Learning how to trade the financial markets begins as an exciting journey. There is so much to learn, and the possibilities are endless.
You’ll learn about technical analysis, chart patterns, candlesticks, fundamentals, etc. Then you go on to open a demo account and immediately you start trading.
Before you know it, you’ve convinced yourself that you love trading and in particular you love making easy quick money. After all, you are a money-making machine on your demo account, so you think why couldn’t I do this for real and be a trader?
Does this sound at all familiar to you? Perhaps you’ve even played around with a live account, but you haven’t made any money yet (or any serious money, that is.
There are a number of possible reasons for why a trader may fail but from experience, if you don’t have any of the following, you’ll have no chance of making a profit in trading.
- The correct trading psychology – If you want to succeed at trading,(or in any business for that matter), you must take a professional approach to it. After all, trading is just like any other business and requires a plan with rules that have been tested to have a probabilistic edge. If you have this, then you must build the mindset of, ‘I’m doing my job and following my rules’, rather than taking trades randomly without any thought of your trading plan. This will allow you to get consistency in your trading. If you want some free advice on this, you can book a free strategy consultation with one of our traders.
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- Completing a trade journal – it is very important to log all the details of your trades so you can learn from them. I’ve never come across a professional trader that makes consistent income and doesn’t have a trade journal. A trade journal with allow you to measure how well your strategy is doing, also identify weaknesses and strengths as well as measuring how well you are executing strategy.
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- Risk and Money Management Controls –you may have a great strategy, but if you run out of money it won’t be any use to you. Risk and money management controls allow you to stay in the game long enough for your strategy to play out. If you trade too big for your account size, it is very easy to blow your account up on a few bad trades. You must learn to control risk and worry less about how much you are going to make. The best thing to do is to utilise free tools that will help you keep on top of your risk – and keep consistent, like this one:
Get Your Copy of LTI’s Risk Management Calculator
- Being Under-capitalised – a large problem people face is not having enough capital to trade to make a decent return. If you were a superstar trader and could make a consistent return of 10% a month and you only have a £2k account for example, then you would only be making £200 p/m (not taking into account any compounding). Here you see where the problem is. Not many people want to put in the work for such small returns (in terms of money). This is why at LTI, we provide large funded accounts up to $1.2 million (subject to performance).
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The truth is, you have to change the way you think about trading in order to have a chance of making it a big success for yourself and your family. Trading randomly, and without a proper trade plan, will only lead to the inevitable and you will become another ‘loser’ when the statistics are read out.
Below are some links that can help you out: