A trader’s journey consists of learning new things all the time and the learning curve is steep and always rising.
But, before you start this journey, there are some things you should be knowing. It took me time to figure out, but when I got there, I just wish I knew all that before itself.
So here are 4 things that you should know too before you start trading.
1. It’s nothing like it’s shown to be
What a bummer! Trading is not as glamorous, luxurious, lucrative, and money making machine as it’s shown to be? Yes, it isn’t, and that’s a very important fact you need to know.
You might read articles, watch videos or movies in which they show that traders are filthy rich, have all the time in the world, and live a very easy life. But, that’s not really the case.
When I started on my trading journey, I didn’t really fall for that narrative completely, but I had it at the back of my mind that through trading, I’ll become rich and all my problems will be solved.
See, trading isn’t a get rich quick scheme, or a goldmine, or a crystal ball that will get you everything that you need. It is just like any other business where you need to toil to make it big.
Yes, once you become good at this skill, stay consistent, and are doing everything right, then your life will change for the better. But you shouldn’t really start your journey with the mindset of becoming rich overnight and living the high life.
If that’s why you’ve come into trading, then take a step back, revaluate your priorities, and then consider if you still want to do it even after you know the truth.
2. Trading isn’t my life but is just a part of it
See, having complete dedication towards something that you like is great, but you need to be realistic about it too.
So it’s very easy to get addicted to trading and you’d end up thinking about it the entire day. But that’s not healthy for you.
You might actually start thinking that trading is your life and everything else should revolve around it only, but you need to remember that it’s just something that you do, and it’s just a part of your life.
I have seen traders getting so engrossed in trading that they start neglecting their personal lives and other things that they have going on in their lives.
This is not only going to severe your relationships but that, in turn, is going to have a snowball effect and will lead to affecting your trading too.
If you look at any of the greatest traders, you’ll see that they draw a line between their professional life and their personal life. They have learned to balance both without having one affect the other.
This is something that not many traders realize until it’s too late. It took me a bit to realize too but when it clicked, I made amends right away.
3. Here to win in the long run
So trading is not something that you’d do with a short term view, it’s something you do with a longer term view, and that’s why patience and persistence are valuable skills that each trader needs to develop.
In the markets, there are mainly two types of traders, those that are trying to get rich overnight, and then those that are in this for the long term to build wealth for themselves.
Now, if we compare the two, we’ll see that the ones that are trying to get rich quickly have higher chances of going bust as compared to those trying to play the long term game.
Say that you are trying to earn a lot through trading quickly. Now, to do this, you will start taking higher risks so that you can earn more, and we all know what happens to those that trade overly risky.
Now on the other hand, if you plan your trading activities for the longer term, you will take the limited risk because you know that profits will come, thanks to probabilities and odds, so all that you’d focus on will be to sustain and keep going.
This is a very valuable mindset that every trader needs to have. But unfortunately, most of them realize this until it’s too late.
If you compare any successful trader with the ones that went bust, you’ll notice this pattern, that the ones that went bust were playing the short term game, while the ones that made it big, had a longer term vision that paid off for them.
4. It’s going to be me against me only
We’re going to trade in markets where there are thousands of other traders punching in orders and trying to capitalize on their biases and the price movements. So, what do you think, we are all just competing against each other? No, we aren’t.
We have this tendency to look at another as our enemy or as our competitor but in trading it’s different. We are our own competitors. I’ll tell you how.
So in trading, it’s not just about how good you are at spotting trading opportunities, executing trades, and managing them, but you also have been in the optimal psychological condition.
There’s this saying that half the battles are won in the head and it just couldn’t be more relatable in trading.
We traders are humans and there will be times when our emotions, our psychology, will interfere with our trading activities and might spoil things for us.
There are many ways in which this can happen and it’s an entire blog post topic on its own.
But know this, if you manage to keep your emotions under control, stay analytical in everything you do, then you are already way ahead in the game.
The sooner you realize the importance of mindset and psychology in trading, the smoother your journey will be.