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(This is Part 3 of the Great Expectations Series [1] for traders. Be sure to read Part 1 [2] and Part 2 [3]!)
Your expectations of success are rising now that you’re going about it systematically. You’re aware of your resources. You’ve decided on a timeframe. You’re even keeping tabs on what’s working on your timeframe (as well as what isn’t).
SO, how much longer until you make that first million?
It’s a question every trader has asked himself, and there’s nothing wrong with that. Anyone with a hint of ambition is in a hurry to reach their goals, whether it’s about weight loss or getting a promotion. So why shouldn’t you be in a rush to reach those trading goals? While it’s perfectly normal to be anxious to succeed, remember that shortcuts can easily lead to short-circuits.
Don’t overlook the fact that The Learning Curve [4] hinges on a few key concepts.
As you begin to build your trading plan and discover the best ways to implement your ideas, don’t forget that few traders become overnight successes. A little luck is certainly involved in the case of the overnight success, whether it boils down to a few fortunate trades or just the right market environment. I know for a fact that 1999 produced a lot of traders who were overnight successes, but 2000-2002 was a completely different story!
Keep your head on straight and be sure to consider the general market environment when you start to plan your success. I’m not saying to set your goals low if the market is choppy…. I’m only suggesting that you stay reasonable. Ultimately, you’ll be happier achieving realistic goals than falling short if the bar is set too high. Reaching goals [5] produces momentum, which is what good trading is all about.
Beginning traders should start slowly and learn the rules of the road from actual experience. Early on, trade with real money in your account (not in “demo” mode). Trade in small lots [6] until you are able to see some progress with your results. Only after you reach that point will it be wise to increase your trade size and exposure to risk by trading more aggressively [7]. Pressing matters too early in your career will lead to underperformance anxiety, which only leads to more poor decisions and painful losses [8]. That in turn will lead to an early exit from your trading career. Not good!
Finally, commit to developing your skills in a progressive fashion. Don’t seek to master every imaginable trade right from the beginning. There’ll be plenty of time and many different market conditions for you to add to your repertoire. Start with simple continuation setups and traditional chart patterns [9] before you toy with reversals, retracements, or trying to buy stocks off support. Trading can be as complicated as you want it to be, and the learning curve is best navigated one step at a time. Remember, you’ve got to learn to walk before you can run.
Come back for Part 4, where we’ll examine how a good Trading Strategy can help make those Great Expectations of yours become reality!
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Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com [11]
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