How to survive your first 3 months trading.

26 de set. de 2023

You may not believe this, but it is very difficult to trade the markets. Here is a statistic to back it up:

90% of new traders lose 90% of their stake in the first 90 days.

This is well known to the brokers, so they will do almost anything to get you to sign up, so they can get your money from you. Mostly they don't even send your orders to the market. They know you are very likely to lose, so they often just take the other side of your trade!

I am not going to bang on about this, just take it as fact.

So, how to survive:

1. Use a demo account for 2 months at least, before risking your own money. No. A week or two is not enough, it proves nothing.
   
2. Use a stop loss every time. If you don't have time to place the stop loss order at the same time as you place the order, it will be because you are rushing into a trade without thinking hard enough. You need to be calm and consider each trade properly. The stop loss level defines the quantity you trade, see the next point.
   
3. Only risk 1% of your balance on each trade. Even great traders can lose 10 trades in a row (it's inevitable, statistics mate). If you risk 10% per trade as a new trader, you are NOT going to survive, period. Set your stop-loss order accordingly. In FX, use a lot size calculator if you need to, example here: https://www.tradingview.com/v/905FK3Sr/
4. Keep a JOURNAL. Write down your reasons for each trade, calculate the risk/reward ratio (known as R). Write down the result, win or lose, write down how you felt when you placed the trade. Even write down when you don't take a particular trade.
   

DISCIPLINE AND PATIENCE ARE HARD TO LEARN BUT YOU MUST LEARN THEM

I have written down many other tips that will help, see my profile, but these are the ones that can keep you alive long enough to learn. Don't expect to make money at first, even if your demo time made money.

If 1% sounds too small, then think about this:

If you make 5% a month, your annual rate of return will be almost 80%. How many hedge funds can say that?