TRADING PSYCHOLOGY
Succeeding As A Trader
Take The First Step
So you want to become a trader? Don’t miss the critical first step that can make you the trader you want to be.
Surely after reading a few books and taking a course or two you’ll be ready to be a profitable trader. Unfortunately, most people entering the profession of trading will give up or go broke within the first year. It’s not because they read the wrong book or used the wrong software; rather, it’s that they skipped the first step: Knowing themselves. Professional traders and money managers understand that they have to find and adapt a trading strategy that will work for their own personality before worrying about the details of hardware, software, and indicators.
Discovering yourself
The critical step often missing in the process is the step of self-discovery. You must first understand how you think, how you learn, and what you enjoy. Without this knowledge, the process of researching a successful trading strategy is next to meaningless and you will likely suffer a high degree of failure before you even begin. Trading is one of the few careers where you do not need to demonstrate competency in it. Doctors, lawyers, electricians, and pilots, for example, all have to do so. With trading, however, you’ll be going up against someone with more experience and more knowledge than you have, and that’s how you gain competence.
So let’s start with the first step, an understanding of yourself.
The rush for answers
Traders who look at different portfolio management techniques can quickly become convinced that active technical analysis is the best practice for their portfolio.
FIGURE 1: PRIMARY STRATEGY TYPES. Here you see the various strategy types based on your level of self-discipline.