As a new trader, expect to lose money your first year. If you cannot afford to experience the reality of this situation, then you are not ready to trade. Depending on the size you trade...and you most likely will trade WAY MORE THAN YOU SHOULD, then you can trade with a few thousand dollars in an account all the way down to as little as $1K and make it last. Most traders max out positions litterally on their first day, lose money, and try to make it back on their second day, and so on.
Two books you should check out of the library (yes, library) or go read for free in a book store are The Disciplined Trader and High Probability Trading.
My answer to your question is very honest and very realistic. Expect to lose money your first year. If you cannot afford this, than you should have another source of income. You can spend your first year trading simply reading and learning, and lose absolutely $0.00 and be ahead of 95% of all the other traders in the world.
Oh yeah..you will overtrade too. It's inevitable. Out of 1000 trade set-ups, 975 look fantastic, and you will take all of them. By the time to other 25 PERFECT TRADES present themselves, you will be so low on your account that you can't afford to take those trades. Point being...the good trades will present themselves in bold....wait for them....The key to trading is taking only those high probability trades, and weeding out all bad ones.
Good luck!
Andy
Very good responses all round folks.
I particularly concur with yours Andy
you should have another source of income. This is something I found - I fiddled around learning for over 3.5 years - with a passion - reading, questioning, trading, tweaking - and so on. Then at the moment I wanted to "Trade for a Living" the truth hit me:
"What if I DO make my monthly salary? I then have to turn around and do it again ... and again ... EVERY month. If I DON'T then my a/c will suffer, and my capital base will suddenly come under pressure - known to be psychologically adverse to sound trading decision-making."
The second thing that struck me in Andy's post was something I have also found:
The key to trading is taking only those high probability trades, and weeding out all bad ones.
Indeed - this is an absolute MUST.
The above suggestions (in all of the posts, including Andy's) are very good advice for a new trader. There is intellectual knowledge, and there is experiential knowledge.
The latter takes at least 3 years to achieve, and that's just how things are.
You would not go to a surgeon who had read 1000 books on surgery, but never actually performed surgery, would you?
That little analogy suggests that there is an apprenticeship to be served, and some mentoring to sit under.
Be patient with yourself - be realistic in your expectations. Understand fear (fear of missing out, fear of losing) and greed (I knew I should have bought more, sold earlier, bought this one...).
Understand discipline ... and gambling. 'Nuff said - self explanatory, and volumes available on the web.
There is always another trade. Overtrading is the nemesis of new traders. If you miss a good trade - just accept that, and note down in your trading journal (you do have one, don't you?) why you missed the set-up etc. These are invaluable learning experiences - not occasions to berate yourself.
I know this is getting long, but I have to mention and agree with the question Damian asked you in his first response to the thread:
May I ask your reasons why you have chosen forex as your chosen market?
Forex is perhaps one of the most difficult of markets for new traders to manage. It has to do with the leverage (gearing) and the time-frames AND the distance stop-loss orders are placed from the current action. There is so much to understand here and it can only be achieved over time. The emotions of fright, fight, flight are primeval, and only a sociopath does not have them.
Only exposure to multitudes of scenarios can teach calmness in the storms of trading action.
Might I suggest that you have a look at ALL instruments - equities, options, futures, commodities, metals, gold, forex, derivatives, indices, and so on over a period of a year or so, before plonking for the one that suites best your personality, risk-profile and time frame.
And DO continue to use your friend John Google to sus out the answers to question. Forums like this are the perfect venue - and do not cost a cent.
If you follow the advice in this thread, your longevity in trading is almost assured, and I hope one day you too will be able to rspond in kind to a newbie. (It's called "Giving something back.")
