Two understandings will speed up your development as a trader. No, it is not technical or fundamental analysis. It is your complete understanding of your expectations and that trading is a business.
I am fortunate to see two of the three types of traders on an almost daily basis. I see both professional traders and people who want to be professional traders. I have limited experience with institutional traders. If someone wants to share that experience I will be more than happy to listen and will give you an opportunity to share your experience here.
But I digressed. The expectations are generally backwards. In the beginning you expect to win. Most people that want to be a professional trader come from a background in which they were successful. Most of my clients are semi-retired, former executives or consultants. They think that their success in another field will transfer to trading. It does but they look at in two points. When they start and where someone who is successful is. It took them a long time for them to become an overnight success and trading is not different. How are their expectations backwards? In the beginning they expect too much from themselves and as they progress they expect too little.
I am not in the business of handicapping anyone, everyones path is different. If you are a superstar you are a superstar. The whole point of my trading education business is shorten the time from start to becoming profitable. I cannot and will not tell someone what to do, each persons set of experiences are different and it takes awhile for me to build in that context. Ideally, I teach them how to build in their own context. I try to show them what not to do and make sure they get the most out of the money they have set aside to learn to trade. Those that learn the cheapest have the best chance. They have the best chance because their head is up high enough to see the light at the end. Expectations determine how far you have to lift your head up to see the light.
I cannot stress how important treating trading as a business is. Most people do not understand they can lose money by going to work. It is a foreign concept to anyone who has had a “real” job. I have a very strict 6 month rule. My lifestyle does not change until I can consistently make that number every month for 6 months. After that 6 months is up, I pay my expenses for the next 6 months. If there is any money left, if I really want something I pay cash. Bills kill in business and trading. I have tried living like a 40k millionaire. Reality set in real fast. Yes, my life is boring at times. But I can always trade tomorrow, whenever tomorrow is. That is rule #1. I get to make decisions based on what the market is doing not when my bills are due. I will be completely honest and tell you it does suck at times, I would love to have a new car and a few houses. I have lived outside my means and it sucks worse. Living below your means takes practice but it is worth it. I understand not everyone is in my same situation: wife, kids, etc. Making money is an opportunity to pay down your bills not add to them. Much easier to go up in lifestyle than down.
It is important to look at the other feedback you are getting when you are new trader. Money is important because it represents time int he beginning and opportunity later but your focus should be on doing the right things. That really never changes but your understanding or appreciation of doing the right thing does. Slow down your expectations in the beginning and than accelerate them. I love the challenge of trading, I love that it introduces me to myself everyday, and I do like money. But remember that the money is a bi-product of the many steps and set backs. You have to be able to weather the set backs. All businesses need to justify their expenses and trading is not different. If you think not having that 10th screen is preventing you from being successful, you are looking in the wrong place.
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