Becoming a professional is not easy and not do not require formal education. It is doable if you have the desire and passion to achieve it.
Whether you are already buying and selling stocks, investing in real estate, mutual funds and doing it full time or you are just starting out and thinking of investing your money.
Start investing time to build a systematic approach that will help you develop an edge over the “retail investors” or even a hedge fund.
The journey to true knowledge and learning starts with accepting that you know nothing.
The Greeks knew this important perspective towards mastery, and it helped them amass a great wealth of ideas and eventual intellectual prosperity.
Becoming is pro in trading is challenging, especially when it comes to making a profit. In the markets, the vast majority of traders lose money.
Hence, it is essential that you know some fundamental ground rules of trading and making decisions if you undertake this journey in the markets.
The knowledge is not only to help you to earn profits but also to prevent you from getting rekt. Therefore it is imperative that you start acting, thinking and making decisions as a professional trader:
How much to invest?
Don’t invest at the expense of your life.
Your initial investment should always be a negligible sum. It should hurt a little but not wreck your life if you lose it.
Don’t put all your eggs in one basket. EVER.
It is extremely dangerous to risk more than what you can afford to lose. ?This habit would put you and your loved ones in jeopardy.
In trading, money management is critical. To earn money in trading you must first know how to protect it.
Never put all of your money into a single trade because if the market drops, you’ll be caught in it and will be unable to buy at cheaper prices.
Only invest 10-20% of your whole assets in a single transaction. This provides you with more trading options and allows you to make several trades.
Back-testing is the backbone of a trading system
Practice a lot BEFORE trading.
Watch live charts, draw your levels, and then a small percentage of your capital.
Using leverage without spot experience is a crime.
Before you begin trading, trade the live market for a few months, there’s no need to haste.
There’s nothing you’re missing out on.
After you’re comfortable with this, trade a spot for some time and only then move to leverage/futures.
Trading spot for at least a month before starting day trading is a good idea. It allows you to become accustomed to the system and its volatility without the drawbacks of leverage.
A trading system has to be back-tested with a reasonable amount of data.
Back-testing is simple and may be done manually by anyone.
Back-test it on the asset of your choice, as each one is unique.
Why having an edge is essential for a trader?
A trading system can be understood as a set of rules/guidelines that specify the conditions under which a trade should be entered further and how that trade should be managed.
It’s worth noting that this doesn’t have to be a mindless, robotic approach to trading.
It’s a spectrum: some skilled traders cling to their method religiously, while others use discretion and follow more broad rules.
The upshot is that skilled traders adhere to some set of rules, and their trading is anything from haphazard.
What are the Ingredients of A Good Trading System?
- Your system should clearly indicate an entry.
- You should have predefined exiting zones.
- All probable support resistances should be well understood.
- Don’t enter a trade unless all of the aforementioned are in place.
- Your system requires a competitive advantage, with a likelihood of more than 50%.
Your system will not always work, and one failure will cause you to doubt it. However, invariably, maintain your routine and if your method has been back-tested and paper-traded, stick to it.
Patience is the key
Trading should be a waiting game that is calm and uncomplicated.
Your system should show the entry and exit points.
Don’t trade if your system isn’t ready yet.
To study, investigate, develop your system, and read new things, you must put in much effort.
Practice, train, and improvise using your hard work.
The performance itself should be simple.
All of the preceding is simple.
It takes much patience to execute and wait for an entry.
“The stock market is a device for transferring money from the impatient to the patient.“Warren Buffett
Developing a deep understanding of price
The majority of novice traders seek to learn a technique, a strategy, or a method.
As the market evolves, this will never work in the long run.
Develop a deep understanding of price fluctuation.
From the Ground Up.
Allow time to work its magic and establish a stable basis.
All indicators (except for volume-related indicators) are generated from the pricing.
Anything else pales in comparison to a study of price fluctuation.
Have an effective daily routine for a day trader
Keep notes and evaluates each trade to learn from your mistakes.
Trading, though it seems fun and looks a lot like gaming, must be treated like a profession rather than a game. Maintain tight office regulations, such as no smoking.
Controlling the media: Read between the lines when it comes to the news media.
Minimize losses/manage emotions: EMOTIONAL CONTROL MUST BE LEARNED AND PRACTICED BY A TRADER.
Leave the winners alone: Don’t get rid of a profitable deal.
Adhere to your own set of rules.
Be wary of helpful tips: You should not rely on Twitter advice without conducting your own research and chart analysis.
Be fluid with your bias.
“Be water, my friend.” When The great Bruce Lee claimed that individuals should be “formless,” he implied that they should not be imprisoned in a certain worldview. Instead, a person must be able to adapt to new surroundings, develop, and evolve.
In trading, strong price opinions have no place. You must understand that trends change often and one has to always adapt and evolve.
It’s very OK to switch from a bullish to a bearish bias. Bias fluidity provides you with several options.
If there are no reversal indicators, never stay onto a losing transaction. Trading is not a game of hopes and prayers.
Get rid of a lost deal as soon as possible. The market will provide you with enough chances.
Another aspect of trading is to keep up with the times and the current trends, and generally be well informed.
Do we really need to catch the bottoms or the tops and time the markets perfectly?
Most money is made during the transition from top to bottom in a cycle.
Trying to catch tops or bottoms is extremely hard to do, and if you miss that, you might end up missing the whole movie. So instead, waiting for confirmation and taking lower profits will yield a better result.
This reduces the number of entries you’ll find but raises the likelihood of finding better trades.
How to take profits in a Trade
Always preserve a cash reserve and never lose more than 10% on any trade setup.
Don’t sell just because you’ve made a profit; your strategy should determine why you should purchase and sell.
Put half of your profit in the bank after a windfall profit.
The majority of the traders end up giving back the profits that they have made in successful trades because of having poor execution techniques.
One of the simple strategies that I have used for short to mid-term time frames for leveraged trading has helped me preserve profits.
It’s a simple but effective technique.
We Exit 20-30% of the position shortly after entry for small gains to mitigate Risk.
Then take another 25% off the position on the first target (can be a Fibonacci level, VVAP, or any other type of resistance) and another 20% on 2nd final target, and let the rest run by trailing the stop.
You can have the percentage according to the Risk you think the trade entails, e.g., 50-25-25 or 40-20-20 with trailing stops.
The strategy depends on the trader to trader and can be developed as you become more self-aware of your performance and risk appetite.
Always manage your risk
Because no one can anticipate the market with 100% precision, always manage your risk by employing a stop loss and avoiding overtrading.
Learn how to effectively manage your money and risk.
All of your trades should conclude in one of four ways:
- A big win.
- A small win.
- A small loss
Professional trading mentor
We are Subverto Trading Club, a group of professional traders from around the globe. Our goal is to find students who want to learn the skills they need to be successful in trading.
Whether you want to supplement your primary career or become a professional trader, we have the tools and expertise to show you the way.
Come check out our discord with a free 7-day trial: ask questions, peruse chat history, and observe us at work. We look forward to seeing you there!