Wealth

15 Trading Truths You Need to Know Before Entering the Market

In this article, I want to share 15 trading truths that I believe you will find helpful.

But first, there’s a problem: Trading is hard. Because you have to stare at your screen to place orders, adjust positions, research – in fact, when you are advanced and have a good process, trading requires minimal time and effort.

Trading is difficult because it requires a lifetime commitment to growth. As a trader, you are essentially an entrepreneur, a risk-taker, and a rider of uncertainty, but perhaps most importantly, you are a smart worker and lifelong learner.

It’s part of the job description that must be understood and explained when you enter the field.

Here are other trading truths every trader needs to know.

#1. Trading is not child’s play

Trading is business. This means you have to take it seriously.

If you have no plan, no structure, no rules, and no best practices to run your trading business, you may make money here and there on a trade or two, but you won’t be successful in the long run.

But if you plan and run your trading business the right way, you basically hold the keys to freedom – financial, emotional… you name it.

#2. Loss is part of trading

Another trading fact is that risk is real and should be respected. Your favorite trades will sometimes end up going against you. When this happens, you have to take control to limit your losses. You must never think too much and never give a second chance. If one of your risk management protocols is triggered, you exit and move on to the next trade.

#3. A good attitude will smooth your learning curve

Even if you fail, be grateful.

You might say, “Why should I be grateful for what I’ve lost?”

The reasons are as follows:

1. Failure is a learning opportunity. You’re gaining experience – you’re learning what works and what doesn’t, or you’re learning to be more accepting of losses as part of trading.

2. Anyone can get rich in the market. Really…anyone, regardless of their color, age, nationality, gender and religion…the market keeps giving us all the opportunities.

Of course, there will be losses sometimes, but if you can stay calm and apply your strategy consistently, the market will reward you tenfold.

So, learn to have a good attitude—even when things are bad.

#4. Delayed gratification is the most important thing

One of the “secrets” to success in this field is to be good at saying “no” to yourself.

No, I will not remove the stop loss.

No, I will not be defeated by failure.

No, I don’t want to be right, I want to make money.

Learn to say “no” to yourself, and mean it.

#5. Be a good student of the market

As a trader, you enter an informal school called the “School of Hardship.”

Every day at this school, you have the opportunity to learn many lessons that sometimes hurt you—sometimes very hurtfully.

You may love these lessons or think they are irrelevant and silly, but how you view them and what you get out of them will determine your success or failure.

#6. You can’t control the market

Because there is uncertainty in the market, the trading game is all about strategic maneuvering. That’s why you need a proven trading strategy.

The purpose of this strategy is to:

Stay stable in an uncertain environment

Help you find your own way

Utilize the law of large numbers

But if you abandon it the moment you suffer a loss or series of losses, it’s worthless. Only by sticking to consistency will you get the results you want.

#7. You don’t need a crystal ball

When a trend starts, it can continue for a while. Here’s what you need to know. No sophisticated chart reading skills are required to understand.

You may love it, you may hate it, but it’s what it is.

Understanding basic support and resistance levels is enough, coupled with risk control in case the trend doesn’t materialize or quickly loses momentum.

At the end of the day, you can make your chart analysis as simple or complex as you want, but know that traders who are consistently profitable tend to keep things simple.

#8. Short-term results don’t matter.

American investment guru and billionaire investor Howard Marks: “Returns alone—especially short-term returns—have little impact on the quality of investment decisions.”

#9. Big deals will come when you least expect them.

As mentioned above, anyone who tells you they really know what the future will be like is fooling you first, and themselves second.

Understand this trading truth: A trade is not one trade, it is many trades.

Here’s how you can succeed in this field: stay engaged, stay humble, and do whatever it takes to stay in the game for the long term.

Eventually, you’ll catch one (or several) deals that will change your life. Mark my words: This may be a deal you don’t expect much from.

But at the same time, you have to endure the torture.

#10. Be sure to think less and do more

You have to train yourself to respond in a way that leads to better results. And in the markets, this often means thinking less and trusting (your trading strategy) more.

You can’t predict the future 100% of the time, or anything close to that. But you can’t control the past, either, and trying to do those things—dwelling on a future you can’t control, dwelling on a past that’s long gone—will only take you further away from the only thing you can control: your actions in the present.

#11. Your endurance will bring you success

Participating in a trade or investment could make you rich quickly. But it can also put you out of business faster.

In the market, if you want to do well in the long term, you have to have a strategy, you have to trade faithfully, you have to make small trades instead of big trades, and you have to think long term.

In other words, you have to have staying power. This staying power will turn the numbers in your favor.

#12. Hard work is overrated. Smart work is the way

The market will provide you with great trading opportunities. Make a watch list, determine your price levels, develop a plan of action, and relax.

Furthermore, whether you trade the 24-hour market or not, you need a time structure that you adhere to: you only look for trades within a 2-3 hour time window.

I don’t think it’s very productive to trade around the clock like a lot of people do.

Decision fatigue is very real and can lead to all kinds of trading mistakes. Another trading truth that many people don’t understand.

#13. Your obsession with money is preventing you from making money

Funding is undoubtedly the main motivation for participating in the market. There’s nothing wrong with that. But at the same time, you have to understand that being obsessed with money will only sabotage your performance.

And not just in the trading world. In fact, ask any professional athlete and you’ll get the same answer: For the money, forget the fame, forget the prize money, and focus instead on performing well.

So, size your trades correctly (keep them small) to control strong emotions and play the long game.

#14. Your equity curve is a mirror

Do you see consistent profits for several months, followed by massive losses?

This is a reflection of your own contradictions. Your equity curve reflects your own image.

Now you know what you need to focus on improving…if you can find a way to behave consistently, wealth will eventually take care of itself.

#15. You will forget

Yes, you will forget the truth about these transactions. Try to come back to this article regularly.

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