How to Learn Trading

In the below article we will be explaining about How to Learn Trading
How to trade successfully is most fascinating question
Follow the below steps to Learn about Trading
Open An Trading Account:

You can’t learn Swimming without getting into water
First thing first open an account with very small capital
Place Your First Trade:
Just buy small quantity of any stock and watch what happens in the price and your thought process on buying the same
Now you will be end with following questions
Why should I Buy a Stock ?
When should I buy Stock?
When/Why should I sell the stock?
The above questions will be answered by Technical analysis or Fundamental analysis

Most of new comers will not know whether they should be a trader or investor to answer this question
Study the methods of great traders and Investors throughout the history and understand who inspires you the most

If investors like Warren Buffet, Philip Fisher, Benjamin Graham, Peter Lynch Inspires you need to select Fundamental analysis and investing as your method

If traders like Jesse Livermore, George Soros, Jim Rogers Inspires you need to select Technical analysis and Trading as your method

If your Personality and natural Tendency will align with investing method and concepts trading may not fit for you

But we should acknowledge the fact that many successful people doing both investing and trading, if you are interested in both it’s well and good

If your Personality and natural Tendency will align with Trading method and concepts you can read further on as we will discuss only about How to Learn trading in this article

Initially focus on learning the method and strategy. Forget about money and Profits
Think about developing a winning strategy
Before kick-start you learning path you should be aware of below stages of trading

Strategy Development:
The Trading strategy or method is nothing but series of buy and sell rules
Example of Buy rules:
Buy when prices closing above 52 week high
Example of Sell rules:
Sell when prices closing below 52 week Low

Once buy and sell rule decided you should decide on Stop loss criteria if trade goes wrong
Stop loss is Risk management tool to avoid capital being wiped out due to single wrong trade
Example of SL:
Exit if I lose X amount in a particular trade
Back Testing:
Once you decide on Buy and Sell Rule you need to move to Back testing Part
Once strategy has been developed you need to back test the strategy either manually or using the back testing software
If your system back tested by back testing software it should be manually cross checked for small population of trades
In the back test report you will simulate your buy and sell rules in the historical data

If you are fine with Back tested result you should move to next step

Live Testing:

In this stage you will test you trading strategy for a couple of months

If you are happy with result you can proceed with Next step that is live trading

Live Trading:

In this you can start trading you trading strategy in live markets

you can read below books for Deep understanding about above topics

Discipline:

Once you started trading with system with positive expectancy the success in trading going to be decided by your trading psychology and Discipline

We have shortlisted below books to learn trading in 60 days

Invest 60 days for reading below books it will give you multi fold benefit in future

Consider it as Investing in yourself you will eventually reap benefits

We have put lot of efforts in shortlisting the book list,it will covers all the segments and make you comfortable trader when finish the course

Trend Following (Updated Edition): Learn to Make Millions in Up or Down Markets

Time line:1-10 days

Technical Analysis of Stock Trends

Its an foundational work on technical analysis and must read for new traders
It will deal with How to improve your trading and investment performance by analyzing stock trends
How to apply the three basic principles of charting, and how to interpret common patterns. When to buy when to sell and how to use stops etc

Time line:10-17days

Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications (New York Institute of Finance)

A Comprehensive Guide To Trading Methods And Applications (New York Institute of Finance) by John J. Murphy is an excellent reference book that attempts to teach traders the complicated relationship between technical analysis and stock markets

Time Line:17-25 days

Trend Following (Updated Edition): Learn to Make Millions in Up or Down Markets

My favorite of the new TA [technical analysis] books is ‘Trend Following’ by Michael Covel. Straightforward, easy to read, this book is rich in details about why trend following is such a successful strategy amongst some of the world’s best-performing hedge funds

Time Line:25-30

Come Into My Trading Room: A Complete Guide to Trading (Wiley Trading)

This book teaches you to manage your money and time, as well as strategy, so that you can enter the markets with confidence and exit with profits. This essential book educates the novice and gives more power to the professional through expert advice

Happy Refresh for 3 days

Time line:34-40 days

Market Wizards: Interviews With Top Traders Updated

A good book to read, nicely written and gives a good insight on how top traders trade. This is a must have book for everyone, especially for swing traders

Time line: 40-46 days

Reminiscences of a Stock Operator

To begin with it looked to me as a personal trading philosophy but by the end it became like a general guideline for traders. How a trader should plan, what should he be aware of and how he should stick to HIS rules of trading. Trading, as I understand is a profession which needs deep understanding of stock market operations along with a general knowledge of economic matters in your surroundings like country

Time Line: 46-52 days

Trading Systems and Methods (Wiley Trading)

For me this book is great for inspiring system development ideas and getting another developers views on how to program the logic for certain trading ideas.this is my cornerstone reference to get the juices flowing and at least get me to the end of the runway with a few possibilities

Time line:52-56 days

Trading in the Zone: Master the Market with Confidence, Discipline, and a Winning Attitude

It has changed my way of think about markets and most importantly about myself as a Trader,It is the best investment I have done for my trading career

Time line:52-60 days

Trading Habits: 39 of the World’s Most Powerful Stock Market Rules

Time tested stock market wisdoms are presented in a easy to understand format
one should keep visiting this book again and again to imbibe these rules in ones trading. Practice it

Common mistakes of traders-Part one

Every trader has to undergo unsuccessful years before he starts making profits on consistent basis.

Every trader goes through stages of trading journey

Below are common mistakes of new traders, I wish someone had told me about this in my initial days

Small steps repeated with consistency every day lead to great achievements

Inconsistency:

Success in trading is achieved not by chance it’s by choice

It is the natural consequence of consistently applying rules of your system

Defining trading process and following religiously over a long time is very essence of success in trading

The new traders will keep changing their trading system and method very frequently without proper analysis is important reason for losses

Every system and trader have drawn down period so don’t change system during drawdown period

 

Continuously watching Quote Screen:

One of the great mistake done by newbie trader is watching the quotes continuously

Tracking the markets by tick by tick data will emotionally drain you

Each small positive or negative move will impact emotionally which will impact your performance

If you already predetermined have SL, Entry & Exit, set alert in system and place the required orders in advance

Avoid continuously watching and sitting in front of quote screen at any cost

 

Lack of Learning from mistakes:

There are only three things you should ever do about a mistake: Admit it, learn from it, and don’t repeat it

Most of traders will never admit their mistakes to save their ego

Most of the successful traders are very humble person, Market humble everybody at some point of time so accept the mistake and Learn from it

Comparison:

The new traders will compare their trades with others

Following famous traders in social media and taking Emotional trades without understanding risk management

Comparing and following other trades will force to slip from plan and discipline

When We Compare and Compete With Others, We Create Fear, Insecurity, Jealousy, Stress and This Depletes Our Energy

Unrealistic goal:

Most of the traders day dream about multiplying their capital within month or years

Please Check the track records of successful traders you will understand that achieving average of 50 % return is very difficult

Hence set realistic goal and strive to achieve that-Peace 🙂

Will Share remaining in part 2

Lessons for Day Trading

 

Keep strict stop loss or a close watch, Take exit immediately If SL hit

Its a normal Tendency to change the stop loss in the middle of trade with the hope of saving a losing trade

Taking Small losses to preserve capital will not broke your trading career but Big losses do

Never ever touch your SL when its placed rather trail it, if trades started to move in profit

Never regret if you miss the Trade opportunity, Focus on Next trade opportunity

In intraday trading we will tend to miss the good trading opportunities but if we started to regret on missed chances we will start to miss few other chances

We should be in better emotional state when trading

Quality of trade matters the most –Never over Trade

Always plan your trades and execute your plan in the live market

Trades will which is strong signal and which once is weak one never take the weak signal

Include Slippage and transaction cost when back testing your system

Transaction cost is very important factor in intra day trading since profit margin will be very less you should know your break even point before taking the trade

Always include Slippages in back testing

Trade with your Own Analysis, Never ever lookout for Tips

We never seen people who made consistent profit with tips,its just short term fix but it will make you poor in the long run

Never have expectation from Market

Never expect market to move in any direction just prepare for any movements

Use Time based Stop loss when required-The longer the duration your trade remains in negative direction, higher possibility of SL hit

Don’t take the trade if risk to reward ratio is not favorable

Always take high risk reward trades-you have better chance of survival 🙂

When think about intra day trading , always trade with market trend

Trading against the market breadth is like swimming against tides,dont waste your energy go with flow

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