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FAQ How Difficult is it to Trade?

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SHORT ANSWER

First - the good news
This is that the mechanics of trading are as simple as can be. New traders opening an account with a spread betting firm won’t have any problems at all. Most trading platforms are very well designed, intuitive and simple to use.

Allied to the mechanics of trading are the methodologies that traders employ. These too can be very simple. The ‘KISS’ acronym (Keep It Simple, Stupid!) is one that crops up so often, that it’s a cliché on trading forums like T2W. So, simple to use trading platforms and simple trading methodologies are very much the order of the day.

Now the bad news
The headline question implies something beyond the mere mechanics of trading or developing a trading methodology. The sub-text is: how difficult is it to trade profitably and consistently over the long term? The bottom line is that it’s extremely difficult for most people. The reasons for this, along with how you can avoid being one of the many who struggle, are examined in the Long Answer.
 
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LONG ANSWER

The simple fact of the matter is - that for most wannabe traders – trading profitably and consistently over the long term is probably the hardest thing any of them will ever try to do. Make no mistake; traders who achieve this feat in less than six months without breaking into a sweat are as rare as rocking horse poo! Effectively, this would mean being profitable from day one, as a trader needs a 6 month track record as an absolute bare minimum to make any claim to consistent profitability.

The reason it’s so tough is pretty obvious: if it was easy, everyone would do it! Not many do - and many that try - fail. To make money consistently, you’ll have to be as good as, if not better than, the professional traders working for the big city institutions. Why? Because they already have an ‘edge’ over you. (The term ‘edge’ is explained in the Essentials of First Steps Sticky.) They have state of the art kit, pockets that are much deeper than yours, access to the best and latest information and are surrounded by colleagues with specialist skills and years of experience. Likely as not, these are the people on the other side of your trades. What makes you think that you can compete with them? Look at it this way: if you truly believed you could dispatch Andy Murray in straight sets at Wimbledon or do a lap around Silverstone faster than Lewis Hamilton, then you’d probably become a professional tennis player or F1 racing driver. Beating the top proprietary traders of Canary Wharf and Wall Street is going to be equally tough. The good news is that it can be done, but don’t kid yourself for one minute that it’s going to be easy. Between you and long term, consistent trading success, lies a lot of hard work.

Why is trading so tough?
This begs an obvious question: what makes it so hard? Listed below are some typical issues that tend to hamper the progress of many new traders:

1. Three dirty 4 letter words
Trading requires total commitment and hard work; all of which requires a lot of time. Often, because of job and family commitments, newbies look for short cuts to success. Don’t waste your time – there aren’t any! The really bitter pill to swallow is that time and effort spent trading is time away from your family and friends. Relationships can – and do – suffer, so you’ll need to consider how these will be affected before you start. Be sure to fit your trading around your loved ones – not the other way around. They are way more important than trading and any money you make from doing it – even if you’re successful!

2. Emotional highs and lows
As human beings, we’re very susceptible to our emotions. The markets thrive on fear and greed and, everyday, traders make decisions based on their feelings. Often, they are decisions they later regret. Traders who are unable to separate their emotions from their trading have two options: either to give up or to switch to mechanical systems trading. (For more details on this, please refer to the FAQ: What’s the Difference Between a Discretionary Trading Strategy & a Mechanical Trading System?)

3. Discipline
Trading requires very strict discipline and the ability to follow a well researched trading plan. Creating such a plan is one thing, sticking to it in the ‘heat of battle’ is another matter entirely. Suffice it to say, it’s often far from easy!

4. Head stuff
The little voice in each trader’s head can reap havoc. This can be virtually dormant when paper trading a simulated account but, when real money is on the line, it’s a very different story. It’s a commonly held view that the traders who fail do so not because of a lack of knowledge, ability or experience, but because their mental wiring just isn’t suited to the task of trading. That’s why so much attention is paid to psychology and why T2W has an entire forum dedicated to the subject; ditto with the Articles section of the site.

5. Thinking can be costly
Many of the skills required to succeed as a trader are counter-intuitive. For example, there is an oft’ quoted axiom along the lines of ‘trade what you see and not what you think’. Many traders will sell the market because they think it can’t possibly go any higher after an extended rally. Buying the market in these circumstances is tough because the little internal voice in your head is screaming: “it’s overbought already; it can’t go any higher. The minute you buy it, it will reverse and drop like a lead balloon. You don’t wanna buy it, you wanna sell it – that’s what you wanna do!” So, you go ahead and sell the market and, surprise surprise, it just keeps on going up . . . and up . . . and up! Making rational, evidenced based trading decisions – as opposed to emotional ones backed by the flawed logic hinted at above – is a skill that many traders find hard to master.

6. Reality Vs hype
A common misconception about trading in general, and day trading in particular, is that it’s nonstop adrenaline pumping action. Maybe it is for a few, but the reality for many traders is that it’s pretty boring much of the time. Waiting for the right set up to appear and striking at just the right time often requires the patience of a saint. Literally, you can wait for hours, make an overdue call of nature and return to your trading desk to discover you’ve missed the one and only decent opportunity of the day! This leads to frustration which, in turn, leads to trading emotively. And, almost without exception, that leads to regret.

7. Patience
Hot on the heels of boredom trades and failing to stick to your plan is the ability not to trade. Yes, you read that correctly: the ability not to trade! This is hard for many traders, especially when they spot what looks like a ‘no brainer’ opportunity, but one that isn’t part of their trading plan. They take the trade and, often as not, it’s a loser. Sitting on one’s hands and not trading is a tough gig for many. If you trade from home and you have a partner, sooner or later, you’ll have a conversation in which you try to explain to him or her that doing nothing is not only a part of your job, it’s an essential skill for all (day) traders to master. They will look at you as if you’ve completely lost your marbles. Guaranteed! This is another example of why trading is counter-intuitive and goes against the grain for many.

The list above is by no means comprehensive. Rather, it is a taster of just some of the issues that traders face on a daily basis in their quest to become consistently profitable in the long term. This all sounds somewhat negative and some readers may be left thinking that it’s not only difficult to become a successful trader – it’s next to impossible! However, it’s better for FAQs like this one to prepare you for the worst than it is to gloss over the difficulties and say ‘go for it – it’s a piece of cake -you’ll be fine’. Maybe you’ll be one of the few who achieves your objectives faster and with less effort than you were expecting. This is far preferable than building false hopes which, in time, are dashed. Be in no doubt, there are success stories on the T2W forums of members who make a great living solely through their trading activities. So, it definitely can be done. Not only that, a few of them will even tell you that it’s really not that hard!

The route and time taken by each trader to go from a standing start to consistent profitability varies from one trader to the next. There are few averages, no benchmarks and no definitive set of hurdles that all traders have to jump through. The challenges faced by one trader will seem inconsequential to the next – and vice versa. It’s for these reasons that answers to questions like this FAQ are generalisations at best. However, it’s a virtual certainty that there will be some obstacles along the way and some of them may appear insurmountable. The good news is that appearances can be deceptive and there are nearly always ways around them. In this regard, persistence is a useful attribute. It won’t guarantee success, but it will certainly come in handy.

There are many popular little axioms that traders use to sum up one aspect of trading or another. The one that neatly sums up all the above and the headline question of this FAQ is this: ‘trading is simple, but it isn’t easy’.
 
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USEFUL LINKS

If you find other threads, Articles or sites on your travels around the net that are relevant to this FAQ, please add a link to them in this thread, outlining what it is that you like about them. Thanks!

T2W THREADS
Why trading is so difficult?
Which is more difficult? Day-trading or position trading

T2W ARTICLES
None here? If you find a good one, let us know and we’ll add it!

EXTERNAL LINKS
None here? If you find a good one, let us know and we’ll add it!
 
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It's easy. Just open a position and pray. :D
 
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Recent studies suggest it takes 10,000 hours to become an expert at anything that requires a high level of multiple skills.

The rub with trading, is that if you are not an expert then you will be almost in the percentage of losing traders and that means losing money.
 
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It takes time to be consistent. Only way is to build confidence in your discipline.
 
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Try reading The Trading Athlete Winning the Mental Game of Online Trading (Wiley Trading) by Shane Murphy and Doug Hirschhorn
.... as someone suggested is like football :)
 
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what you put in is what you get out... although some people never let things mature and give up too soon and some unlucky people just havent the mental gears to ever get anywhere.. the majority just give up from an ocean of crap info and losers teaching losers. your chances of success are vastly improved with a mentor thats been in the game for many years.
 
its not that easy thing to do and its also not so difficult...it mostly depends on your experience so as long as you are trading you will gain experience... and also your luck plays a rule in it :)

you should know when to open and close your orders and choose the right times to do that..and before all of this you must pracitce very well before trading in the real world because its too risky...you should read the rules of trading and follow them to be in the safe side as much as you can...start with demo accounts...understand the platform and how to read charts..etc..

and as shadowninja told you "just open an order and pray" :)
 
When you make money its easy
When you lose money its difficult

:)
 
Once you have a trading strategy/plan that works, profitable trading is fairly straightforwards. It is then just a matter of following the plan, trade after trade.

Sitting in a quiet room for hours per day, and maintaining focus and concentration on what is a fairly boring activity, is not that easy. However, it can be done, and so you just have to do it! And this is also largely dependent on the timeframe you're trading. Generally, the smaller the TF, the more screentime.

I am motivated by financial success and what that brings, and so whenever i start to get bored, i just picture all my cash sat in a pile of crisp £5 BOE notes on the floor. I want my pile to get bigger!
 
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its not too difficult but continuous practice with play money does it easy to trade. I tried playing with play money at gnutrade for a year now...and I'm all happy with my trading with real money...

so..i think practice with play money and then get to real money..thats all ..it makes trading easy
 
One of the most difficult aspects of trading for me is combatting the boredom.

The technical side is quite straightforward but chart watching and waiting for things to fall into place can be deathly boring.
 
over-trading Finance Definition

The excessive buying or selling of securities in a discretionary trading account.
The expansion of a company's operations so quickly that it doesn't have enough working capital to pay for its expenses and may face default.
 
The rub with trading, is that if you are not an expert then you will be almost in the percentage of losing traders and that means losing money.
 
It should be easy.. LoL

check out the freshman (Trader mag)
----------------------------------------------

He trades. He helps run an endowment. He's 14.

Most kids his age pass their time playing Wii, posting on Facebook or checking out the latest hilarious cat-on-a-treadmill video on YouTube. Christopher Davis prefers studying 10K's.

Sharing the same the name as (but no relation to) a famous money manager, this 14-year-old Florham Park, New Jersey, *resident might well be on his way to running his own fund. He trades his own account, and has an advisory role helping to steer the endowment at Newark Academy in Livingston, New Jersey, where this fall he'll enter the ninth grade.

This precocious trader got started at age 11, when he bought a handful of shares of his local thrift, Peapack-Gladstone Bank, with money he had saved. Since then, he's up more than 90 percent on his personal principal, and still holds those shares of Peapack. "They have very few non-performing loans and pay a nice dividend," he says of his first investment.

In 2002, Newark received an anonymous gift of $100,000 to its endowment to be managed by students. Sam Goldfischer, the school's business manager, oversees the student-run pool, whose investments are restricted to low-cost Vanguard mutual funds. Davis helps set the asset *allocation. "Christopher is one of the more active members of our Student Endowment Committee," Goldfischer says. "He often shows up to my office to discuss *investment ideas with the Wall Street Journal in his hand."

With Davis's input, the student-run fund was up 4 percent in the first quarter of 2008, following solid returns of 13.7 *percent in 2007. In addition to helping burnish the student-run portion of the school's endowment, Davis sits in on *meetings of the school's formal investment committee (which is run by adults).

"I keep them on their toes," he says. "It's fun showing up at meetings and being introduced alongside members of the class of 1948."

Like the other Christopher Davis, the freshman follows value-investing principles -- but his true inspiration is his father. "I guess what I do has rubbed off on Christopher," says Paul Davis, who manages portfolios for high-net-worth clients at Oppenheimer and Co. in New York. "We often talk about trading ideas at the dinner table."

The younger Davis's best play to date? Buying Nokia in the teens and selling in the 40s. As for the market in general? "I think it's going to be crazy until the election," he says. "But I have a long time horizon. I'm only 14."
 
How difficult is it to trade?

It depends on what you understand about the markets and how profficent you are in using your understanding in terms of the application. That's how difficult it is.
 
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Hi all - Adding a few cents ............

The new chaps must also know that:-

1) A good brokerage MUST and HAS to be painstakingly chosen. My criteria is that if a player is into a certain Spread Trade or Futures / CFDs, then she/ he has to look out for the necessary edge ( say, in terms of for eg. Brokerage A gives a tighter SPREAD than B or A gives a lower commission quote than B ) and possible BETTER Next Day quote ( even better if there is no carry forward trade fee or charge for commodities futures ). - Leading to lower starting costs and overall lower Risks Factor! The history of the brokerage and the Total Holdings of Monies ( including Paid Up Capital ) it has is Very very Important - there are sooo maannyyyy online ones having gone bust, giving the public no clue why they go ............... !!! Some brokerages are just Fronts for Money Launderers who would have no qualms about closing Business once their plot is discovered!

2) Lowest Possible Fees/ Charges Factor - LPF/CF ( the lowest it is achieveable, the better the rating of the brokerage will be ). Brokerage A might be giving a no carry over fee for its Spread Trade/ Bet or Contract! Which is not possible for CFDs, but highly likely for Spread Trading. There are also the concern for stamp duty and tax for CFDs and others like FO ( future options ).

3) Discipline and Money Analysis/ Management - BOTH control GREED, which is a MAJOR SIN! For those of you, who do not play FOREX ( FX for short ), it is good to know what is the brokerage's requirements ( USD or GBP - even other currencies like Rupees or Yuan ). For latest info, USD is up at 1.79 against 1 GBP and that will probably strangthen even further!

4) Using Tools like FA, TA, RA and also the many others of the Whole Kaleidescope of Methodologies! A good Open Source like the Open Office suite ( as Excel is expensive considering the cost ) would prove useful for normal buggers like you and me.

5) Consider the 95 % losers and 5 % even or profit-winners stats! Awful, but true! Nature - is such, a cold and grim world!

6) Balancing your personal costs and your earnings/ profits - again thrift is the Word! Being a money pincher can be a gain for the new chap, what with the rising cost of energy, food and travelling .......... and perhaps Time ( in terms of opportunity costs ).

7) So, One Important Last Point, if you find that you can't handle the Adrenaline Flow and the Stress, then Stop ( not just inputing the STOP LOSS ) ......... really just stop and retrace! A good gambler does not only try NOT to stay after a major win, he also stop if he can't win! Most, spread traders / betters have the uncanny ability to think and act like gamblers! Time to Stop That as well!

8) To sum up, even if you can get through the said 7 points, you must have a Back Up Plan as well! In the good old days of Trunk line accounts trading, the bookmakers and the brokerages are making small profits unlike the modern technological age, whereby the Internet has brought the Online Gambling Dens ( Casino ) and the Brokerages to the House together with the temptation and the ease of looking at the informational data ( which are mesmerising to some, but crap to those who know! )
8.1) Back Up Plan means what do You Do When You can't trade - it's like a way back out of the game if you find it unsuitable!
8.2) Also applies to the Plan that what if the Internet Fails ( a good recent eg. would be the LSE that crippled FTSE index spread trade/ bet for a few hours due to glitches!

So, the IT IS EASY TO TRADE, but ................. it is not for any, but the few 5 %!



S K

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Hi There


Be with GOD, for it is HE who would Hear Ye Out! Be not with GOD, for those of Ye who Hear Him Not!

HariHaraBramKalki ( S K )

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How difficult is it to trade?

It depends on what you understand about the markets and how profficent you are in using your understanding in terms of the application. That's how difficult it is.
 
Trading is essentially easy.

All you need to do is identify repeatable events, patterns etc. and use them to your advantage.

Patience is required in bucket loads and a good measure of self-discipline won't go amiss either.

But, in essence, it is not a very difficult pastime to excel at.

I think a lot of the failure arises because people look for difficulties and problems where none actually exist.

Strip away all the crap, keep it simple and you will see it for what it is.

Quite easy really.
 
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