Many fledgling day traders come to me and they’re shaking in their boots. They hear horror stories about traders that fail — these traders had totally crashed and burned, losing all of their money and ended up completely broke.
I tell them two things:
- One: Some traders do fail and that’s simply a fact of life.
- Two: If you trade smart, this won’t ever happen to you, even if you do fail.
There is a reality that you have to face when you consider getting into trading. Not everyone can and will succeed. Sometimes it’s because the person isn’t committed. Sometimes they just don’t have the intuition it takes to be a trader. In other scenarios, a person isn’t necessarily failing, but because they think trading is about becoming an overnight millionaire, they slow successes aren’t enough for them.
Coming into trading is all about attitude. “Isn’t trading also about money, knowledge, intuition and effort?” Yes — it’s all those things and more. However, before you ever crack open a book, join up with Live Traders or start playing your first trading podcast, you have to have the right attitude about trading.
If you aren’t aware of these four particular lessons and you’re already on your trading journey, don’t panic. You may experience a learning curve, but there’s still time to adjust your thinking. If you’re interested in trading but haven’t begun to learn yet, pay attention. These four lessons can be the difference between failure and success.
- Learn to love the grind.
Day trading is hard, there’s no question about it. Between putting in large amounts of effort to learn about trading and getting lots of experience in order to be a polished trader, a lot of time and energy has to be invested in mastering and honing the craft.
Being persistent will get you far as a trader, and every trader has a little bit of masochism in them. The work is hard, but it’s rewarding — you just have to find that reward for yourself.
“Isn’t the money the reward?” We’re talking about newbie traders, which means money isn’t really on the table yet. While you may feel driven by the idea of one day making money, only thinking about success in the form of fiscal gain won’t get you through the struggle involved with becoming a trader. You have to learn to love the grind because it’s a grind that will never end. You will ALWAYS have to learn and follow the market, and that’s something that will never change.
- Get used to taking baby steps.
This is perhaps the most obvious lesson, but it’s also the one that seems to be the hardest for new traders to learn. To be blunt, you can’t bet it all and win it all. It’s not going to happen. Even if you happen to bet a nice chunk of money on a trade and find success in landing a windfall, know that this is dumb luck, and trading is about duplication.
The stereotype of day trading being a quick money business is one that needs to be broken. New traders continually come to me with this attitude that as soon as they master the Live Traders material, they’re ready to risk large amounts of money in trading, but that’s not the case. Baby steps are the key to success in trading. You have to learn to mitigate your risk — even if you continue along at a snail’s pace, remember that this IS a money making opportunity where slow and steady wins the race.
- Go with the flow.
I’ll let you in on a little secret: you WILL fail at least once as a trader. While this isn’t actually a secret, many new traders seem to be totally shocked when they hit a nice momentum and then fail suddenly. How could that have happened? Weren’t they doing everything right?
Sometimes unexpected patterns show up in trading, and that’s not your fault — it’s not anyone’s fault. Every trader has a story about how they were so sure that they would make a successful trade, but against all odds something happened to go wrong. It happens. No one is immune.
That’s not the lesson, though. The lesson is that you need to learn to go with the flow. One failure — or even multiple failures — won’t deem you a bad trader. Adjusting your behavior as a trader is part of the game, and your profitability depends on how you react to bumps in the road. Keep a level head and you’ll find your groove again.
- Don’t be afraid to ask questions.
Trading is definitely a field of expertise where “there’s no such thing as a stupid question” applies. I’ve encountered many a new trader who has withheld questions just because they feel like they’ll look dumb for asking them, especially when day traders can be an intimidating bunch.
If you find yourself in the midst of senior traders, take advantage of their knowledge and experience. Instead of refraining from asking questions, ask as many questions as you possibly can. If someone tells you to cool it, oblige of course — but many day traders don’t keep their expertise close to the vest. They’re proud of their accomplishments, and these are accomplishments you can learn something from.
Similarly, try and absorb knowledge from as many resources as possible. This, however, comes with a caveat: while you CAN find information on trading blogs and the Internet, make sure to verify your sources and ask follow up questions about these topics. Information from outside sources may not always be as credible as you hoped, so use your best judgment to figure out what is credible and what isn’t.
Newbie traders have something else to think about: potential. They have infinite potential — you have infinite potential — and it’s something that shouldn’t be wasted.
Work your butt off, listen to those who know more than you and always have a thirst for knowledge. Internalize these lessons and you’ll have a running start at being a successful trader.