The Authority’ on Price Action Algo trading strategies forex broker. In 2016, Nial won the Million Dollar Trader Competition. Hopefully, after finishing today’s lesson, you will have a better understanding of the reality of trading, what to expect and how to profit from it. The Myths of Trading: Myth: Trading is all about making that fast-cash man!
Perhaps the biggest myth about trading in the general public’s mind, is that it’s all about making money fast. High risk, fast money, fast cars, etc. The stereotypes that surround trading are so widespread that most beginning traders get into trading due to these stereotypes and so they start off with the complete wrong mindset and expectations. These expectations come to a crashing realization once they lose a few trades and reality sets in. That’s right, trading is about not losing money much more than it is about making it. The reason is, if you want to make money in the markets, you must be a risk manager more than anything, a capital preservationist, if you will. Once you get to the point where you can preserve your trading capital and only use it on trading opportunities that meet your strict, pre-defined criteria laid out in your trading plan, then you will have conquered yourself and you will start taking money from other market participants rather than giving it to them.
You don’t need to be a college graduate to be a successful trader. Trading isn’t only for some super-genius math wiz who sits there coding algorithms all day. In fact, just like being overly-emotional can be bad for trading so can being overly-analytical. Ideally, you want to have a good mix of gut feel and analytical trading abilities.
Only when a trade idea passes both your gut feel and your logical, objective analysis should you consider entering it. Those who succeed at trading are masters of themselves. Master your own actions and behavior and ability to control them and you will succeed at trading. All the books and an IQ of 180 won’t do you any good if you over-trade or risk too much or cannot remain disciplined. You don’t have to pick exact market turning points to make money trading like many people think.
You do have to read the chart, the story on the chart and understand what it’s trying to tell you. An uptrend was in place on the daily chart as seen below. Then, we drew in the key horizontal levels of support to look for signals at. Then, price pulled back to support and formed an obvious pin bar reversal signal there, indicating a long entry was appropriate.
You can see what happened next. Often, traders believe that to succeed at trading they need a big trading account. But, this is simply not true. IN fact, you can lose money on a big trading account just as fast as you can on a small trading account. It’s best to start with a smaller account even if you have a lot of money to trade with. Will a large trading capital reserve allow you to make more money faster? But, fi you don’t know what you’re doing you can also lose that money faster.
The strategies, skills and mental attitudes you need to succeed at trading will work on a small account the same as a big account. It’s always best to start on a small account and hone your skills, then when you’re ready you can deposit more money if you have it or just keep building that small account. If you build a track record of successful trading on a live account, even a small one, you will be a successful trader. Building a successful live account track record over a period of a year or more is something that FEW people can do. If you do that, even on a small account, your success will start to snowball. Myth: You have to know what is going to happen next in a market to make money. One huge myth about trading is that to make money you must know what will happen next.