest. I then looked up in front of me and knew exactly what my next goal was--finding some way to make it about 50 more yards to score a touchdown.
There were several other players from the opposing team standing between me and 6 points, and I knew that I had to find some way around them. Exactly how I was going to make it around them I didn't know--when we huddled up we discussed the routes we would run, but we never put much thought into what we would do once one of us caught the ball. I started running and trying to dodge the opposing players, but without a plan I was soon tackled just a few yards away from where I made the catch. It was now 4th down, and we had no choice but to punt the ball away and miss out on a great opportunity to at the very least get a first down and at the very most score a touchdown.
So why exactly did we fail to score? Was it because we weren't as good as the other team? Or maybe because we weren't as fast as them? Or perhaps we didn't know as much about football as them? No. It was none of those reasons. It was actually because they planned not only what they were going to do while we were running our routes, but they also planned exactly what they would do once one of us catches the ball and how they would block us from scoring 6. You see, our team had a great plan for the first part of our goal--catching the ball--but we fell short on the second part of our goal which was moving the ball father down field.
Just yesterday I was able to spend a few hours with one of my local coaching students. We looked at several charts while the market was open and looked at and analyzed several of his recent positions. Much like my football team, he was having a hard time with knowing...[Click Here To Continue Reading...]
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