If I could send a message back in time to advise my younger self as a beginner, this is what I would write. Hope it helps some of you.
Give it at least 5 years of focused, disciplined study. The more focused and disciplined you follow these steps, the faster you will become profitable. Monitor your emotions, stay humble and stay curious to constantly learn more. Remember that even a random coin toss has winning and losing streaks, they are part of the game and make you neither a genius nor an idiot.
Start with a very simple trading plan:
Forget trying to make money, the goal for the first 2 years is to break even, survive and stay in the game long enough to learn the necessary skills to become profitable
Start with any simple entry system such as moving average crosses, support and resistance or even a simple coin toss, doesn’t matter. Do not obsess over entry systems, they are less important to your success than the next 2 steps.
Focus all mental energy on managing the downside: cutting losses, getting out of losing positions with minimal damage. You will waste years, if you underestimate how important this skill is, do not cut corners here. Yes, I know it is boring but it is THE key to profitability and your success in the future.
Set a TP and let the market take care of winning positions, focus on improving loss cutting skills. Yes, I know winning is the fun part, but for right now it is also the least important part until you’ve gotten enough experience.
Improve chart reading and analysis skills to filter out low probability trades and increase win rate.
Once your chart reading skills are good enough to anticipate trend movements and changes, stop using a TP and exit when the trend is about to change to maximize winners.
Start to think about how you want trading to fit in with your personality and desired lifestyle. Remember that this is a marathon not a sprint. Develop a process that you can trust, focus on the journey and the results will take care of themselves afterwards.
Look for ways to develop a genuine love for your craft. It should get you up and energize you every morning.
After making it this far in your journey, you’re well on your way and it should be clear sailing from here on. You should be making more than enough money to live life on your own terms doing something that you love. Remember to look after your physical, mental & spiritual well-being and take the time to be with your loved ones.
Totally agree. Especially with point 1. I thought for sure I would be one of the people who would have it worked out within a couple years. 5 years later and just about starting to get there. As you said, it’s a marathon not a sprint.
I totally relate to those points. It’s never too late to learn, even for those of us who’ve been around a while. I definitely wish I knew some of these things sooner, but better late than never!
Yes, it’s tough especially when you have a day job and family, means you’re doing it part time without full cognitive potential. While the markets are filled with full time professionals.
If trading is what you really want to do, then hang in there. It will eventually click and the pieces will fall into place. Your job is just to make sure your account survives until it does.
Yes, I’ve been around for a while. It took me 7 years to start to get it.
The interesting thing is that after 7 years, I acquired a lot of knowledge and analytical skills. I just had the wrong mental understanding, I couldn’t take a loss and had unrealistic expectations. It was because I was so focused on looking for ways to win, I didn’t realize that it was my inability to cut losses that was holding me back.
Once I changed my thinking from “how do I win” to “how do I keep my losses to a minimum” then it was like the light bulb finally turned on. Now here’s the good news, once I “got it”, the 7 previous years of knowledge and analytical skills that I developed accelerated the learning curve, it all finally made sense. The insights and improvements went parabolic especially after going full time.
To my younger self: Dedicate five years to disciplined study, focusing on risk management over profit. Break even initially, enhance chart analysis, and align trading with your lifestyle. Cultivate a love for trading, prioritize mental well-being, and enjoy the journey—success will follow with persistence and passion.
Unfortunately I’m very hard headed, stubborn and slow to learn new things. So I needed a lot more details to grasp the whole picture to reach that “aha” moment.
For example, the term risk management is too general and there’s not enough detail for me. My younger self’s understanding of risk management is to place an SL and position size accordingly. My younger self already knew this but it wasn’t nearly enough to turn on the light bulb.
I needed to understand this equation profitable trading = wins > losses, where
the markets determine the size of my wins, i.e. I can’t squeeze more out of a winner than the market is willing to give, so it’s out of my control
I have full control over the size of my losses and the better I get at minimizing my losses, the more profitable I will be. So this is the key skill to learn as a beginner.
It was this understanding that I needed to have beaten into my head before the light bulb moment. Now you know why my posts are so long, I’m a slow geezer that needs a lot of detail.
