Information on trading can be found everywhere. There is no lack of trading gurus to follow, online trading courses or instructional books and videos. New traders have the opportunity to gain experience using dummy accounts and can obtain valuable advice and suggestions from trading brokers. But still, with all of that available, some people just can’t seem to get it right with their trades. You might not hear about the losers so much since they’re not broadcasting their failures, but there are many out there. Usually, once they have lost their trading accounts, they step back from trading altogether. No one wants to walk away with their tail between their legs, so it’s worthwhile to stop and take a close look at why people lose at trading.
Steps to Prepare for Trading
Long before anyone begins to trade, it’s mandatory to spend countless hours studying how the market works. This can be accomplished through online videos, tutoring by successful traders, signing up for market newsletters and meeting with potential trading brokers. Basically, you get out of it what you put into it. Free online courses are great, but if there is a fee it could result in motivation to get that money back when successfully trading. Don’t take preparation and learning lightly, because this will be your foundation and support system. An understanding of the way trading works will see you through the ups and downs of real-time trades. In fact, if you don’t put the time in at the beginning, you won’t stay in the trading scene long enough to experience the highs of winning.
It’s really hard to get good traction as a new or experienced trader without discipline. There is a degree of discipline required in many areas of trading. After the initial learning, you still need to watch successful traders and learn from them. In trading, there is always something to learn or a place where you can improve. Then there’s the beginning experience curve. This normally begins with a dummy trading account that your broker can set up for you. Yes, it takes time to get it right, so why not learn the game before putting money where your mouth is? Once you have begun trading and have your trading plan in place, it takes great discipline to stick with it and not waver. Of course, there can be those infrequent instances where a major event happens unexpectedly. In that case, you would need to roll with the flow but generally speaking, you want to stick with your plan no matter what. Your trading plan is what protects you from trading on emotions or whims.
Reviewing Your Trading Journal
You should begin keeping a precise and disciplined trading journal when you are working with a practice account. Setting up good habits from the beginning and monitoring your trading experiences through your journal is one of the best disciplines you can adhere to. Why? Because if you are honest and all-inclusive with your entries, you will learn from your own experience. Whether you won or lost in a day of trading, document everything. Record information such as the time of day you traded, which foreign currency pairs, the market trend, and your mood. If your trade ended in profit, make a note of what you did and why. If you lost on a trade, write all the conditions that contributed to the loss. Review your journal regularly and learn from your own experience. After you identify a flaw in your trading, you will you be able to tweak your trading plan to become more reliable.