Subscribe
Apple | Google | Spotify | Stitcher | Soundcloud | YouTube
In today’s episode, you’ll discover what you should really expect in your first year of trading.
So tune in right now…
Resources
Exposed: The Truth About Trading Nobody Tells You
How Long Does It Take to Become a Consistently Profitable Trader?
Transcript
Hey, hey, what’s up my friend? In today’s episode, I want to share with you what you can expect in your first year of trading.
Most of you here are probably new to trading, maybe you’re in this for less than 12 months and you’re unsure what to expect. So let me break it down for you.
1. Expect confusion in your first year of trading
You’ll be bloody confused. Because there’s so much about technical or fundamental analysis out there to learn, like the RSI, MACD, chart patterns, candlestick patterns, price action trading, day trading, swing trading trend following, etc.
You will be overwhelmed and confused. Here’s the thing, to help you get out of this confusion, you must first define your goal and what you want out of trading, according to your circumstances.
For example, if you’re someone who wants to make 10 to 15% a year without being glued to the monitors then you could probably consider swing trading or position trading to hold trades for a few weeks to even a few months.
This is how you filter out the noise out there. You must first define your goals and the circumstances that you’re in then you can find the trading methodology to suit your needs.
2. You will blow up multiple trading accounts
You will blow up multiple trading accounts especially if you are dealing with leverage through margin trading for CFDs and FX. The problem with this is usually due to lack of knowledge.
If you don’t know what you’re doing and you just click buy on a position that you think is a nice round number like 10 lots on a $1,000 account, then what will happen is that you’ll blow up your trading account because you don’t understand how leverage works.
So you need to understand the math behind risk management and position sizing. It’s not rocket science, it’s pretty elementary math. Understand them and you’ll never blow up another trading account again.
This is one of the most important things to understand and apply in your first year of trading.
3. Expect to be inconsistent
Because in your first year of trading you have no idea what you’re doing. One moment you’re day trading, the next moment you’re swing trading, and the next moment you’re counter-trend trading.
You’re likely also using all the different tools and indicators on your charts, one day it’s RSI, the next day is chart patterns, the following week is price action trading and then you’re back to MACD. No consistency.
The way to get consistency in your trading is, first and foremost, approach trading as a business and have a trading plan.
What this means, is that every time before you put on a trade, it has to meet your criteria, it has to follow your trading plan.
A trading plan should tell you:
- Under what market conditions will you enter a trade
- When do you enter a trade
- How much risk do you put on a trade if the market goes against you
- When will you bail out of that losing trade
- If the market moves in your favour, where will you exit your winners
This is what a trading plan entails. And once you have it in black and white, you can always refer to this trading plan before you put on a trade.
What’s going to happen is that in the long run, you will get consistency in your trading. Because when you follow your trading plan, which is a set of rules, then your actions are consistent and you’ll get consistent results.
That’s how you get consistency in your trading number.
4. You’ll think that trading is easy
You might get lucky on a few trades and they’re all winners, so you make a few hundred bucks, thinking day trading is easy.
There will be times where you get lucky and you have a few winning trades, thinking you can finally quit your full-time job to trade full-time instead. You’ll be thinking trading is easy.
5. You’ll think trading is a scam
After you have four or five losers in a row, you’ll be thinking the markets are rigged, your broker is against you and this whole trading thing is a scam. Be prepared for that as well. You might think that trading is a scam.
But no, trading is not a scam because again, it’s all about probabilities. Just imagine you have a coin in your hand now. There’s a 50% chance that it will come up heads and a 50% chances that it will come up tails.
If you’re free, if you want to do this exercise, toss the coin 100 times, just take some time, go to an isolated room and toss the coin to yourself.
Write down every outcome of each of the hundred coin toss and you might some patterns like sometimes you might get four heads in a row, sometimes you could get five or six tails in a row. And that shouldn’t be a surprise to you.
Because again, you’re dealing with probabilities down here. Just because you have a 50% chance of coming up heads, doesn’t mean that every time you toss a coin it’s going to be heads then tails then heads again.
It can be a series of heads, then a series of tails. It’s the same as trading. If your trading strategy has a 50% winning rate, you will have a series of winners and a series of losers. This is something that you should expect.
Those are pretty much the five things that you should expect in your first year of trading.
Before you go…
I just want to share one thing with you – anything worth pursuing in life will not come easy. If you want to reap the rewards, you have to go through the hurdles.
In life, nothing is given to you on a silver platter (unless you’re born into a rich family). Most of us were born into an average, middle-class family, some even from a poor family.
And really, to achieve anything worthwhile in life, you have to fight for it. Think of it as a pyramid. At the base of the pyramid is where the most number of retail traders or people who are interested in trading get involved in trading.
But as time goes by, as the years go by, you can see that the pyramid gets slimmer at the top. Just like the many traders who drop like flies after blowing up a few accounts or after being confused by all the technical jargons, or after not understanding risk management.
So after a few years, there’s only a handful of traders left in the business. And if you can persevere, if you can fight to the end to get to the top of the pyramid, you realize that those hard work and obstacles that you go through are worth it.
This episode is to manage expectations so that you’ll know what to expect in your first year of trading. We’re all going to start at the bottom of the pyramid and the only way to get to the top of the pyramid to reap the rewards is to put in the hard work.
You got to persevere and do the things that I just shared with you. Those are the things that you should expect yourself to be doing. Hopefully one day you’ll get near the top of the pyramid and reap the rewards. I’ll be happy for you.
With that said, I wish you good luck and good trading. I will talk to you soon.