rading can be rewarding.
You can make lots of money. Many, many dollars can be saved
You can have tons of fun. by new traders if they take the
You can have something to brag time to learn and practice. There
about to your friends. are so many resources so readily
Unfortunately, trading can also available today that there is no
just as easily lead to financial excuse for not entering the
distress and high blood pressure markets prepared to do battle.
if you don't go about it the Demo accounts can be found for
right way. Here are a five more all major markets. That means you
things you can do as a fledgling can practice your order
trader to get off on the right execution, and you can paper
foot. trade your system to confirm its
viability before putting a single
#1 Have a System! dollar at risk. To do otherwise
is foolish.
You will not be a successful
trader if you do not have a #3 Trade in the Right Time
system. They come in all Frame!
different shapes and styles, but
there are a couple of common You have a life beyond trading.
elements. A system has both entry May be you have a job or go to
and exit determinants. A system school. You have family and
can also be described. If you social commitments. All of these
cannot verbalize your system, things combine to determine the
it's not a system. If you don't timeframe you can use. It does
have rules for both entry and not make sense, for example, to
exit, it is not a system. try day trading when you cannot
not monitor the markets almost
#2 Take the Time to Learn! continuously. In my own trading,
there are times when I can day intraday, while others are better
trade or swing trade (1-3 day for longer-term action. The
position durations), but there process of deciding to begin
are others when I know I won't be trading should include a hard
able to dedicate as much time to look at what market you should
the markets and therefore have to trade based on your account size,
take longer-term positions. You trading time frame, and
must find a trading time frame risk tolerance.
that fits your lifestyle.
#5 Understand the Risks!
#4 Trade the Right
Market(s)! Every market has different risk
factors. In fact, each trade has
What often happens with new its own distinct risk factors.
traders is that they get in to You need to be aware of them. You
trading because of some may have a general awareness that
experience they had which the market may not go the way you
introduced them to the thrill of thought. That is certainly true,
the game. That experience and that is why stop loss orders
probably also got them in to a are advocated. It is how the
certain specific market, like market can go against you,
stocks or foreign exchange. An though, that is important. In the
emotional attachment is major markets, things like
established. Needless to say, economic releases, earnings
this isn't the best way to pick reports, and statements by
the market you should be trading. government officials can
The various markets have influence prices. Some cannot be
different trading profiles. Some avoided, like a natural disaster,
are more volatile than others. but others can be by simply being
Some are good for trading aware of the calendar and taking
measures to guard against an predecessor, "Five New Trader
adverse data release or speech by Pitfalls", you can avoid some of
someone like the Fed Chairman. the bigger potential pitfalls.
That could both save your money
As a new trader, you will make in avoidable losses, and
mistakes. If you take the advice potentially lead to more profits.
of this article and it's
About the Author:
John Forman is author of The Essentials of Trading (http://www.TheEssentialsofTrading.com) and a near 20-year veteran of the markets. For a free e-book on getting started in trading go to http://www.theessentialsoftrading.com/FreeGuide-GSIT.html
Read more articles by:
John Forman
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