Starting small and making it big: Three key steps in making money short-term trading

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Starting small and making it big Three key steps in making money short-term trading

Starting small and making it big Three key steps in making money short-term trading

Every day there are traders sitting at home, trading the markets, and making money. There are just as many who have lost money in the markets too! But the dream of taking a small trading account and turning it into a fortune are the dreams of many. In this article, we will take a look at some of the differences between those who are successful and those who fail.

Although it’s not a physically demanding role, being a short-term trader can take a little mental power to achieve success if you want to trade for a living. Trading is more than just sitting down and clicking the mouse button, and hoping and praying that things go in your direction. Like most things in life, preparation is key and for short-term traders the task of buying and selling is the action not the process.

Many ‘want to be’ traders don’t understand what it takes to be successful. Certainly the opportunity to make money from the stock market is available to anyone, but just how is it achieved? Quite often I am approached by people wanting to make “easy money” trading the markets. Yet, they fail to put the time and effort into learning the art of trading and understanding how success is achieved. Instead, they simply open an account start buying and selling, only to lose their hard earned money to professionals like myself!

From my experience in teaching and mentoring traders, of learning and developing my skills in this arena over more than 15 years, there are some simple key points to help get you started. Here are 3 of those key steps that will help you become a short-term trader.

1)     Trade Small and trade often

If you are starting with a small trading account, your key to success is survivability. If you put all your capital onto the one trade, you have a 50/50 probability of success. It will either be profitable, or lose. If you lose, then you have to start all over again.

Ideally, professional traders will only expose a very small percentage of their account into the markets at any one time. And when I say small, I mean very small, one percent, possibly two percent at most. That way, if the position completely turns against them, there is very little impact on the value of their overall trading capital.

You will not make your fortune with one single trade. There may be some trades that are big wins, but you will make many, many losses along your journey. So don’t punt on making a fortune in one individual trade. Look at it as a long-term venture that will see many ups and downs.

The more trades you do, the better you will become at the art of trading. So if you can make a plan that in your first year you will focus on the process, development of entry and exit signals, and of learning the art and influences of trading, then you will be in a much better place for becoming a successful trader.

2)     Don’t trade for a living, trade to improve your overall wealth

Those who approach short-term trading because they are financially desperate, typically fail. If you need to make money or risk not being able to pay your bills, then you will start making decisions based on emotion, and not due to sound trading practices.

Unless you have already made your wealth through other means, there are very few people who make fortunes out of trading alone. Normally, successful traders start with a reasonable amount of trading capital, and learn to make that work for them. Starting with a small capital amount and expecting to live off that while you trade is an exceptional amount of pressure, and something very few people can manage.

If your mindset is to focus on becoming a proficient trader, then the end result will be making money. Too many traders focus on the dollars and cents, losing sight of the process on how to be successful in trading.

3)     Focus on one field, and be the best at it

You have so many different medians available to trade, that it can be a daunting task choosing what it is you are going to trade for a living. Do you approach the top 200 shares on the Australian stock exchange? What about any of the 20,000 companies listed in the US markets? Commodities, futures contracts, Options, CFD’s, Foreign Exchange, Over the Counter Pink Sheets… the list is almost endless!

You need to know the dynamics of the market that you decide to focus in on, and become an expert in that field. This might mean choosing a few companies that you are familiar with, or commodities or currencies that directly influence your life. Study them and learn everything there is that influences their prices. This will take time, but of course, the more preparation you put into it the better the potential reward.

My expertise is in stock and option strategies on the US markets. I don’t look at tens of thousands of shares, but focus in on the S&P 500 list of shares and the NASDAQ-100. From there I have a process of evaluation that I adopt to select a potential trade opportunity. This is my field of focus.

Trading is an easy process

Trading is an easy process, but takes a lot of hard work to become successful at. Too many beginners give up after a few trades thinking their success is judge off a small test group of transactions. But they fail to understand what they are trading, how the markets work, or the probability of success and how to shift this in your favour.

Here at Halifax Investment Services, we provide recommendations for various trading strategies. These are provided to traders who then focus on the process of implementation and portfolio management. They realize our skills are in analysis and strategy selection, and their skills are in managing their financial well being.

If you would like to know more about short-term trading for a living, or would like to talk to a professional trader, CLICK HERE and register your contact details for us to have someone call you back.

Since 1998, Matthew has been involved in the Financial Services industry providing stock, option and CFD advisory services, trading advice, funds management and education services. Matt is an Authorised Representative of Halifax Investment Services, providing analysis and recommendations for trading Covered Calls in the US markets and using Exchange Traded Funds (ETFs) ...
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