Trading For Beginners: Top 5 Things To Know Before You Start

 

Trading & Life have a lot in common but when you first start trading nothing looks familiar, either you end up feeling frustrated or feeling extremely confident both conditions are not considered ideal for trading.

Trading is the most viable and rewarding career if one can approach it in a systematic way.

Even though trading and life works on simple principles, it's very common for people to easily get distracted or  just ignore the simple truths, for example you know you can go broke from jaywalking and you always try to avoid it but in trading you take unlimited risk and hope you won't go broke because of it.

How do you prepare yourself for a thing which has so many ways of expressing itself?

Answer is simple : Prepare yourself in such a way that no matter how long does it take for you to become successful in trading you won't go broke because of it.

Below are the top 5 things to Know about Trading before you start your own journey

1. Trading is A Performance Game

Just like any other sport trading requires not only the skill, practice and focus but it also demands a player ( trader) to give his best performance while in the game ( trading).

You might have seen a batsman in cricket scoring 100 after 100 runs back to back and many times getting out in a duck ( 0 runs) this kind of winning streak and losing streak is also very common in trading as well as in any sport.

Whenever a trader sits in his trading terminal his performance is determined by many factors  such as his mindset, his technique or his attitude.

2. Probability : Core Of Trading Success

I am sorry to ruin your surprise this early but  if you are a beginner trader sooner or later in your trading journey you will find the word "Probability" more relevant than any other secret recipes to success.

Let me give you a very simple example of casino , how casino owners make money despite of some players coming into the casino and making huge money, this is just because of the slight probability edge casino has over its players.

Now listen to these two statements very carefully -

I know market is going to move 100 points up tomorrow  -  Average Trader

I think odds of market moving up tomorrow are high - Professional Trader

A professional trader always talks in probability.

3. Trading is Never Ending Business

If You have seen The Big Short movie, you know there is always someone who makes money no matter what going on in the world, in trading Money Never Sleeps, be it a bull run , recession or the black swan events a trader can always make money if he is well prepared for doing the business.

There will always be a market for you to trade, be it currency , commodity , crypto or stocks you can always do business whenever you want.

This type of freedom gives you an unlimited possibilities to make money however as Uncle Ben told "With great power comes great responsibility"

4. Trading is Risky

Well i know you might have heard this a lot , but i cannot simply overlook the fact that trading is inherently a risky business, but no business comes without risk , infact i will call trading a risk control business since that is the only thing we as traders can control, profits does not have to be controlled but losses definitely needs some sort of mechanism to be in control.

Risk in trading comes in many ways, the more you will get involved in trading the more you will understand types of risk, your understanding of risk matrix will determine your results.

5. Trading & Financial Freedom

Most of us don't realise but trading can give you a lot more than just money, once your financial obligations and needs are fulfilled even to a manageable extent you become free financially and you have all the time for yourself not for your boss , not for your company but for yourself and in my opinion that is the great success of life, when you are able to dedicate your most precious commodity i.e your time for rest of the important aspects of life like family  & friends.

When we first think about traders we imagine big expensive cars, yachts, huge Villas with pools and other materialistic stuff, however in my own personal view if you have liberty to choose when you want to work and from where you want to work than even though some of the luxuries will take time to attain you will enjoy a great sense of freedom doing what you love without anyone watching over your performance except you.

Summary

Trading is a great career if you are thinking weather it will be a right choice , however like everything else in life you should give it time, with time patience and right tools in your hand you can create a great trading business.

Make a clear vision of your trading journey, be a proactive learner of markets and make sure you stick to your knitting and avoid all the noise there is in the world about trading.

The most important thing you need to understand about trading is that Trading is a curious paradox the more you learn about it the more you will understand it.