A SIMPLE THREE STEP PROCESS TO SUCCESSFUL TRADING
Trading the stock market successfully requires two things – Education and Experience. There are many ways to acquire the knowledge and experience and here is a simple three-step process that I find invaluable – Learn, Act and Repeat.
Some people will read one book on how to trade and then think they know enough to start trading but do they? I have a 14-year old son and he wants to start driving a car as soon as he can. He can read every book published on how to drive a car but that does not mean that he can actually do it. He may have acquired the theory but will I give him the keys to my car – No! Just because he reads a book on how to drive a car does not mean he knows how to actually drive. He needs someone with experience to guide him, hands on, to show him how to apply the theory. He also needs to acquire experience as a driver. I have been driving for over 25 years and there can be difficult situations whilst driving but my experience leads me to have the intuition to know what to do and to handle the situation with success.
This is how it works in the stock market. You can read books or take courses but until you actually start to invest with real money you will not gain any experience. You also need someone with experience to guide you, to show you how to apply your knowledge. Some people do not want to pay for courses or training. But the reality is when you start trading in the market, you will always pay for your education, either by paying for a course or by losing your money. At Trillium Trading Academy, we have helped many students gain experience so they can trade successfully.
START WITH YOUR PAPER TRADING ACCOUNT FIRST
The first step is to take a course on how to trade and learn one strategy. Once you feel comfortable with this strategy you practise it on a paper trading or simulated account. This is how pilots learn to fly. Would you board a plane with a student captain? No. You want someone with experience and they get this experience by practising in flight simulators.
The simulator is not enough for trading as it does not give you a real feel while trading. The simulator itself is not enough. Why? Because trading on paper does not give you the same emotional responses that you get when trading for real. E.g. If you start losing money in a simulated account, you do not have fear of that loss. You make different decisions than you would with real money but this is where you must start. Once you are trading and making consistent profits in your paper account you can then trade for real but NOT with your life savings. Start with small amounts of money, small share lots. This will give you a real feel of gains and losses. The majority of your profits will be eaten up by commissions but you must think of this as part of the cost of your education.
Over time, when you are trading and making consistent returns, you can slowly increase the share lots and the amount of money that you are trading with. Get started in the process of getting educated in how to trade the markets – Learn. Open a simulated account – Act. Trade that account until you are consistently profitable – Repeat. Learn, Act and Repeat will give you the experience to trade the stock market successfully.