The reason is all but a secret. Many people believe (or they have been convinced) that you can easily earn and what you need to do is just open a trade, maybe with one of the famous magic strategies that always win and make you rich in a very short period of time.
Let me say this attitude is right for “burning” your account and sending your capital directly into institutional investors’ pockets or towards those playing markets with method and efforts.
My suggestion is to try to keep in mind these 3 points:
- Trading and financial investments should be considered as important as any other professional activity, act accordingly
- Don’t fool yourself. Observe markets and leave emotions out of your trades
- We are not playing in a casino. We are not going to bet.
Trading and investments need to be considered as professional as any other job, so be sure of your intention.
No way, trading is a business.
As any other profession, you need continuity, passion, and investment in terms of money and time.
The businessmen who manage a profession without rules and method can’t have a future. If you think, the companies that succeed in growing and living longer have a well-defined planning and real objectives to target at.
I know what you are asking yourself, how can I behave as a businessman if I’ve never been one and I have no experience at all?
This is not a problem, this is a challenge and an opportunity. When I started moving inside financial markets I had stopped attending the college and was about to start university. No experience, no specific competence that can lead me anywhere.
What did I do? I’ve started investing time in learning from experts, in particular a mentor.
A person, or a group, exactly like Assistenza Brokers, that could help me to understand the basics, the fundamental principles (and the mistakes to avoid) of a constant “in-profit” activity over time.
Without developing a saving attitude towards your portfolio, and achieving capital management and protection skills I’ve never been able to become the investor I am today.
Don’t lie to yourself. Follow the trend and prevent emotions from interfering with your trading
I’m not asking you to believe me but trust me if I say that I know how you feel. Longing for easy profits you are easy prey for emotions. Probably it’s not your fault, you act in good faith because someone else has convinced you that financial markets are an easy ride.
I’m here to tell that IT’S NO TRUE.
Without method and strict rules, you can’t manage markets because they’re very hard to forecast.
If you think first to earn and not to save money, you will never get profit.
Do you remember the 2 main rules developed by Warren Buffett (he is one of the mentors I mentioned before)?
- Never lose money
- Don’t forget the first rule
If one of the richest businessmen in the world shares his advice, why not taking inspiration?
I’m not saying that to be a trader and/or a profitable investor you should never experience losses because I would lie. Buffett too has lost much money over the time. What makes the difference is surely the “mindset”.
We are not playing at the Casino. We do not bet.
Start thinking as an entrepreneur. Remember you are dealing with your hard earned cash.
Why risking to lose them by trading without rules and plans?
You will be probably asking yourself: “ok, got it, but how can I change my habits?”
My suggestion is easy: find rules suitable for your own needs and objectives!
I give you an example:
I mainly trade commodities futures (spread trading) and options. Let’s focus on the spread trading.
By using the main statistical websites, like Moore Research or Seasonalgo, I have different opportunities I can consider and take advantage of, but I have to be careful because not all of them are right for me (and my capital!).
Therefore, I need to start from my base, the main rule I have for managing the capital allocated on this financial product: never risk more than 4% on high risk trades (spread on futures of different commodities) and never more than 5% on low risk operations (spread on futures of the same commodity but different expiry).
Thanks to this scheme I can decide to exclude all trades that have high exposure I can’t afford. No emotions, I don’t care if profit may be potentially huge. These trades are not for me and I cancel them from my list.
The objective is to find trades that meet my rules’ requirements and that allow me to manage my positions without losing sleep.
Remember, financial markets require patience. Without it you will be easy prey for profit anxiety, ending with losing all your capital.
Are you sure you have never tried this feeling?
My opinion in short
Many words have been written but I hope to give you a moment of inspiration with some advice to change your mindset.
I will recap briefly:
- Trading should be seen as a real entrepreneurial activity. You need rules and precise objectives. If you don’t have, stop and take your time to think of what you are doing, then start with a defined plan. If you miss a plan, you will a very short career in there.
- Close off your trades to emotions. The rules you created ad hoc for your personality and your capital are necessary to this purpose. If you judge yourself to be still too emotional, try to change. Suggestion: once you have a trading plan don’t change it according to the different positions but organize it in order to respect the general operative vision.
- You are not playing in a casino, please keep it in mind. You are not betting on red or black numbers, we are talking about your own capital. Decide rules that make you feel comfortable, without anxiety and fear that can damage you and your activity (it’s not nice losing your sleep because you don’t know how to manage a trade, don’t you think?)
If you find this article interesting and useful, feel free to share it with other traders like you; it will be probably of help for those having your own problems. All newbies will be thankful for avoiding some common mistakes at the very beginning of their trading carreer.