My journey as a trader has put me into an environment where I am constantly in contact with many traders, both professional and amateur alike. And looking at it from various types of traders' perspectives, I would say that many people who start out trading go in with the wrong expectations.
When one starts considering trading as a career or as a means to make money, the thought process will almost always start with 2 things; the money and the effort required to make that money.
Seldom do you see people go into trading because it is an INTERESTING job; well, people do, but the concept of it being interesting would be severely diminished if you take away the monetary aspect out of the equation. That's because the "interesting" factor of trying to gauge markets and how they move, is increased by having something on the line, something at risk and something to gain.
Without the potential risk and gain factor, gauging the markets and how they move will be nothing more than doing what an analyst would do, or on a less in depth scale, what a news analyst/pundit would do, EXCEPT you don't get paid.
So, now that we have determined that monetary gain is what drives many people to go into trading, let's look abit deeper into how this can affect how you end up as a trader.
RULE NO 1
-Keep your expectations realistic!!
Many traders start out thinking that trading is easy, and I know that all of you out there who have not dabbled in this on a first hand basis, but have heard about trading, would normally have a vision in your mind of a person sitting in front of a computer, scanning the screen, tapping the occasional key on the keyboard, clicking the mouse button, waiting, and then making thousands, hundreds of thousands, if not millions of $$$$.
I experience this alot with my fellow Malaysians,as trading is not something that is common over here, hence, we do not really have the option of speaking to people who do this for a living and finding out what it is really like.
It is also made worse by the statistical fact that 90% of the would-be-traders out there think that they have what it takes to become the next George Soros, which is not wrong, but realistically thinking that way because you know what it takes to become a good trader, and thinking that way because you have successfully predicted the rise of the Chinese Yuan or the Singapore Dollar based on the fact that you read an article on the Internet - I see a big difference in how these 2 schools of thought will create very different results in terms of creating successful traders.
Compare this; what would it take for you to learn how to become a good butcher? Being able to stand the sight of blood and guts is one thing. But I do not think anyone would deny that it would greatly help if you understand the anatomy of the animal that you butcher. Apart from that, it would be learning how to use knives and cleavers until you become expert at it.
Now this; would the same apply in learning how to become a good surgeon? (i) Stand blood and guts, check. (ii) Understand the anatomy (in this case, human), check. BUT, you would need to understand the anatomy more in-depth as compared to being a butcher. You are cutting to keep a person alive, the butcher is cutting to divide the meat and bones and sell them. (iii) Learn how to use scalpels, saws and pinchers AND various other equipment as technological advancements bring new equipment, as it will greatly improve your success rate of successful surgery.
The main difference is that the surgeon has something to lose, and is aiming for a specific scenario, where the main issue that called for surgery is sorted out, and the patient is alive and better because of it. In the course of surgery, the surgeon also has to make decisions based on his knowledge and experience whether to be aggressive or to play safe, in order to achieve the optimal outcome from a surgery.
I am not knocking a butcher's job, but it is not the same!
Now, imagine learning how to become a surgeon who is so good at what he does and has much experience in terms of decision making and diagnosis while not being affected by emotions, having to perform surgery on his/her own loved one! You would need to have steel hard emotional control to be able to call the right decisions!
Trading profitably and being good at it requires that you first set your expectations right! If that is wrong, everything else that you proceed to learn will be useless...USELESS!! It does not matter what strategies you have, whatever software you are using to help you....USELESS!!
A good trader stands to make as much or even more money than a surgeon, WHAT MAKES YOU THINK YOU CAN BECOME A GOOD TRADER BY SPENDING LESS TIME IN LEARNING AND EXPERIMENTING AND PRACTICING THAN THE AVERAGE PROFESSIONAL TRADER??
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