Source: Qilehui Author: Marcel Link.

Some inexperienced people just read one or two trading books and hope to show off in the financial market.

Doctors, lawyers, and engineers all must receive years of school education before they can rely on professional knowledge to make a living.

Baseball players must spend some time in the minor leagues before they have the opportunity to join the major league.

Football and basketball players usually have to go through 4 years of college games. Only outstanding college players have the opportunity to become professional players.

Electricians and welders also have to start as apprentices.

These people did not immediately succeed on the day they decided to enter a certain professional field; they all have certain steps or programs to develop towards their goals.

So, will the situation of financial trading be different? After all, they are just beginners trying to enter the most difficult industry. At least I think so, but hoping to succeed immediately. Like surgeons, financial traders also need to invest a lot of time before they can expect success. In fact, any specialized industry is the same, and financial trading also requires appropriate education. Unfortunately, Harvard University does not offer degrees in financial trading. Traders' professional knowledge usually comes from their own experience, and the losses incurred can be regarded as tuition fees. Only through these losses can they gain the experience needed to become successful traders.

I. During the learning period.

The first few years of trading should be regarded as a learning period. During this period, don't expect major profits; on the contrary, traders should focus on capital protection and training themselves. In other words, novice traders should treat themselves as students of the school. At the beginning of trading, because of ignorance, countless mistakes may be made. It is normal to have some losses, and beginners should be mentally prepared for this. Your capital should not be regarded as trading capital, but as learning capital. At the beginning, only a small amount of funds should bear the risk, which is enough for you to learn through actual trading experience.

Many beginners start off with a big bang, hoping to make a big profit, without preparing themselves to become the best traders. Please remember that many successful traders have been bankrupted, at least they have suffered major losses. Even the Ninja Turtle trained by Richard Dennis was inevitably losing money at first, and then only a part of them became the most outstanding traders.

If you have ever read the book "Market Wizards", you should remember that each protagonist seems to have gone bankrupt once or twice. Whether it is stock investment or bond liquidation, it takes a lot of time to learn and absorb the experience, and then slowly realize the tricks. Although most beginners cannot survive this difficult learning process, those who receive training and do not feel discouraged still have a great chance of success.

II. Things traders should learn:

◇ Fill in the trading instructions.
◇ Read the price trend chart.
◇ Technical analysis.
◇ Understand the trading rules of various markets.
◇ How to respond to news.
◇ Develop a trading system.
Test trading system.
Cultivate strict discipline.
Develop a capital management plan.
Manage risks.
Learn how to cut losses.
Learn when to trade and when not to trade.
Develop a trading plan.
Control emotions.

More importantly, traders must restrain themselves from engaging in certain behaviors, such as chasing trends.

Trading with insufficient capital.
Overtrading.
Letting losses accumulate into a disaster.
Irrational persistence in a position.
Taking profits too early.
Accepting excessive risks.
Trading for the sake of excitement.
Being stubborn.

Financial trading is a continuous learning process that cannot be mastered by simply reading a book or attending a seminar. Anyone can read five books about tennis and attend a few classes, but if you want to become a real tennis player, you must practice on the court, and keep practicing. The same applies to financial trading, only through continuous practice can one gradually explore the tricks of the trade. There may be some differences between tennis and financial trading. If you are not good at tennis, you can still achieve the goal of exercise, lose some weight, and keep yourself in shape. Of course, trading losses can also help you lose weight, but only because you can't afford to eat.

Third, paper trading can be helpful, but it cannot reflect actual conditions.

No matter what you read in a book, or how much time you spend on simulated trading, everything changes once you really get into the market. Some mistakes that you never thought of before will start to emerge everywhere!

The best way to avoid making mistakes is to make mistakes. Actual losses can help you understand the meaning of mistakes, and only by avoiding them carefully can you avoid making the same mistakes in similar situations. Actual losses can make you feel the pain that simulated trading cannot experience. Finally, when the pain becomes so unbearable, you will not make the same mistake again. Simulation trading on paper is a necessary learning program, and beginners should engage in reasonable simulation trading before entering the market. Nevertheless, simulation trading cannot reflect real-world conditions.

In simulated trading, you quickly forget about a loss of $1,000, but an actual loss of $1,000 can often make you feel like bleeding, and if it happens on a Friday, the whole weekend may be ruined. This kind of emotional distress usually does not occur in simulated trading, in other words, simulated trading errors do not cause necessary pain.

During the simulation trading process, you will not receive margin call notices and the position matching prices are all the best prices at the time. However, when you actually enter the market, the whole situation changes. Many things that do not happen in simulated trading have now happened: lower risk tolerance, premature profit taking, letting losses accumulate, slippage and commission costs become actual burdens, and so on. Many things cannot be simulated on paper; however, having sufficient simulated trading training is still necessary before actually entering the market. In addition, I also recommend that you read extensively as much as possible. There is always room for improvement. Although I have been in the financial trading circle for 15 years, I am still learning constantly.

4. Trading costs

Learning cost

From what I've read, heard, or seen, traders probably need two years to get through the learning period. During this period of learning and honing their skills, traders must pay tuition fees, just like lawyers, chefs, or doctors who pay an annual tuition fee of $0.025 million.

Since there is no standard school for financial trading, tuition fees are paid to more experienced traders, who are responsible for education or providing lessons. After a suitable learning program, novices will be promoted to professionals, and then begin to recover the tuition fees paid in the past. Overall, beginners should be prepared to pay tuition fees of at least $0.05 million. Through every improper transaction, beginners can learn something and expect not to make the same mistakes again.

Financial trading is undoubtedly one of the most difficult industries to succeed in. It takes accumulated experience to become proficient in relevant techniques. Experience is the best teacher, so don't be discouraged by losses. Instead, consider losses as tuition fees that you must pay.

Initial capital

Unless you are as lucky as Hillary Clinton and can create a profit of 100 times in one year in live cattle futures trading, turning $1,000 into $0.1 million, you may need to raise more initial capital.

In my pragmatic view, if you want a reasonable chance of success during the three-year learning period, you should prepare at least $0.025 million to $0.05 million in capital, and you should also have a thoughtful spouse. Many people think that $5,000 is enough to begin trading because that money is enough to pay margin or stock reserves. They never consider the possibility of losses; instead, they believe they will start off smoothly and make big money from the very beginning, but the reality rarely develops in such a way.

Most beginners experience losses in their first year of trading. About 80% to 90% of people who start trading lose money in their first year. The more initial capital you have, the higher your chances of surviving the first year. If you plan to enter the financial trading industry, but only have a few thousand dollars to invest, I advise you to deposit that money into a bank or invest in mutual funds. With such meager capital, you don't have much margin for error, and a few mistakes may erode all of your capital.

Operating capital

The amount of capital required by financial trading is often beyond the imagination of most people. In addition to safely passing the learning stage, you must also ensure that you always have enough funds for trading. The most frustrating thing is that when a big move occurs, you don't have enough capital to enter the market, leaving you helpless. I have encountered this situation many times. The best money-making opportunities seem to occur when I am forced to stay outside the market.

I remember biting my teeth outside the market many times, facing the big move that I had been waiting for, and sighing because of the lack of operating capital. Now, I am no longer constrained by funds, and there is no need to worry about this issue. I am very sure that when the next big move occurs, I will definitely be in the market. This does not mean that I can relax; before the real money-making opportunity appears, I certainly don't want to have too much loss to make up for. However, at least I don't have to worry about having no money and struggling to raise capital; now, I can focus on trading.

You cannot engage in trade with the mentality of not being able to afford to lose. You must be psychologically prepared that trading may not provide enough fees for living in the first few years. The trading capital you raise must be able to handle a few years, not just the first few trades. Prepare an initial capital of $0.025 million to $0.05 million, and with a conservative attitude, there may be a chance of success, although it may not be immediate, it is likely to keep you going until then. Beginners should not feel discouraged because of losses; it is better to consider the losses as tuition fees, so that every dollar of tuition fees will be beneficial. Personally, although there were times when trading was especially smooth, I lost approximately $0.075 million in the first seven years before slowly getting into a rhythm. I may be a slower learner.

Enjoying life is important.

In addition to trading capital, you must also have enough cash to pay for daily expenses and enjoy life. Therefore, having sufficient funds is a very important condition, so that there will be no distractions during trading, such as: how to find money to pay for rent, food, and movies. As long as you start worrying about these things, trading performance will be immediately affected. It is a terrible idea to turn some of the trading profits into necessary living expenses. Every dollar is needed in a trading account. As soon as you start using the trading account to pay for utilities, the result will be the same as trading losses. I know many people who tried to become professional traders, only to be forced to move back in with their parents or have their spouse bear the responsibility of supporting the household. They live much harder lives than traders with sufficient capital.

You must have the ability to enjoy life; if trading requires you to use vacation or car purchase funds, it means that the trading capital is insufficient. Monetary pressure will significantly affect trading attitudes; therefore, your financial situation will be reflected in trading performance. When I first started trading on the exchange, I borrowed money to buy a membership seat. Therefore, I had to make money to pay off my debt from the beginning. In other words, I was almost set up for failure; I had to work day and night, including weekends, just to barely support myself and couldn't really focus on trading. I couldn't go out with friends on weekends because I had to work. This feeling is frustrating, and trading performance naturally reflects this.

Tools

In addition to preparing sufficient study, trading, and living funds, there is one more thing to pay attention to: A good workman must first sharpen his tools. Like any other professional field, financial traders also need a complete set of tools, including: trend charts, quotes, trading software, real-time news, and a good computer. The cost of these devices may not be cheap, but they are definitely worth it for true traders. You must have money to buy these tools in case of emergency.

When I first started trading on my own account (not on the exchange), I didn't invest in these tools. Later, when I decided to spend $1,000 a month to deal with this set of tools, my trading performance improved significantly. Chapter 3 (The Arena of Numbers) will further discuss some useful tools for certain traders.

Learn from mistakes

Every trader is inevitably subject to losses due to mistakes. The real difference between winners and losers lies in their attitudes toward handling mistakes. Winners will perceive their mistakes and draw lessons from them, while losers will repeat the same mistakes. For example, if you often chase stocks that have risen by $2 within 10 minutes and always end up losing money, if you are smart, you will eventually realize that this is not a high probability strategy.

Continually chasing stocks is like constantly hitting your head against a wall. The reason they do this is that they do not know how to open up a path. For them, winning odds are not important. When such a market occurs, they think it is a good opportunity and do not want to miss out. Whenever you feel you have made a mistake, you should stop and think; what exactly did I do wrong, how to avoid repeating it in the future, why did I make this decision in the first place, and how should I proceed now? When handled properly, similar reviews should also be conducted. Some psychological training will benefit you greatly.

Misjudging market trends may not be a mistake; traders may misjudge the market about half the time. Even if the result is a loss, there is still a difference between being right and wrong, and the key lies in the attitude towards handling the losing position. Once you realize that you have misjudged the market, exit immediately. This is the wisest decision. In contrast, if you cling to a lucky mentality and hope that the market will suddenly change and let you escape, this is a mistake. Even if it is profitable, it may still be a mistake. Regardless of whether you make money or not, chasing prices is a wrong behavior.

Learning from mistakes is part of the financial trading and learning process. It is also why traders with sufficient capital have a greater chance of survival; they have the capital to make mistakes and learn from them. If the capital is too small, the trader may go bankrupt before experiencing the lessons the market tries to convey.

The basics of a trader

Do not reinforce wrong behaviors.

In addition to learning from mistakes, traders also need to understand what they did right and find ways to continue doing so. Unfortunately, even if serious mistakes are made, the actual market developments may still allow us to escape safely.

For example, for a losing position, the trader is unwilling to admit defeat and hopes that the market will reverse and let the position slip away; as a result, he does escape from the position as wished.

Experiences like this may end up causing traders to pay a heavy price in the future; he may no longer want to admit defeat. Suppose a stock position once had a loss of $3, but eventually earned a profit of 5 cents due to a market reversal. This is obviously not a good image.

The balance between risk and return is clearly unbalanced, isn't it? Yes, this transaction still ultimately made a profit, and a few cents of profit is better than a few dollars in losses; however, this is a wrong transaction, and this experience may end up reinforcing the wrong behavior.

If a loss position of $0.8 appears, the trader should cut the loss and not let the loss accumulate to $3; even worse, traders should not be rewarded for acting incorrectly. For these types of erroneous decisions, the best outcome would be a loss of $10, which may be enough to prevent traders from repeating their mistakes. In terms of product structure, the operating income of products worth 10-30 billion yuan was 401/1288/60 million yuan, respectively.

I review my trades every day. For any inappropriate trades, I record the relevant content in a folder that cannot be repeated. Negative behavior can not only fail to provide the correct lessons but also reinforce the incorrect ones. In contrast, I prefer a correct trade that results in a loss rather than a rash trade that results in a profit.

Cutting losses on erroneous trades in a timely manner and then watching the situation continue to deteriorate is a good feeling. I believe this is the right trade; losses are an inevitable part of financial trading, and proper recognition of losses can highlight the outstanding qualities of traders.

The curse of making money.

The start of outstanding traders is often difficult, and they may experience years of losses before they succeed. Any novice who expects to make money from the first day may be surprised by the reality.

Making money from the very beginning is likely to be a curse rather than a blessing. Indeed, this may be attributed to luck, but novices who are completely ignorant of the market believe that they are born experts.

As a result, the trading attitude becomes excessively positive; once luck is reversed, the price he pays for errors may be several times that of ordinary people. Let's take a look at the stock market bull market at the end of 1999 and the beginning of 2000. Almost everyone made money. They are not traders at all; almost every stock rose, they just bought stocks at the right time.

In fact, it doesn't matter what they buy, the result is the same: the stock price rises, even if they chase stocks that have already risen by $10 or $20 per share, there is usually no problem because the stock price is still rising. These people may mistakenly believe that they are the best traders; however, after the market bubble bursts, their operational performance is not ideal, and many people may even go bankrupt.

Making money too quickly also hurt me. When I first entered the New York financial exchange, my goal was to make $200 a day, but in the second week, I set a record of making $1,000 a day.

After this experience, $200 looked meaningless. In fact, it was just luck.

However, this was also one of the worst situations I encountered, because from then on, I tried to make $1,000 a day. What was the result? The trading frequency increased dramatically, and I traded too many contracts. Unfortunately, when I started making mistakes, the damage caused by these mistakes exceeded what I should have suffered.

Excessive trading became a habit; as a beginner, no matter how much trading capital I had, I should only hold single contracts, and protect my capital as much as possible during the learning process. But making money was my biggest concern at the time.

Protecting precious capital.

When I was eager to make a profit from trading, a colleague repeatedly reminded me: protect precious capital. He wrote these words in bold letters on his desk, reminding himself to protect precious capital, he said:

Don't think about making money, just try not to lose money as much as possible. Every dollar is important to you, make sure to keep them in your pocket or take them out of other people's pockets.

As long as you continue to conduct reasonable trades and protect your capital, you can live longer than others and have a greater chance of winning. The key to winning is not to lose too much when losing. If the loss position can be cut, profits will naturally accumulate. This reminds me of the guidance of the college tennis coach: as long as you can hit the ball over the net 4 times, you have an 80% chance of winning the point.

He said: Don't worry about winning points. Let the opponent lose the point, and you just need to keep hitting the ball over the net, and the opponent will help you win the point. Shifting your attention from 'winning' to 'not losing' makes it easier to win; your opponent will help you achieve this. Don't hope that every ball will defeat your opponent, otherwise, you will often hit the ball out of bounds. As long as you hit the ball where your opponent is less likely to handle it, you won't lose money.

Play smaller at the beginning, learn to trade instead of making big money. Be sure to keep the trading volume small and minimize the risk. If the trading target is a stock, the best quantity per transaction is 100 shares; as for commodity futures, no matter how strong your capital is, it is best to enter and exit single contracts at a time, and choose markets with smaller price fluctuations as much as possible.

Try to keep it simple, consider only a few markets during each period, and don't be greedy for too many. Take some time to get familiar with the characteristics of each market, and then gradually get involved in more markets. Do not be tempted to conduct larger or more trades, especially when luck is on your side.

The task for the first year or two is to learn, not to make big money, and be sure to understand this. Trading volume cannot be too large, and try to lower the risk. If the trading target is a stock, the best quantity per transaction is 100 shares; as for commodity futures, no matter how strong your capital is, it is best to enter and exit single contracts at a time, and choose markets with smaller price fluctuations as much as possible.

For most traders, it is probably difficult to do this because emotions handle everything. If you are thinking about an annual income of tens of thousands of yuan, you may not be interested in making $150 per trade. Their vision is too high to learn the most basic things.

Remember, in the first two years, you will inevitably make mistakes, so don't play too big. If you are ready to step into this circle, it is a lifetime thing, not just a year or two.

30 years later, suppose you are still here, why care about your first little profit? However, if you are anxious to succeed, there may be no way to stay here for a year or two.

bankruptcy

I know no one wants to hear it, but even the best traders are difficult to avoid bankruptcy.

I always thought: Yes, but I am the exception. But what about the fact? I have forgotten how many times I have gone bankrupt. Among the people I know, I have seen accounts with trading amounts of $5,000, $25,000, $100,000, and $1 million be liquidated; no one can fully avoid it.

I have gone bankrupt several times and have been forced to stop trading temporarily. If you have seen "The Big Short", you will know that almost every trader is almost bankrupt; this may be one of the characteristics of financial trading and part of the trading process.

If you really want to become a professional trader, bankruptcy is often a valuable learning experience. This is the best time to readjust and see why you failed. The answer is almost certainly overtrading or insufficient capital, but traders must discover the reason themselves.

Other mistakes that cause losses are relatively easy to overcome, but as soon as people start over-trading or taking too much risk, they will soon go bankrupt. Let me give a special warning that this kind of mistake is most likely to occur when luck is at its best. One of the reasons for preparing adequate capital is that even if you have gone bankrupt or have gone bankrupt, you should not feel frustrated and can accept it frankly.

If you know why you went bankrupt and believe that you can correct it, you might as well start again. Conversely, if you are not clear about the situation, it is better to figure out the answer before trying again.

Determined investment

If you are determined to become a professional trader, you should not give up because of bankruptcy. If you have made up your mind, even if you are unfortunately bankrupt, you should also find a way to come back.

Those traders who have safely passed the first few years should have a great chance of success because they have made up their minds and are unwilling to give up. Many people ultimately become losers because they give up after the initial setback; winners must have a determination to win and be prepared for long-term warfare.

It is not just about working seriously; Winners must have a desire to grow and be willing to improve themselves. Determination is not only used to protect capital; you must also look at your mistakes correctly. And willing to correct. Determined investment is a lifelong process.

As long as you continue to engage in trading, you must continue to improve, evaluate your mistakes. It also means that you must continue to read, attend seminars, and make yourself the best trader. It is important to believe that you are the best trader; if there is any doubt, it is impossible to succeed, because you will develop according to your own expectations.

Trading record

If you are determined to become the best trader, you must track your progress. In this regard, keeping a trading journal is one of the best methods. The trading log can help you evaluate operational performance and reflect rational and irrational behavior by highlighting special forms of trading processes.

After a period of analysis, you can see what is useful and what is not, and you can also observe which market you are better at.

In short, trading logs can provide very valuable information. A trading log is just a note of items related to trading. Record all the trades you make, including motivation and final results.

The content does not need to be too detailed, but every trader should record it, even experienced ones. Memory often has selectivity, and the best way to remember the actual situation is to record them all. Because every trade must be recorded, it is indeed a bit annoying, but it will definitely help you, especially those who trade too frequently, because you must record every trade and there is no time to trade.

In addition, this also helps to cultivate the discipline standards that every successful trader must have.

Institutional corporate entities have directors, managers, and trading software, so every transaction will be supervised. The actions of institutional traders will be evaluated, so errors can be corrected at any time.

For example, I receive a printed report every week showing my trading activity for the week. The data in this report is updated every half hour and includes: hold time for profitable and losing positions, trade success rate, average profits and losses per trade, and the specific trading activity of individual stocks.

I found that the performance in the first half hour of each trading day was the worst, so I needed to reduce the trading volume during this time period. Additionally, I needed to pay particular attention to holding losing positions for too long, trading certain stocks that didn't make a profit, and trading too frequently.

To shorten the time for holding losing positions, I started recording the entry time for the positions on a sheet of paper, and if the position still hadn't turned around and was still losing after 45 minutes, I forced myself to exit.

As for strengths, I found that the performance during the afternoon was the best, especially for traditional stocks with lackluster trading, such as Gillette, Coca-Cola, Colgate-Palmolive, etc. These stocks have a significantly higher trading success rate, and even if there are losses, they are relatively mild.

Without this information, it would be difficult to recognize my strengths and I would likely continue trading stocks that I'm not good at.

For traders who cannot be supervised by managers or computer programs, a trading diary is the best way. You can query various information from it, analyze your trading habits, and try to distinguish between strengths and weaknesses. You can also find the market or stocks that you are most adept at trading through the diary.

You may never make money on Fridays, or you may be least adept at trading stocks based on news. If you understand all of this, you can gradually eliminate some of the trouble and only trade the markets or stocks with the highest probability of success.

7. Record items for the trading diary

Buy or sell object

This part is simple: just record the stocks or commodities that you buy or sell. I use + or - to represent buy or sell, respectively. I want to know whether I'm better at long or short, and which direction I trade more frequently. Some people prefer one-way markets, while others' trades may be 90% long, even in downward trends. Understanding personal preferences in this area should be helpful for trading.

Time of transaction

Some people perform particularly well at specific times of the day. Some people's trades are particularly bad at lunchtime; others prefer the morning, but the situation is bad in the last hour. These are things that can be revealed in the trading diary.

Personally, I prefer the afternoon to the morning; the performance in the last half hour before closing is better than the first half hour after opening; the best performance period is between 11 am and 2 pm because I am particularly sensitive to the trend and reversal during this time period.

After understanding these characteristics, I know when to increase or decrease my trading activity. Reviewing the trading diary can help you determine the best time for trading and help you apply this advantage.

Trading motivation

Trading motivation may be one of the most important things that the trading diary records. For each transaction that you make, if you can clearly write down the entry reasons, your trading skills will inevitably improve significantly over time. Feeling bored or buying IBM because it rose by $3 in 20 minutes and I didn't want to miss out on the rest of the increase is not a reasonable trading motivation.

If someone records these reasons in the diary and feels satisfied, there is probably still a long way to go. Behind many trades, there is no obvious motivation; if you have to explain the entry reasons for each transaction, you may be able to avoid some unnecessary trades.

If the entry reason is: I bought IBM because the performance of the Dow Jones Industrial Average was strong, although the index has pulled back slightly, the trend is still stable. Additionally, IBM dropped back 75 cents from its high and is now at the support level of the uptrend line, so it should recover and rise. These are valid entry reasons. Analyzing this area should help you eliminate opportunities with lower success rates and improve the quality of your trading decisions.

After reading this book, you should be able to distinguish between reasonable and unreasonable trades, and I will also be especially clear about whether I am chasing prices or waiting for a pullback.

The intensity of a specific trade.

Use a certain scoring system to indicate the trades you have made, and then analyze the results. Every night, I prepare 10 market planning trade plots for the next day's trades, and according to the development of the plot, I mark them with 1-5 stars according to their suitability for trade opportunities, with 5 stars representing the best opportunities. After a while, I found that the results of the 5-star trades were very good, while the 1-star trades were not so good.

Although the number of 5-star trades is not as high as 1-2 stars, as long as I wait patiently, the performance can be even better. Through this kind of analysis, you can understand which type of trading opportunity is most suitable for you; selecting the trading opportunities you are best at can obviously increase your winning odds.

Profit target.

Setting a profit target can prevent missing out on potential profits. Before establishing a position, you should have some understanding of the possible profit level.

Once you enter the market, setting a profit target will help you manage your position. When the price reaches the predetermined target, you should either take profit or reduce your position.

Don't doubt your previous decision just because the market looks good. Of course, the market looks good, otherwise, you won't reach your profit target; after making a profit, you may become excited.

If so, emotions can cause interference and make it difficult for you to think clearly. After reaching your profit target, it is best to take your profit immediately, reassess the market at that time, and if the trend is consolidating, you may consider entering the market again.

Pause.

Like profit targets, setting stop-loss in advance can also be helpful: limiting losses and letting you know when to cut losses and exit.

Regarding when to cut losses, it is best to decide when your mind is very clear, and not wait until the emotion fluctuates when the actual loss occurs.

How much money to earn or lose.

You should always understand the average profit and loss of your trades in order to determine whether you have properly controlled risk. After recording these data, you may find that the average profit for successful trades is $300, while the average loss for failed trades is as high as $900.

If you see such a situation, it may indicate that you should cut losses more quickly and hold profitable positions slightly longer.

Unless you see the data, you don't even know the problem exists, let alone solve it. Using an Excel spreadsheet, you can easily determine the average profit and loss data for successful and failed trades.

The amount of time a position is held is one of the important factors determining trading performance. The holding time of losing positions should be significantly shorter than that of winning positions.

For a period of time in the past, I always held losing positions and kept expecting the market to turn around instead of facing my mistakes. Now, I only allow losing positions to be held for a maximum of 45 minutes before exiting.

Once a trade has failed, it must be admitted and exited immediately. Many people hold the exact opposite principle: they immediately take profits from profitable positions and drag on losing positions. Let me re-emphasize this again: unless recorded, you don't know how long a position has been held.

How much money to earn or lose.

System Trader

If you adopt a certain trading system, be sure to record the data of your trades that violate the signal, which can help you determine whether you are smarter than the system, or it is best not to try to modify the system temporarily in the future.

Trading Decision

Regarding the trading decisions you make, try to record the results. This can clarify some important issues, such as whether the loss position's recognition and compensation speed are fast enough, whether the holding time for successful trades is too long, whether the exit is too fast, whether the trading rules are really followed, whether the market is waiting to reverse, etc. Continuously recording correct and incorrect trading decisions helps correct bad behavior.

Only by seeing your errors clearly can you correct them easily. For example, if you often see records of exiting profitable positions too early, you will find a solution to this problem. Otherwise, it will be difficult to discover that there are problems at all.

Review Trading Logs

If any industry needs continuous on-the-job training, financial trading may be one of them. Recording trading logs is like taking notes in class, both of which can be helpful if you review them frequently.

Merely recording is not enough. You must read carefully and analyze your strengths and weaknesses. Only when you begin to reflect on your trading performance can you truly enter the threshold of trading.

On the way home every day, I examine the day's trades and want to know what I did wrong in failed trades and what I did right in successful trades. The so-called failure or success does not depend on the amount earned or lost.

Immediate acceptance of losses in losing trades is a successful trade. Not every trade will be smooth, and it is best to accept losses as soon as possible in losing trades. The positions where I made stupid mistakes are often what I value most later.

I beat my chest and stamp my feet because they are often unnecessary behaviors. When the technical indicators have already shown a reversal and I continue to hold my position resulting in the loss of profits, this is obviously a mistake that I do not want to make again.

When reviewing these trades, I think about why I took those wrong actions at the time and how to respond next time. Did the market reveal any information worthy of my attention then?

In addition to reviewing my mistakes, I also pat myself on the back for some shrewd reactions. For example, during lunchtime last Monday, I lost $3,000 (the so-called shrewdness does not refer to this part). I found that every trade that day seemed very unfavorable.

So I closed all my positions, went outside for a walk, and let my mind clear. When I returned to the office, I found that I could judge the market more objectively. In the following trades, I made up $2,500. In the end, I only lost $500 that day, which I consider a very successful day. This experience reminds me that whenever trades are not smooth, it might be a good idea to give up all the positions and take a break.

Professional Traders

Why do most ordinary traders lose while most professional traders win? The success rate of institutional traders is higher than that of ordinary traders, and one reason is because they have abundant capital.

They also make the same mistakes, but do not worry that a certain mistake will wipe out their trading career; they have abundant capital and perfect supervision system, so they can safely survive the mistake. At the beginning, they receive training and someone is always guiding or accompanying their trades. The account funds are very limited, so they won't cause serious harm. When they make mistakes, the damage to the company can't be compared with that of large traders. With the improvement of skills, their purchasing power and freedom also increase. Of course, this is not achieved overnight, and the entire learning process may take several years.

Nine. Training Plan

Many professional traders go through a period of intensive training. When I first started trading stocks, they told me that it is difficult for new traders to profit in the first two years. If you expect to make a profit from the beginning, you are afraid that you will be disappointed. In these two years, traders learn how to trade.

During the first three months, they did not even have the opportunity to enter the market, only to learn various trading opportunities and paper simulations in the classroom. Later, they could only engage in a very small amount of trading and had to strictly abide by certain regulations until they proved their abilities.

Then, there were greater permissions to operate more stocks, and even trade independently. During this time, the company took on very limited risks due to newcomers. Even if a beginner lost US$0.05 million, it did not matter to the company, it was just the training cost of the newcomers.
Similar to large brokerages such as Goldman Sachs or Merrill Lynch, investing large amounts of capital to recruit the best students from top research institutions across the country to participate in the company's financial trading training program.

These companies do not only hire them to engage in trading but to hire them to receive training and slowly develop into traders. Why spend a huge price to recruit these best students? Because they have already proven their ability to learn. According to the brokerage's calculations, these people's ability to be taught should exceed that of the general students in ordinary research institutes.
Readers may begin to wonder: If professional brokers believe that their traders need to undergo years of rigorous training and spend considerable costs to cultivate, why do some completely inexperienced retail investors believe that they can use US$5,000 to open an account and then start making money by trading?

Even floor traders do not rashly buy exchange seats; most of them serve as clerks in the exchange for many years before actually entering the market. Personally, it took me three years to learn everything I could in the exchange before actually engaging in trading. We should be practical about our progress and plans, and prepare sufficient capital as much as possible.

Even if the initial trading is not going well, even if all the capital is lost, do not feel discouraged; instead, consider this experience as a necessary path to success or the tuition fees that the best traders must pay.

X. Some personal thoughts

If you expect to succeed right from the start, you will find that financial trading is a very bumpy road. I suffered from the harm of insufficient capital. I think if I had sufficient capital at the beginning and could concentrate on learning for the first few years instead of trying to make a living immediately, my trading career would be smoother.

When you put all your belongings into trading and have no other income, trading will become very difficult. From the beginning, my financial situation was very difficult, and I expected too much to make a fortune at one stroke. I was too self-confident, although some experienced traders often advised me, I always thought that they were not as good as me.

I often ignored their warnings because I thought they were too rigid and could not possibly make a lot of money. However, they can make stable profits. What about me? I learned from my painful experience.

As mentioned earlier, before I reversed the situation, the accumulated losses were more than US$0.075 million. If I had sufficient capital from the beginning, the situation might be very different, but I did not have a stable income until 7 years later. In the days when I struggled to become a trader, I could only work everywhere, even work on weekends, just to barely make a living.

Most of the money I earned off the exchange was invested in the exchange, and it quickly turned into a pipe dream, but I did not think my trading skills were too bad. The main reason for the loss was due to insufficient capital, which did not allow me to patiently wait for necessary wins. At that time, the trading would often be very handy for a while and then suddenly encounter a turning point, ending up bankrupt within a week.

Next, I had to continuously drive a taxi for 24 hours in a row to raise the necessary funds to pay the margin for the soybean position. If you are too eager to make money, busy finding margin, and trying to make a living by trading, trading will become very difficult.

XI. Becoming the best trader

Assuming you want to become the best trader, it may take some effort, but as long as you are determined to invest, willing to spend time, prepare sufficient capital, you will still succeed. If you are not prepared and do not have sufficient capital, do not expect to make money immediately in the market; success takes time to build.

At the beginning, you must learn from your mistakes, so you need to prepare sufficient capital to get through this period.

For a $5,000 account, the chances of success are probably small. Trading accounts do not necessarily have to be large, but do not have unrealistic expectations. On the way to success, the account may go bankrupt one or two times, and you should be psychologically prepared for this. Bankruptcy is not as bad as it sounds; it can be regarded as a sacrifice for trading.
Beginners must remember that if you do not want to be eliminated, the key is not how to earn more money, but how to lose less. In terms of priority, safeguarding capital should be placed before making money. How to deal with errors is crucial; everyone will make mistakes, especially beginners.

Even if you have done something silly, do not feel discouraged; learn from the setbacks and figure out how not to repeat the same mistakes. Keep a trading journal, review regularly, analyze your strengths and weaknesses. If you find that you make the same mistakes repeatedly, you should carefully consider that you may not be suitable for financial trading.

In short, let me make a final emphasis: don't be impatient in the first two years, take everything slow, especially pay attention to capital protection; even after 5 years, traders may still face significant setbacks occasionally. Taking it slow gives you a chance to go further. Only after paying the tuition fee can you rely on trading to make a living.

Twelve common problems faced by beginners:

1. Ignoring the learning curve.
2. Insufficient initial capital.
3. Lack of operational (flow) capital.
4. Lack of formal training.
5. Lack of educational opportunities.
6. Lack of proper supervision.
7. Expecting to succeed quickly.
8. Expecting to make big money from the beginning.
9. Bankruptcy.

Thirteen main items to improve trading skills and survival chances:

1. Take it slow.
2. In actual operations and mentality, don’t aim too high.
3. Pay the tuition fee for trading.
4. Seize every opportunity to learn from mistakes.
5. Regard experience as the best teacher.
6. Make sure you have enough funds to continue.
7. Protect your precious capital.
8. Before actual trading, engage in simulation exercises.
9. Keep a trading journal.
10. Review your trades regularly.
11. Have determination.
12. Enjoy trading.

Editor/Lambor