What will be the role of trading in your life?
In our articles, we discussed earlier the importance of setting goals in trading and highlighted what goals most traders set. The goal not only inspires and motivates, but also determines a strategy – the way you will follow from the very beginning.
Maybe you have already read in previous articles that there are two strategies for achieving trading goals. If you determine exactly your goal now, you’ll be able to choose the most optimal strategy for its achieving.
If you haven’t determined your key goal yet, I recommend doing it right now.
It can be getting an additional source of income from trading when you aren’t interested in full-time trading, but consider this activity as an opportunity to receive extra money, as an interesting hobby.
Alternatively, it can be becoming a professional trader, when trading and financial markets analysis become your basic activity.
Identify your main goal. Define the sum you want to receive and the time you want to spend to reach the goal. Maybe you haven’t studied risk management and money management yet and you can’t determine correctly profit and risk potential that would be acceptable to you, but you’ll be able to do it in the future using your current goal as a benchmark.
Trading is often associated with considerable stress, as well as the need to make informed decisions under increased emotional strain. Therefore, the better you know yourself, your personal strengths and weaknesses, the easier it’ll be for you to act according to the logic, not emotions. So, trading will be easier for you. For that reason, you can often receive information that firemen, professional sportsmen, psychologists become good traders. People of these professions often face enormous stress in their lives. They have to make important decisions quickly or they understand the human behavior psychology better than anybody else and are able to effectively control their emotions.
Whatever goal you have, write it down. Because if you remember why you’ve come to financial markets, you are less likely to start trading emotionally and lose your way.
Trading in the market is associated with lots of psychological mistakes every beginner trader makes. Minimizing these mistakes is one of the key tasks each trader faces.
To minimize the likelihood of making emotional decisions, write down your goal and strategy for achieving it. Think about why you start to explore trading and the role of trading in your life.
Is this an additional source of income? Then, maybe, you should primarily focus on medium-term or long-term trading. Alternatively, is it professional trading? In this case, you can choose any option for trading in the market.
How much time are you willing to spend on trading? If the answer to this question is not more than one hour a day, then you can’t trade short-term or intraday. It makes no sense to take into consideration trading tactics applicable to low timeframes. To do this, you should spend more time on trading.
I recommend adjusting trading process to you, rather than adjusting to it.
How much money are you willing to allocate to achieve this goal? We’ve already examined the sum needed to trade in the financial markets on your own. If you’re going to use not your own, but mainly investment capital in the future then minimum funding will be enough. At start, it can be comparable to several thousand dollars (if we are talking about trading in the futures or option market) or hundreds of dollars (if you want to trade in the Forex currency market).
In any case, you should clearly realize how much time, effort and money you want to spend on studying trading. This is important because you can compare this contribution with the realities we have examined in previous articles. If you just start studying the financial markets, you will be able to understand if the goals you set are realistic or not.
I’d like to note once again that if you plan to use in trading not only your own but also investment capital, then seed money will matter less. In this case, the trading statistics for 6-12 months or more plays a key role since it’ll be your calling card.
When you decide on the time you want to spend on trading and the sum you are ready to use, you’ll directly see what trading style is good for you. Consequently, you will be able to draw balanced conclusions about what you should pay special attention to.
Let’s say, you are ready to spend on trading no more than 1 hour a day and $1000, then you should pay attention to medium-term trading. Short-term or intraday trading requires more free time and long-term trading requires more capital. Thus, it makes no sense to study these trading methods at this point.
You can come to them later after spending some time on medium-term trading and, for example, after you’ve decided you’d like to trade more actively. However, at this point, medium-term trading looks more suitable.
If you want to spend less than 1 hour on trading, then pay attention to long-term trading. If you have 4 hours a day, you can focus on short-term and intraday trading.
There is no need to break yourself and trigger inappropriate psychological pressure. While trading you’ll have plenty of pressure. Choose the trading style that fits you.
Exploring medium-term trading will allow you to better understand long-term trading, and help get ready to quick decision-making when trading short-term or intraday.
Articles by the topic
- Planning in trading. Two strategies for achieving goals.
- Goal setting in trading. What are your goals?
- Trading plan and its role in trading.
- What unites 95% of beginner traders.
- Trading styles. How to choose your style?
- What is trader’s one hour worth? A conscious choice of the trading style.
- The best books from the trader’s library.
- What will be the role of trading in your life?