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In today’s episode, you’ll discover the 7 best practises in your first year of trading.
So tune in right now…
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Hey, hey, what’s up, my friend? In today’s episode, I want to share with you 7 best practices to adopt in your first year of trading.
1. Don’t take it personally
This is especially critical for people who have found success in life consistently. Maybe you’re really good in your studies, always top in your class, graduated with first class honours, or found success in your professional career.
Then when they start trading and flop, they start taking it personally, “Why is the market against me? Why, why, why?”
But I’m here to tell you, don’t take it personally because the market has nothing against you. It doesn’t know who you are, it doesn’t care what you’ve achieved. The market is just the market.
Don’t take it personally, it doesn’t matter whether you have excellent academic credentials, whether you’re a flop, or you’re a beggar in the street. It all doesn’t matter. The market doesn’t care. There’s nothing personal towards you. So don’t take it personally.
Don’t think that someone is out to get you, the system is rigged, or the institutions and the smart money is out to destroy you, to blow up your account. No, none of it.
Firstly, don’t take things personally. Because if you take it personally, then it’s very difficult to look at the markets from an objective perspective.
And if you can’t look at the markets from an objective perspective, it’s near impossible to become a consistently profitable trader, because you’ll always be thinking that someone is out to get you. There’s no way you can survive like that in the long run.
2. Don’t tell your wife, your kids, your family and your friends
I’m not joking. In your first year of trading, just keep it to yourself. Don’t tell anyone, not even your wife. And why do I say that?
Because let’s be honest. Most traders lose money in the long run, especially in your first year of trading, you are more likely than not to lose money. And the last thing that you want to do is to tell your wife that you’ve started trading, only to have your wife ask you every week how that account has grown.
The last thing that you want to do is to tell her the truth because trust me, that account is probably just left with $5 from $5,000. You don’t want to be in that situation. My advice to you is to not even tell anyone to start with.
If you want to trade the markets, if it’s your first year of trading, great. Keep it to yourself or maybe join a forum anonymously and tell people your trading journey.
But don’t tell your loved ones because they will have questions and they will unknowingly put pressure on you even though it’s not their intention. They’ll always ask, “How’s trading? How much did you make? How much did you lose?” And you won’t feel good about it.
So the second point is, don’t tell your wife, your kids, your family and your friends. You can tell me and we’ll keep it a secret.
3. Fund a fraction of your savings
When you are ready to go live in your first year of trading, you don’t want to put all your savings into your live trading account. Even though you can afford to lose huge amounts of money, like $100,000 and it won’t affect your lifestyle but it doesn’t make sense.
Because when you first get started with trading, you’re going to suck badly. I just mentioned that in your first year of trading, you will likely lose money. You don’t want to put in so much money into your live trading account.
If you have $100,000, great. My suggestion is to put $99,000 in the bank and just fund that $1,000 into your trading account. If you lose that $1,000 account, that’s kind of like a small tuition fee that you can afford to lose rather than the full $100,000.
So fund your live account only with a small fraction of your savings and never go all in.
4. Master risk management
As a beginner, as someone trading for the first time, in your first year, one of the easiest and the lowest hanging fruit that you can do is to master risk management. There is nothing subjective about it. It’s all about math.
It’s something simple that even a 10-year-old can figure out. Risk management is one of the lowest hanging fruits that you can grab because once you master risk management, you can be pretty certain that you will never blow up another trading account no matter how much money you’re trading with.
You can protect that sum of money and that’s kind of like one of the easiest things to learn. There is no subjectivity involved, just some basic math. So go and master risk management as soon as possible.
5. Learn everything from A to Z
Here’s the deal in your first year of trading. You will be overwhelmed because there are things like swing trading, day trading, position trading, chart patterns, candlestick patterns, RSI MACD, stochastic, etc.
My suggestion for you is to learn everything. Be like a sponge and absorb everything. You don’t have to dive in very deep, but rather, just learn things at a superficial level first to be exposed to them and to know what’s out there.
When you’re new to trading, you do not know what you do not know. It’s important that you try and expose yourself to all the different departments, all the different fields in trading to have a taste of what it’s like.
Then hopefully within one year, you have something that you can resonate with, something that you’ll tell yourself, “This suits me”. From there, I want you to deep dive and master this particular trading strategy or methodology in the future.
But within the first year, it’s quite difficult to deep dive into something when you do not know what you do not know. Make sense?
6. Decide if trading is for you within the first year
This is one of the most important advice that you should consider. Many traders get into trading and they think that it’s the only ticket to financial freedom. Trust me, it’s not. There are also other ways to make money.
You can do e-commerce, you can do coaching, you can set up an online business on Shopify and stuff like that. There are a lot of ways to make money.
If you have tried trading and within the first year you realized that trading is not for you, you should call it quits earlier. You don’t want to sink in deeper, because the last thing that you want is to spend 5 to 10 years in trading and not see any results.
By then, you would have sunken in too deep. The sunk cost is too high and it makes it very difficult for you to get out of the hole. Many of you watching this video now, might not be trading after a year.
It pays to know within a year if trading is for you or not, especially when your time and money invested is still at a minimal level. If trading is not something for you, then quickly cut your losses and move on to something else.
7. Don’t quit your day job yet
The failure rate in trading is high, so the last thing you want to do is to tell your boss you quit only to turn around and ask if he is hiring again.
Don’t quit your day job yet, you can always trade part-time and see how your results fare over 1 or 2 years. Once you’re consistent and confident, then you can consider quitting your full-time job.
Let’s do a quick recap…
- Don’t take it personally
- Don’t tell your family, friends, wife, kids or whatsoever
- Fund your account with a fraction of your savings
- Master risk management – it’s one of the lowest hanging fruit that you can grab
- Learn everything from A to Z
- Decide if the trade is for you
- Don’t quit your day job just yet
With that said, I wish you good luck good trading. I will talk to you soon.