It's all great advice...but...
We've all been there and know that following this advice is next to impossible when starting out. I can't explain it, but even though Chicken and Cash's points and posts are right on, they seem to only get operationalized after personally suffering through them. (It's like not swinging too hard at a golf ball...I can't do it 'cause 6 years ago, I hit a 300 yard drive)
I've seen (and done) all of this. Definitely take to heart these earlier posts, and I'll add some more thoughts. My suggestions to those just starting out go like this:
1) Don't over capitalize your account. Then, many of the opportunities to add to bad positions, to over trade, to take on too big of lines go away. Remove the source of the temptation until you are ready to move up.
2) Believe and internalize all of the horror stories and advice that you hear and don't just brush them off and think, "That'll never happen to me!" I don't know how many times new traders have come to me and said, "I know most people lose at first, but I'm different" I say, "I hope you're right, but I doubt you are."
3) Something I see (almost across the board)is that folks don't have business plans for their trading. All of the previous comments and all of a successful habits have to work within a framework of reasonable business practice.
There are very few business that have succeeded without a good B-plan For traders, this plan should include average return over a proper period of time (for day traders, this should be less than a week). A key factor is that this goal should be rooted in reality and necessity. What I mean is this: if you want to make $250 per day, develop a system that allows you to. I see traders all of the time who tell me, "I just want to make 1/2 point a day." Then they go out and try to top tick a stock that's just made 3/4 of a point only to see it reverse and take their money with it. They should have closed the trade when their goal was met. Expanding your goals is like giving yourself a raise...but you have to earn it!
In trading, like in any other business, you have to have a measurement of success. When just starting out, you cannot define your success by the numbers that the person next to you posted. You have to start slowly and work your way up. If you don't have daily goals (and limits), you will find that you don't know when to quit and that can kill a trader.
4) The last thing I'll add is that when starting out, most traders do not try hard enough to learn from their mistakes. You have to review all of your trades, (good and bad) to make sure that you understand what to do better next time. If you don't learn from mistakes, your time to get up to speed will be painful.
I hope these thoughts are useful.
Dave Huff |
