By VIKRAM
When I look back to year 2004, when I started Day trading for the first time, I feel, wish I had a mentor or someone to tell me how to prepare myself before quitting my job and taking trading as a full-time profession, had I knew all these, I could have saved myself from emotional and financial loss.
Those days youtube was very new, Google was just picking up, Facebook and Twitter was not even heard of, only Orkut 🙂 was there as a social networking site.
After I started my blog pivotcall.com in May 2019, I started getting lot of emails from many aspiring and young traders who wanted to know how they can take up trading as a full time profession, so, I decided to write this blog post, so that they don’t fall in to wrong hands or misleading ADs and lose all their hard earned money.
More than financial loss, its emotional loss which forces many people to never to enter stock market again, so this post might help few traders who want to know how to plan their journey towards full-time Trading.
This blog post will give you the reality of trading, and what all the things you need to know before entering it, it’s more like a checklist, where you need to see whether you tick all those 5 boxes.
Now let’s see what are those 5 checklists,
[bctt tweet="5 checklist for a new trader."]
1)Motivation
You need to ask yourself why you want to become a Trader.
If you want to become a Trader because of fast money and thrill it offers, then you are selecting a wrong profession.
World’s successful traders have not chosen a trading profession with only intention of making tons of money, but, because they enjoy trading and they have passion for it, if you want to be successful in any profession then the first thing is passion, you should enjoy what you are doing and Trading is not different.
If there is such a low success rate (around 10%) in Trading, it’s because many people come with the lure of fast money and gambling mind set when they realize the hard work it requires they will give up.
So, first in the checklist is,
Why do you want to become a trader?
It’s for fast money or you have a passion for chart reading and enjoy trading.
If the first one is the reason, then you should not take the risk of quitting your job and taking trading as full time, if you have passion for it, then most likely you are going to be successful in this business.
2)Financial Security
Financial security is very important when it comes to trading, before coming into this uncertain profession you need to make a list like what are your regular monthly expenses are, start from your monthly household expenses to your monthly EMIs, to your kid’s school fees.
Next is, how much savings you have in your bank account, you should have a savings of at least 2 years of your monthly expenses, suppose your monthly expense is 25k then you should have at least 6 laks in your savings account before entering into full-time trading plus your Trading Capital.
And remember to clear of all your debts like Home Loan, Car Loan etc before taking up Trading as a full time Profession.
You can’t expect to pay your monthly bills from your trading profits from the first month itself, profitable trading will take some time, you need to have a plan B in place, so that you can stay calm and unemotional while trading, and this is possible only you have plan B, like at least two years of savings or you have a partner who is having a stable job and ready to support you.
In my case, I didn’t have support from anyone who will take care of expenses during my trading journey, so I had to work and save 2 years of savings plus Trading Capital and then decided to become a full-time trader.
So, here is your checklist,
Do you have 2 years of savings which can take care of your monthly expenses or have a partner who is working or anyone in the family who is ready to support you?
And have you paid back all your debts or Loans?
[bctt tweet="5 checklist for a new trader."]
3)Patience
For that matter in any business one needs to have patience to achieve success, in trading, patience is the key, one has to have a lot of patience to wait entire day to take that one good trade, in trading lesser the trade better it is, if you are a Day trader doesn’t mean you need to constantly trading and taking 10-15 trades a Day.
You need patience on both side of trading, to wait for a trade to come to your level and then patience to let your profit to run, so you can maximize your profit.
Many people lose money because of their impatient nature, they wait for some time and as frustration kicks in they will take trades at the wrong place and eventually lose their money.
You have to understand that trading less frequently and taking a patient approach will actually make you money faster in the long run.
So ask yourself, whether you are a patient person or an impatient person where you want everything to be quick.
4)Trading Discipline
Trading disciple is nothing but having a strict rule in place, ability to stick to it irrespective of circumstances.
Now, let’s see some of the common rules which are important when it comes to trading,
a) Deciding risk per trade and never deviating from it (say your risk per trade is 1%, that mean you won’t deviate from it at any cost)
b) Respecting you stop loss (once you set your SL you won’t deviate from it like changing it to the next level or trying to average the losing trade)
c) Maintaining a trading journal where you record all your trades like entry, exit, reason for the trade, RR in that trade etc.
d) Trusting your strategy, sticking to it, and not jumping from one strategy to another strategy.
Discipline should be a habit, if you are not a disciplined person in real life then you can’t be disciplined in trading because trading reflects your real behavior.
So, here you need to check, whether you are a disciplined person, are you organized person in real life? like, taking care of fitness, taking care of your health etc.
If Yes, then you will be disciplined Trader.
5)Trading Edge
Finally, after ticking all those boxes above, you need a robust system that can give you that trading edge, Trading edge is nothing but a technique that gives you an advantage over other retail traders, it can be anything like pivot point strategy, price action strategy, vwap strategy, or for that matter any strategy which you feel right for you.
In my case, I use pivot points combined with price action which is giving me that edge to stay profitable month after month.
No system in this world can give you a 100% success rate, trading is a probability game, any trade can fail on any given date, but, if you have a robust system that has an edge and can give you high probability trades, which can keep you profitable over the long run if you play with proper risk management.
So did you find any trading system which has a trading edge that can keep you ahead of others?
If not, then find that trading system, backtest it, master it and stick to it.
CONCLUSION
If you tick all the boxes then congratulations, you have arrived!
If you think you are not able to tick all the boxes then don’t lose heart, even I was not a patient and disciplined in life, but when I released the importance of it in trading, I changed myself from an impatient to patient person, indiscipline to disciplined person, and it changed my trading career for good.
Thanks Abheshek.
Thanks for your valuable experience share with us. could you plz explain about how to back test our strategy in market by “how and where”.
Thanks Sridharan.
Will plan a blog on this subject in future.
Thank you so much sir.. eagerly waiting for that..
Thanks for the guidance.. it was encouraging
Thanks Sriram
True vikram…thanks for your valuable information
Thanks Vignesh
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