Everyone wonders how to get started trading and what the path is like to become a successful trader. Unlike most trading services out there, we are not going to sugarcoat it and pretend it’s a quick or easy process.
This article will let you know exactly what you have to go through to become a profitable trader. It is a long and tough process, but the reward is completely worth the risk and time you put into it. There are no other professions that have a comparable level of freedom and scalability of income.
Anything worthwhile result in life is difficult. Don't be discouraged by the difficulty of trading. Otherwise, everyone would be a millionaire trader living on the beach right? Why would anyone work a 9-5? Here are the 6 steps needed to become a successful trader:
1. Get Educated
There is a lot of confusing terminology in trading. Candlesticks? Moving Averages? Short selling? Level 2? It sounds like a foreign language. You have to get acquainted with the stock market basics before putting any money on the line. Most new traders are impatient and just want to start trading right away and end up losing all their money cause they have no clue what they’re doing. Trading is no different than other high paying professions. You need education and mentorship in order to find success. You can learn most of the terminology and basics on Youtube and other free resources.
2. Find Your Niche and Trading Style
There are 3 main styles of trading: Day trading, swing trading, and long-term investing (learn more about the differences in the styles here). Which style you pick is dependent on your personality and what suits your lifestyle. Day trading is a good style for those who can process information quickly and make fast decisions. Swing trading is better-suited for those with full-time jobs, and like things at a less stressful, slower pace.
You also have to pick a specific niche in the markets. There are a lot of different things you can trade: Stocks, Cryptos, Futures, Forex just to name a few, and there are countless sub-niches within these as well. The narrower and more defined niche you can make your niche and setups, the better. An example of a defined niche is day trading mid and large-cap stocks gapping up on positive earnings reports. Find a niche and style, and learn everything you can about it. A jack-of-all-trades cannot become a successful trader in the beginning.
3. Build A System
This is the part where a lot of traders fall short. They don’t know how to create a profitable, defined trading system. There are 1000’s of profitable trading systems out there. But you have to find one that works for you, and fine tune it for you individually. I could share you my exact trading system, live entries, and exits, and you still wouldn't be able to make money.
A lot of traders have difficulty refining and perfecting a winning system because they don’t track their data. They make assumptions about what works and what doesn’t without data to back it up. They are just trading what they think works, and are just gambling. You need a system that has a positive expectancy, meaning it can make you money in the long run. We show students exactly why their system isn’t working, and tell them exactly what is needed to fix it.
4. Practice in A Simulator
There a lot of mixed views about this step. Some view it as unnecessary as it fails to simulate the emotions that come with trading real money. In our trading boot camp, we put our students on a simulator at the end of the two months of instruction. We only keep them on it for at most 30 days. We have found that a simulator is only beneficial for a short period of time.
It has utility: It gives newbies a chance to get the hang of the mechanics of trading, like placing orders, reading your charts, and making decisions on the fly. If you cannot make money with your system on a simulator, why would you ever use real money? As soon as they get the mechanics down and can get a week or two of green on the simulator, we move them to real capital.
5. Trade Live
Finally, you get to the fun part: Trading with real capital. But this is the most difficult step of them all. Becoming profitable trading real capital. Success in the simulator usually has little indication of your ability to make money trading with a real account. This is where we encounter the most problems with traders. They have a sound system and plan, but they cannot execute it correctly.
This is where trading psychology comes into play. You have to constantly be improving yourself to achieve peak trading performance that delivers you results. When you start trading live, trade with small size. Ease your way into it. Build up size as you start to find consistency. This is NOT an overnight process. We spend the majority of our time at BOWS working with traders in this stage and help them resolve psychological and mental hurdles which are preventing them from executing correctly.
Once you find consistency, it comes the time to start scaling your success. Many traders shot themselves in the foot because they scale their position sizing too fast. It should be a slow gradual process, not doubling your size every two weeks you are profitable. This is an essential component of increasing your income without hampering the execution of your system.
Scaling up too fast will make you trade emotionally, and hurt your performance. Build up your position size slowly, maybe increase 5-10% every couple weeks when you are consistent. Eventually, you will hit barriers where you start to become emotional. When this happens, size down to remove the emotions. We work with our students constantly on picking the right times when to size up, and when to size down.
Free Trading Consultation
If you want direct feedback on how to improve your trading results, click here to schedule a free trading consultation. We will go through all of your goals in detail, and give you actionable feedback on how you can improve.