You probably know by now that I believe an all around stock market education is vital for your success as a trader whether it be for as a day trader, swing trader or long term trader. When starting your new trading career, either as part time or full time, it can be very overwhelming with what you need to learn. So here is a little check list of the subjects you need learn about before trading for real money.
7 Educational Steps To Success
Technical Vs. Fundamental Analysis: You have to learn about both before you can chose which one to use. You cannot just rely on what other traders are telling you as you have to test it out to see what suits your personality. When you have decided you then drill down and become and “expert” on that particular area.
Trading Mindset: The key to success is to learn to control your emotions while you trade. Do not get greedy and enter too big a position. Do not revenge trade after a loss. Do not fear a trade if it’s according to your rules. Learn about trading psychology just like you learn about charts.
Trading Plan: Learn how to write a trading plan. When writing the plan it is not just about how you need to enter when, for example, Stochastic crosses over. Subjects such as money management and when not to trade are equally, if not more, important.
Platform: Learn to use your platform. How to plot the indicators correctly and change the settings of them. If you use a scanner then learn how to use it the best way. Are you an active trader then learn how to use the “dom” or “ladder” for easy entry and exits.
Profit/Loss Spreadsheet: Learn how to keep a record of your trading. It is not just about writing profit and loss down. You need to keep stats on your Risk-Reward and hit-rate. You also need to watch your equity curve. This way you can see if your current streak of wins and losses are abnormal and thereby catch early warning signs of changes in your trading. Changes are not good especially if they occur because of something you have done without knowing it.
Journal: Writing down your profit/loss is important but another important thing is keeping a journal with your trades. Write down your thoughts you had prior to entering the trade, whilst being in the trade and after the trade. You can learn a lot by checking how your mind changes during the course of a trade. Use charts with annotations to also learn about the winners and losers. Any mistakes that keep popping up? Any reason why you lost on these trades? You can learn a lot by going over your past trades both the winners and the losers.
Discipline: Learn to be your own boss. Many traders fail because they do not have the discipline to work hard on learning to trade. All this freedom is difficult to control. Structure your day and show up to work like you normally would do. Get breakfast and coffee, shower and get dressed. Then when you are done with that sit down at the computer and prepare your trading before the market opens.
We believe these are 7 very important subjects that every trader needs to learn before they can become consistently profitable.