{"id":18159,"date":"2012-04-01T13:48:52","date_gmt":"2012-04-01T17:48:52","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=18159"},"modified":"2023-05-09T08:01:54","modified_gmt":"2023-05-09T12:01:54","slug":"five-things-i-wish-i-knew-about-trading-when-i-started","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/five-things-i-wish-i-knew-about-trading-when-i-started","title":{"rendered":"Five Things I Wish I Knew About Trading When I Started"},"content":{"rendered":"

Like any challenging pursuit with a steep learning curve, trading requires an incredible amount of determination in order to succeed.<\/strong> If we are successful, there is the temptation to look back to our beginning and to shake our heads at our combination of naivet\u00e9 and the youthful enthusiasm that allowed us to overcome it.\u00a0<\/span>While reminiscing, we can also ask ourselves: what lessons did we learn along the way that we wish we had known earlier?<\/strong><\/p>\n

Without further adieu, here are the top five lessons that a beginner can learn:<\/p>\n

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  1. \u201cA Hard Way To Make An Easy Living\u201d<\/strong>\u2014There is a saying among poker players that it is a hard way to make an easy living. While sitting at a table and playing cards is not physically tasking, the real difficulty lies in the ups and downs of your chip stack; the exhaustion that comes from concentrating intently for hours at a time; the psychological struggle of making a statistically sound bet, only to lose to a card flip that had a minute probability. Trading is quite similar. Viewed from the outside it can seem like traders are just playing a mindless video arcade game. However, that disguises the extraordinary amount of skill and effort required to be profitable, let alone to be one of the greats. Moreover, the mental and psychological strains can be enormous, especially when you are just starting out and trying to get your bearings. Much like poker, you need to be prepared for the arduous route towards success.<\/li>\n
  2. 2. <\/strong>Good Trading Is Anything But Glamorous<\/strong>\u2014While a lot of people are drawn to trading by charismatic figures like Gordon Gekko or the madhouse atmosphere of Liar\u2019s Poker<\/a><\/em>, they are often disappointed by the reality. Good trading requires early starts, long hours, intense concentration, earnest preparation, and taking superb care of one\u2019s body and mind. Late nights, showboating, and extravagant lifestyles have no place in the lives of most successful traders. The people who are initially attracted by the frenetic pace and energy of trading often end up quitting, disappointed by the intense and methodical pace that is required for success.<\/li>\n
  3. Risk Management Is The Key To Making Big Money<\/strong>\u2014A famous Scottish proverb goes, \u201cTake care of pennies and the dollars take care of themselves\u201d<\/a>. This is something that successful traders know and starting traders wish they did. While a lot of beginners take on excessive risk, trying to get rich in a hurry, they are often setting themselves up for failure. The successful trader knows to take small amounts of risk on each individual trade, never putting himself in a position where he can blow up; to seek winners that are bigger than his losers and to have a decent winning rates, knowing that the probabilities will work in his favor; to add to his equity every year, as it can compound significantly over time. While a successful trader will likely not triple his account in a short timeframe, he will always stay in the game and make significantly more over the long haul.<\/li>\n
  4. All Gamblers Die Broke<\/strong>\u2014There is an old adage that all gamblers eventually die broke. By definition, a compulsive gambler is always looking for \u201caction\u201d\u2014to bet, even if the odds are not in his favor. Unable to control his compulsion, he will keep betting and keep losing. Good trading is the polar opposite: disciplined, cautious in its approach to risk, and demonstrating a clear edge. We can rescue ourselves from the gambler\u2019s fate by vowing to \u201cbet\u201d only when the odds are in our favor; by risking small amounts on each trade; by always keeping aside money that we will not put at risk. The results of successful trading are profitability and wealth accumulation, worlds apart from the gambler\u2019s fate.<\/li>\n
  5. Learn From The Greats<\/strong>\u2014Beginners are looking for \u201chot tips\u201d or the next \u201csure thing\u201d. They would be better off learning from the greatest traders. A lot of famous traders, like Bernard Baruch, Jesse Livermore and George Soros, have written books or done interviews that contain important lessons for beginners. Their words may sound cryptic, but they are golden if you\u2019re trying to improve. Some of my favorites include:<\/li>\n<\/ol>\n