{"id":2460,"date":"2010-07-15T05:00:09","date_gmt":"2010-07-15T09:00:09","guid":{"rendered":"http:\/\/club.ino.com:80\/trading\/?p=2460"},"modified":"2010-07-14T14:52:14","modified_gmt":"2010-07-14T18:52:14","slug":"10-steps-to-becoming-a-trader","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2010\/07\/10-steps-to-becoming-a-trader\/","title":{"rendered":"10 Steps to Becoming a Trader"},"content":{"rendered":"

\"\"Today's guest is Mark Hodge of Rockwell Trading. The very basics of trading are often overlooked by new traders and I think we all can agree that you need a solid foundation to prosper in today's markets. Mark decided to write a post on what, in his experience, makes a successful trader. Be sure to comment and feel free to share your success (and horror) stories of becoming a trader. Also, don't forget to visit Mark at Rockwell Trading<\/a>.<\/p>\n

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With the way the markets have been behaving these days, it\u2019s no surprise that more and more people are interested in trading. If you\u2019re new to trading, you\u2019re probably attracted to the potential to make money, but you\u2019ve heard horror stories about traders that have lost money in the markets as well. If you\u2019ve been trading for awhile, you probably have a horror story or two of your own. These stories and experiences are important to share, but it\u2019s unfortunate when many of these horror stories could have been avoided by understanding what it takes to become a trader, and by having direction early on.<\/p>\n

The following \u201c10 Steps to Becoming a Trader\u201d provide a structured and systematic approach to becoming the trader you want to be. By following these \u201c10 steps\u201d you will be in the best position possible to achieve your goals as a trader:<\/p>\n

Step 1 \u2013 Determine the type of trader that you want to be.<\/strong><\/p>\n

Sounds simple enough, but if you don\u2019t address this key step it will be difficult to progress as a trader. What markets and time-frame will you trade? You\u2019ll discover that your situation and goals will have a direct impact on the type of trader you decide to be. So ask yourself, what type of trader will you be?<\/p>\n

Step 2 \u2013 Decide on a trading strategy.<\/strong><\/p>\n

By understanding the type of trader that you want to be (Step 1), you can narrow down your search and education to learn strategies that are appropriate for you.\u00a0 Don\u2019t worry about learning strategies for markets or time-frames that you won\u2019t be trading.<\/p>\n

Step 3 \u2013 Get a charting package and trading platform.<\/strong><\/p>\n

Your charting and trading platforms should be tools, not barriers. Don\u2019t let your charting package and trading platform prevent you from becoming the trader you want to be. Once you know the type of trader you will be and strategies you could possible use, you can then decide on the platforms that suit your needs.<\/p>\n

Step 4 \u2013 Practice your strategy.<\/strong><\/p>\n

Although some trading strategies might be simple by nature, they can be extremely difficult to apply successfully without experiencing wins, losses, and draw-downs first hand. With practice you will be able to create personal experiences trading a strategy, which in turn will increase your confidence and give you performance numbers that can be evaluated. This practice and confidence is paramount to your eventual success trading a strategy live.<\/p>\n

Step 5 \u2013 Learn chart reading skills.<\/strong><\/p>\n

Markets will trend or move sideways. Unfortunately there isn\u2019t one strategy that is perfect for all market conditions. Understanding when to trade the right type of strategy using chart reading skills will help you improve the performance of the strategies you are trading.<\/p>\n

Step 6 \u2013 Understand money management.<\/strong><\/p>\n

If the concept of money management is new to you, money management is simply a strategy for increasing or decreasing your position size. Even though the actual use of money management comes down the road, make it a point to learn about money management before moving on the next stage.<\/p>\n

Step 7 \u2013 Create a trading plan.<\/strong><\/p>\n

Many traders are confused about the difference between a strategy and a trading plan.\u00a0 A trading plan is a comprehensive guide that goes beyond just basic strategy entry and exit rules. A strategy might tell you where to enter and exit a trade, but your trading plan will outline when to take a trade using a strategy.<\/p>\n

In addition to covering specific guidelines for applying your trading strategies, a trading plan will cover goals, objectives, the markets you will trade, risk management, money management and more.<\/p>\n

Step 8 \u2013 Execute your trading plan on a simulated account.<\/strong><\/p>\n

Even with trading, practice makes perfect. Practice your plan and evaluate your results. If you can\u2019t make money trading your plan on a simulated account, you can\u2019t expect that this will change when you trade your account live. When you do show consistent profits in a simulated account, it\u2019s time to move onto the next stage.<\/p>\n

Step 9 \u2013 Execute your trading plan on a live account.<\/strong><\/p>\n

After you have achieved simulated profits trading your plan, it\u2019s time to trade a live account, but start small! Focus on consistent execution trading the plan you have practiced, and profits should follow.<\/p>\n

Once you are able to achieve consistent profits it\u2019s time to move on to Step 10.<\/p>\n

Step 10 \u2013 Use money management to grow your account.<\/strong><\/p>\n

When you prove that you can take profits out of the market consistently trading your plan, it\u2019s time to increase your position size in order to grow your account. There are different money management strategies that can be used, but traders should always increase their position sizes with profits, and decrease position sizes with losses (known as anti-martingale money management). When using an anti-martingale money management strategy you must earn the right to trade larger positions. With proper money management and consistent trading profits, you will be able to achieve your goals as a trader.<\/p>\n

These 10 steps are a structured and practical approach that will help take you from where you are today, to where you want to be. Don\u2019t\u2019 skip any of these 10 steps! There are no short cuts here, but following this outline and approach will take your trading to the next level.<\/p>\n

Happy Trading!
\nMark Hodge
\nHead Coach, Rockwell Trading<\/p>\n

P.S. For those traders that are interested in day trading, we\u2019ve put together a FREE Day Trading Starter Package<\/a> that we\u2019d like to share with INO traders. This starter package has everything you need, including one of our favorite trading strategies, to get you through the first 4 steps discussed in this article.<\/p>\n","protected":false},"excerpt":{"rendered":"

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