Novice To Master - Part I

What are the basic skills of Wall Street professional traders, from novice to trading masters?


1. Learning period

In the first few years of trading, beginner should see themselves as an student, an student to someone, an student to a book, or an student in the market. During this period, don't expect significant profits. Instead, traders should concentrate on capital protection and train themselves. 

When you first started trading, because you were ignorant, you were likely to make countless mistakes. It is normal to generate some losses. Beginners should be prepared to accept this. These should be the cost of learning. At the beginning, you should only let a small amount of money take risks, as long as it is enough for you to learn through actual trading experience.

Many beginners have been fanciful from the beginning, intending to make a big fortune, and have no preparation for training themselves as the best trader. Keep in mind that many successful traders have gone bankrupt, and at least there have been major losses. Whether it is stock investment or bond, it takes a lot of time to study hard and learn from experience before you can slowly understand the doorway. Although most beginners can't get through this difficult learning process, those who are trained and not discouraged still have a great chance of success.

Forex trades are a process of continuous learning. It is not limited to reading a book or attending a lecture. Anyone can read five books about tennis and take a few lessons, but if you want to be a real tennis player, you have to practice and practice. This applied to Forex trades. Only by practicing constantly can we slowly explore the doorway.

On-paper simulation or simulation trading does help, but it does not reflect the actual situation. No matter what you read from the book or how much time you spend on simulation trading, as long as you really come into play, everything is no longer the same. Some mistakes that have never been thought begin to emerge everywhere. The best way to prevent mistakes is to make mistakes. Actual losses can make you realize the meaning of mistakes and learn to be self-disciplined so that you don't make the same mistakes in similar situations The actual loss can make you feel the pain of the simulation transaction. Finally, when the pain is so severe that it is unbearable, you will not make the same mistake again. On-paper simulation trading is a necessary learning process, and beginners should conduct a reasonable degree of simulation trading before they can actually enter the market.

That being said, simulation transactions do not reflect the actual situation. In simulation trading, you quickly forget about the $1,000 loss. However, the actual loss of $1,000 tends to bleed your heart, and if it happens on Friday, the whole weekend may be ruined. This type of emotional distress usually does not occur in simulated trading. In other words, errors in simulated trading do not cause the necessary pain. During the simulation trading process, you will not receive a margin call notice

However, when you actually enter the game, the whole situation is different. A lot of things that don't happen in simulation trading now happen: risk tolerance is reduced, profit margins are prematurely settled, losses are accumulating, slip spreads and commission fees become actual burdens. A lot of things can't be simulated on paperwork.

In addition, I also recommend that you read as widely as possible. There will always be room for improvement. Although I have been in the Forex trading for 15 years, I am still learning.

2. Learning cost

Judging from the my experience, it takes about three or five years for the trader to spend the learning period. During this period of study and tempering skills require tuition fee. That is the cost of being a good trader. Just as a lawyer or doctor pays $25,000 a year in tuition for university. For trades, the tuition fee goes to the Forex market. 

After an appropriate learning process, the novice will be upgraded to a veteran and then begin to earn back the tuition fees paid in the past. As a whole, beginners must have at least a mental preparation to pay $50,000 in tuition. Through every improper transaction, beginners can learn some knowledge and expect to stop making the same mistakes.

Forex trades are undoubtedly one of the most difficult industries to succeed, and you must accumulate a lot of experience on the spot to be proficient in the relevant doorways. Experience is always the best teacher, so don't be frustrated by the loss. Think of the loss as the tuition you have to pay.

3. Starting capital

Unless you are as lucky as Hillary Clinton, you can create a hundredfold profit in futures trade, turning $1,000 into $100,000. Otherwise, the starting capital may have to be more. According to my personal view, if you want a reasonable degree of success, you should prepare at least $25,000 to $50,000 in capital during the three-year study period, and you must have a considerate wife or husband. Many people think that the $5,000 is very abundant, and it is entirely possible to start trading because the money is enough to pay the deposit. They simply do not consider the possibility of loss; on the contrary, they are convinced that they will be smooth and profitable from the beginning, but the actual situation rarely develops.

Most beginners lost money in the first year; about 80% to 90% of those who started trading, the first year of the transaction was a loss. The more abundant the starting capital, the higher the chances of passing the first year safely. If you are planning to enter the Forex trading world, but only a few thousand dollars are available, I advise you to deposit the money in the bank or invest in mutual funds. For such a distressed capital, you really don't have much capital to lose. Several mistakes will erode your capital.

4. Operating capital

The amount of capital required for Forex tends to exceed the level of imagination. In addition to the safety of the learning phase, make sure you always have enough money to trade. The most frustrating thing is that when a big market happens, there is not enough capital to enter the market. All you can do is just to watch. I have encountered this situation many times. The long-awaited rally has finally emerged, but I don't have the money because very little capital has been eaten up.

It is very strange that the best opportunities to make money seem to happen when I am forced to stay on the sidelines. I remember that I have been gnashing my teeth many times on the sidelines, facing the big market that I have been waiting for a long time, but sighing because of the lack of operational capital. Now, I am no longer subject to funds, no need to worry about this problem. I am very sure that when the next big market appears, I will definitely be on the court. This does not mean that I can relax; before the real opportunity to make money, I certainly don't want to have too much deficit to end up with. However, at least I don't have to worry about being empty and rushing around to collect money. Now, I can focus on trading.

To be continue...