When I started getting interested in trading, (how I got interested is another story) a friend of a friend (who was more into investing than trading) advised me to start by reading the financial portion of the newspaper daily as well as trading books before I started this endeavour of trading just to be sure it’s something I truly wanted to pursue. He also did not hide the fact that trading was very difficult which I guess was sort of a blessing. That’s why I decided to read as many trading books (mostly technical analysis) as possible and also this one weekly financial magazine for close to a year before I started to trade. But during that same period I also started reading blogs / spent time online for systems to trade and that’s where I started seeing these courses / training and systems offering huge monthly returns. And so I started to believe that there is really big money to be made in trading. I remember making these rough calculations in my head like doubling my money every x months and taking out something every month (to live it up!) while still growing the account exponentially and so on.
When I eventually started trading, it was with a newsletter that gave weekly stock picks for a monthly fee. I found him in that financial magazine I told you about earlier (he was giving stock tips based on technical analysis there and did the same in his newsletter) which was a reputable magazine and he was a CMT (Chartered Market Technician). My reasoning was simple, I studied on my own for roughly a year and now I got this CMT giving me stock picks as well…I’ve done all the work plus some…what can possibly go wrong? And with all the studying and the newsletter it took me +/- a month to halve my first trading account… and that was trading daily charts!
That was one of the biggest psychological knocks I took trading as what I expected from trading wasn’t reality. Here I had gotten advice from a guy with some experience on how to start and he told me it wasn’t easy. So I decided I will do a whole year of studying, plus I thought I can’t go wrong if I traded using a newsletter from a reputable, qualified guy and I lost money (reality) instead of doubling my account in less than a year (what I expected). A lot of new traders start this way, we look for that side hustle that will make us easy money, we stumble onto trading and think it is a godsend, we start dreaming of that wonderful life we gonna have and then reality sets in. That’s when we start to sort of go into a downward spiral with our trading (that is if we haven’t already given up by this stage). We start looking for new strategies / newsletters, read more books / blogs, different trading instruments (Fx, stocks, futures, options, etc.), we are in denial and so on. But the truth is that the gap between what we initially expect to get from trading and the reality of it is so big that we just can’t fathom what trading actually requires. Next follows a small list of what you can expect from trading.
Reality of trading:
- Making mistakes are inevitable like maybe placing an order wrong that results in large loss or small profit for example (and in both cases beating yourself up).
- Failing is part of the game (failing to stick to your stop losses for example).
- Trading will reveal many things you didn’t know about yourself like being afraid of taking on risk, being impatient, lacking discipline, too much pride / ego and anger issues.
- Returns might not be as consistent as you thought (forget about making a fixed amount a day / week / month).
- Consecutive losses will happen (this can make you doubt yourself, your strategy and and many other things related to trading).
- The learning curve steeper, longer and continuous.
- You will learn psychology play a major role (a lot of what’s discussed in this portion comes down to psychology).
- Markets are unpredictable.
- I’m yet to see a trading strategy with a 100% win rate.
As I said the above list is not extensive but it should be enough to give you some idea of what to expect. What i’m trying to say is that the closer your expectations are to the reality of trading at the beginning of your journey, the smoother your journey will be.
I don’t write this to put you off of trading but because it’s the truth (and of course to help you) and if you go and do proper research / trade long enough, you will most probably find it to be so. The great part is that if you started out like me (unrealistic expectations) after that initial reality shock (which most newbie traders will experience), you still decide to stick with trading (and you stick with it long enough), you will find it to be a very rewarding journey. Money aside, just to see yourself improving, not just in trading but also in terms of lifestyle can make this journey worthwhile….this is not to say that making money should not be the goal but that there are many non financial rewards in trading as well. There are many ways in which trading can and will improve your lifestyle and this will come up in future posts.
Regards,
Trading SOS SOS