Trading For A Living – Daydreaming Or A Real Possibility?
Trading for a living is a dream of many. If you are a part-time trader, you no doubt dream of this every morning you have to get up early and face the endless traffic before getting to the office. You dream of becoming a full-time trader every long hour you sit at the office doing work you hate. You dream of it every time you have to look at your boss’s angry face.
There are a few things you will need before you can make this a reality. Without these trading full-time will always remain nothing but a distant dream.
The first prerequisite for a full-time trader is that you have to realize something: you are not actually trading against other traders, or against the market. You are trading against yourself. If you are unable to overcome your inherent weaknesses as a trader, you will never be able to trade successfully over a long period of time.
What exactly does that mean? It means that you can study all the rules, you can intellectually know the right thing to do in every possible set of circumstances. But if you have a tendency to hang on to losing trades in the hope that they will turn around, you will lose money time and again.
Similarly: if you don’t train yourself to be disciplined and stay with a winning trade longer, if you sell a trade that “goes into the money” immediately it shows a small profit, you will never make serious money trading. To the contrary – hanging on to losing trades and selling winning trades early will cause you to have numerous large losses and a few small wins – not a recipe for making money in trading!
You second important step will be to decide what type of trader you want to be. A day trader, a swing trader or a longer term trader. Day-trading is extremely alluring. You can start with little money, and you can sometimes make a lot of profit in one day. Statistically it is however much more difficult to predict the market movement for a share or a currency during the next 8 hours than to predict it for the next year.
You will need to decide whether you are going to trade in shares, in commodities or in currencies. Each one of these requires a special set of skills and tools. Share trading will require that you study the financial statements of the companies involved and the underlying market conditions for those companies. With commodity trading you have to get familiar with the market in that type of commodity. The same goes for currency trading.
You will also need a proper set of tools. If you are going to try your hand at day trading, you need to to get charting software that can visually display all the technical indicators which day traders use. You will have to choose two or three technical indicators and stick to them to make trading decisions – don’t jump around using one today and another one tomorrow!
You also need to sign up with a service that can provide you with the latest market prices for the instruments you have decided to trade in. You get free services that supply delayed prices – that is fine if you do swing trading, but if you are doing day trading you absolutely need live prices.
Trading for a living is a noble dream. To make it more than a dream, you need to be able to control your own trading weaknesses and you need the proper tools. You also need a lot of determination and just a little bit of luck…
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