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Findings from the research.
I share sth what I write for a friend, it sums up what I know and am trying to organize
it somehow. I read a lot of things that I don't like so I suggest a look from another
perspective – how traders develop themselves and build their skills and capital as
result.
I thought that I'll make simple introduction to trading - with the knowledge from
research on traders development that I've been making.
If anything is unclear, ask me. I can write something obscurely because I got sick and
don't think soberly. It's very important for me that the text and content were perfectly
understandable.
Introduction for beginners:
My goal is to show you the way you can quickly get to the level of regular income
when you're just a beginner.
You'll quickly understand what I mean below if you understand that the high level of
emotion makes it difficult to learn. Emotions (especially fear) produce adrenaline rush
and the blood flow from the brain to the muscles. We usually think worse then, but
we are ready to fight.
We think and learn more slowly, so here is my recommendation – the less emotio
over the norm, the better.
I write that for you to understand that working with emotions is one of the key when it
comes to your trading. I'll write about it in separate article.
Now I just want to say that you should know that you'll learn quickly if the level of
emotions will be at your "average" – it means normal or only slightly higher tha
usual - because it mobilizes a bit.
What I write applies to both beginner and more advanced trader when he learns the
new system.
During all my "lessons" there will be one repeating thing from my research on
traders. I give it here in short, it's just the beginning:
At each stage of trader development you'll reach the most in the state of your mental
comfort.
That is why I'll constantly refer to care for it and I'll be pointing at each of
the "lessons" what improves it and what makes it worse, and how the traders are
dealing with it.
Managing the size of the position.
Managing the size of the position – it means how much from your capital yo'll
allocate for one entry.
If you have, for an example, $ 1,000 in your account and you'll use $ 10 for one order
it means that you risked 1%.
If it's $ 20 – you risked 2% and so on
Please note that in the beginning you learn. You want to make profits as quickly as
possible and this is also my goal.
Take into consideration that in the beginning you should (at least for several reasons)
be in good shape mentally, to… learn quickly
If you entered with too large % of your capital to one position, you may have
problems with fear and... greed. These emotions reduces your opportunities to learn,
so follow the golden rule:
- Enter to the market with this kind of % of your capital that profit and loss in a single
order should be neutral for you. If it's $ 1 (one dollar) – so be it
It's generally accepted that in the beginning we apply the principle of 1% per order.
My comment is: yes and no.
Remember that the principle is: emotions close to the optimum.
And this may mean that $ 1 will be too much.
RECOMMENDATION:
If your level of emotions is still high with 1% on single position:
1. Reduce the amount of capital on the position. Reduce by half or even more, to a
level where your emotions are reduced. If this doesn't help – go to step 2
2. Go to the demo and make at least a few dozen orders with your system. That
should build up your self- confidence and trust in the system. You'll understand it
more deeply and emotions (even when they appear) will have less influence on your
judgment.
3. Apply tools for working with emotions - I'll describe them in one of the next articles.
To be continued...
Let me know also about problems that you have – maybe 'll think up sth interesting
to remove them. No question is stupid or strange.