In today’s day and age, everything is about performance and being successful in life (our jobs, our marriage, our friendships etc). We have people like Tony Robbins, Robin Sharma, Brendon Burchard and numerous others who are high performance coaches, writing books such as “The 5AM Club”, “High Performance Habits”, “Money Master The Game” to name but a few. All these people have a drive to help the general public understand that there is magic inside each one of us, and it is our duty to go and find it and make it a reality in our own lives. So how do we do that? Human beings are creatures of habit. Between 40% and 95% of the things we do daily, are done habitually. Taking a conservative look, that means that half of our day, every single day, we are on autopilot.
So, what does this mean for trading the financial markets? Successful traders who are consistently profitable long-term are the traders who managed to do something that a lot of others have not yet managed. With all the courses and resources out there, it’s easy to become overwhelmed and unsure where to start. So we’ve simplified it for you; the following will guide you on how to become a successful trader:
- Get educated
- Have a trading plan
- Choose a market and times to trade
- Choose chart package and broker
- Choose a strategy and stick to it
- Find your trading tools
Step 1: Invest in a trading education
As with all things in life, when learning something new it is best to learn from those who know what they are doing. We cannot stress the importance of this enough. The best traders out there all have one thing in common; they invested in a well-rounded education and had coaches helping them along their trading journey. Try immersing yourself in trading knowledge and take the time to learn about the market, strategy and trading terminology.
One key thing to look for when searching for a trading education is to confirm that your trading coach is a certified financial technician and fully qualified member of the Society of Technical Analysts (STA). You aren’t going to become a successful trader by simply watching YouTube videos or by getting someone else to trade on your behalf. That’s not to say watching YouTube videos isn’t valuable (we even have a YouTube channel!), but don’t base your entire trading education on YouTube. Obtaining a trading education is a great way to build your confidence and skill level. Taking the time to learn about trading will ensure you have a solid background to get started in trading the markets. We offer a range of courses that are suitable for all trader levels, goals and budgets available, all taught by our trading coaches.
Step 2: Have a trading plan… and stick to it
These successful traders use technical analysis to trade what they see and not what they think is going to happen next. What separates a successful trader from an unsuccessful one is their trading plan. A trading plan is a clear plan of action outlining what is to be done, how it is to be implemented, when and why. This includes your strategy, the tools you’ll use, which markets you’ll trade and your trading goals.
Successful traders stick to the financial instruments they know best and have back tested. They have a percentage risk per trade, and a maximum percentage risk per day before they stop trading. Once a period of trading has passed (day/week/month) they reassess what happened in the trades taken and log it in order to learn from any mistakes made. They know their plan and they stick to it.
One of the key things to include in your trading plan is your risk management strategy. If ever traders were to have a “job” title, it would be “Risk Manager”. This is one of, if not THE MOST important parts of trading, and the part that will keep you in a position to keep having money to trade with. Protecting that trading account is the most important thing as a trader.
Step 3: Choose a market and times to trade
Depending on your desires and your broker, you can trade almost anything! There is a huge list of markets available out there, such as Foreign Exchange (Forex), Stocks/Shares, Commodities, Bonds, Options and more! You want to trade on markets that have good volatility and low commissions. Familiarise yourself with these markets and names.
Below is a list of the most popular markets to trade in:
- Forex: The exchange of one currency for another
- Commodities: A basic good that is used in commerce
- Indices: An index is a statistical measure of the changes in a portfolio of stocks
- Stocks: A holder of a stock (shareholder) has a claim to a part of the corporation’s assets and earnings
- Cryptocurrencies: A digital currency with no physical counterparts, existing solely in electronic form
Depending on what market you choose to trade, you will need to ensure you know the operating times well so that you can fit them around your schedule, whether you work full-time or are a stay at home parent or a day or swing trader. Most markets are only open Monday to Friday at certain times, however depending on your broker and market chosen (e.g. cryptocurrencies) you may be able to trade on weekends too.
The main stock markets around the globe are Tokyo, London, New York & Sydney. There are a few overlaps in the global market time zones – remember as traders we want overlaps because, during these times, moves start, consolidate and end and generally there is great volatility at these times.
Step 4: Choose a chart package and broker
As Technical Analysts, we use our charts to analyse the market and inform our trading decisions. There are many chart packages to choose from, including ProRealTime, MT4, Trade Station, Esignal and Multicharts. There are benefits and limitations to any package, so you need to choose a chart package that suits your needs. Our coaches prefer ProRealTime as it’s simple to use and works perfectly with the ProTrading System.
The broker is where you place your trades after you do your analysis of the charts. Your broker is the middleman between you and the counterpart, and charges a commission for executing trades placed by investors; in other words, your broker will find you a seller. Every broker focuses on different instruments and markets. Not every broker allows you to spread bet, for example. Ensure the broker you choose allows you to trade the market you are interested in. There are hundreds of brokers out there, so the first question is, which is the right broker for you? There is only one important factor to consider; you must ensure your broker is regulated by the Financial Conduct Authority (FCA). Most of our coaches use IG Index because they allow trading in shares, commodities, Forex, and indices. They also allow you to spread bet to take advantage of tax-free profits. Finally, make sure the commission you get charged per trade is not expensive.
Step 5: Choose a strategy
The difference between a novice trader and a technical analyst is that the latter employs market statistics and analyses historical data to inform their trading. They choose a strategy that works for them based on their trading goals and what type of trader they are; day trader or swing trader. Having back tested their strategy, they have 100% clarity on what their edge is in the markets. They know exactly what the intention of their strategy is, and trade it without reservation or hesitation when it presents itself. They know exactly when to trade their strategy, and when to sit on their hands, and not trade it at all.
To impose your will on the market for it to go in a specific direction is futile. There will always be another opportunity, but it’s important to stick to your strategy and not chase an opportunity missed. As our MD Lee Sandford says, “it’s a never-ending buffet!” The next opportunity will present itself; the question is just when and where. Having the patience and the discipline to wait until that next opportunity to present itself is critical to success.
Whilst you must be aware of any news announcements that may affect a trade you are in or about to take, you must also ensure you’re not trading the news. If you’re already in a trade that may be affected by the news announcement, you may want to manage the trade differently than you would under normal circumstances, especially if that trade is on a smaller time frame. If you’re not yet in the trade, you want to trade the reaction to the news, not the news announcement itself. Think ahead of the announcement to what the outcome may be. As humans it’s easy to react to news and want to sway from your strategy. Don’t do this! Have confidence in your strategy and stick to it.
Step 6: Equip yourself with the right tools
Finally, no trader is complete without their trading tools. We are in the business of educating and empowering traders to find financial freedom by learning to trade the markets. One of the best ways to do this is to equip yourself with the right tools for the job. As we’ve said time and again, anyone can trade. All you need is a good internet connection, some capital and something to trade on. Yes we all love seeing multiple screens with charts displayed all over. It looks cool! But trust us when we tell you, it is not essential to set up multiple screens and buy the most expensive computer on the market to get started as a trader.
As a beginner, look for a laptop or desktop computer with the following features:
- No less than 8GB RAM
- I5 Intel processor
- Nvidia (or similar) graphics card
You’ll also want good internet access of a speed no less than 17 mb/s and a backup internet connection, just in case. Computer prices can range from £400 to £1,000, and you have a variety of brands to choose from, although your current computer may be good enough to start with provided it has the above features. If you’re still unsure, feel free to get in touch and we can make some recommendations.
You’ll also want to consider the trading software you’re using. Our proprietary software, the ProTrading System, is used by our coaches and students and is the most valuable tool in their trading. It shows you where the market is going and exactly where to place your entry, stop and profit target. Depending on the strategy you use, you may also wish to use software to work alongside it. Our Pro-Trader Programme offers a full online course that teaches you several strategies and includes the ProTrading System and select strategy software.
These 6 steps are designed to get you started as a trader and ensure you’re on the road to success. Just like these world-famous high performance coaches, we should view our craft as traders with the discipline and respect it deserves. As someone wise once said: “We are what we repeatedly do. Excellence, therefore, is not an act, but a habit.” Remember your strategy, use your tools efficiently and stick to your trading plan, and you’re well on your way to becoming a successful trader.