The purpose of this post is to provide guidance on where to concentrate your efforts in order to improve and trade successfully.
Credits goes to Billy Williams..
Numerous individuals aim to become profitable traders in the current market environment. Many people who trade stocks, options, and other securities are attracted to the possibility of making a lot of money, but they are frequently unaware of what it takes to consistently make money, position yourself to make windfall profits, and protect your account from excessive and/or unnecessary losses.
The good news is that there are several resources available to assist you, but the bad news is that novice traders frequently do not know where to begin.
The goal of this post is to show you where to focus your time and energy to get better and trade successfully.
The first stage is to focus on acquiring the industry’s lingo.
Learn what a stop limit order, or “handle,” is and how it applies to your trading. If you encounter a term you do not understand, simply “Google” it and then learn its definition. If you plan to trade futures, it is quite difficult to understand what an article or a seasoned trader is saying if you do not know the fundamental terminology of stock orders, option definitions, and how the futures market operates.
The second stage is to learn price action analysis.
Price action is the fundamental language of a stock or market. It reveals what the stock or market has done in the past and is likely to do in the future. Learn how to interpret trends on a chart.
Is the stock in a positive trend over the long term?
Are oil prices experiencing a moderate bear market?
There is evidence that oil futures may transition from an intermediate bear market to a long-term bull market. Learn to interpret price action and you will get wealthy.
Risk management is the third step to achieving success in trading.
Almost every effective trader who has lived and prospered over the long term knows how to manage his market risk. I know a professional hedge fund manager who was short of the German mark when the Berlin Wall came down, but still managed to get his funds to make record-breaking gains that year.
At the time of the September 11 terrorist attacks, the same trader was long Dow futures and outperformed the S&P 500. I was long a large number of oil and refinery stocks when Texas was struck by Hurricane Rita, but I still made money as these stocks fell because I am adept at managing my investments. If you want to be a successful trader, you should learn how to evaluate and deal with risk.
The fourth step is to trade with an advantage.
A trade advantage is anything that provides a trading advantage. The more benefits you can obtain, the better your chances of earning a high income. A competitive advantage could be the ability to read charts better, pick good stocks, or handle money well. I know a very well-known and successful stock trader who used the three strategies I just described to turn a stock account of $11,000 into $48,000,000 in 23 months. He has been in almost every major financial newspaper and holds the world record for making the most money in the least amount of time.
If you look at the best traders, you can see what strategies they use to become legends.
The fifth step is mental discipline and emotional equilibrium.
Trading is predominantly mental. Even if you give two traders the exact same trading technique for stocks, futures, or options, they will certainly achieve different results.
Their mental and emotional states may not be conducive to their performance with the offered system. Worry and stress can make a trader give up on trades too soon, hesitate to follow entry signals, or take profits too soon, missing out on big moves. The other trader may have the self-discipline and self-control to take each trade as it comes and focus only on making sure the system works as it should. He or she may know that losses are a normal part of the game and that, in the long run, this is the way to make the most money.
Learn how to use your mental discipline and emotional control to help you become a great trader rather than to hinder you.
These five steps will go a long way toward assisting you in becoming more skilled and profitable. Eventually, you may choose to review the “basics” of this lesson to maintain your focus and keep you on the path to becoming the best trader possible.