It’s easy to see the appeal of trading. It’s an exciting, fast-paced career that has the potential to make you a lot of money.
While TV shows and movies make it look easy, it’s not actually that simple to become a top trader – otherwise, everyone would be doing it.
Learn more about making a success of investments with these ten steps to becoming a successful trader.
1. Learn the basics
Before you can go anywhere in the world of trading, you need to learn how it all works. Learning the basics of trading will give you the foundation you need to support your career and give you a deeper understanding of how the industry works.
Once you’re comfortable and familiar with trading basics, you can start to look for more advanced information that will help you further develop your skills as a trader.
2. Absorb information
The more information you can get about trading, the better prepared you will be. You can learn a lot about trading from books, webinars and other online resources, while experienced traders could be the best option to give you a first-hand account of the industry.
Find a trading mentor who is willing to share their knowledge with you, and perhaps even let you shadow some of their work to help you get to grips with trading.
3. Try a practice run
Traders are fortunate that they can try out life as a trader before taking any risks.
Online stock simulators are great for helping you test out your skills as an investor and to see if you have what it takes. Using a fake trading platform will teach you the basics, helping you to grow in confidence before you try out the real thing.
4. Make sure you’ve got the capital to get things moving
While anyone can start to trade, if you’re going to make a living from it then you need to get serious about your capital.
Some people have had success by starting to trade with just $1,000, but these are among the lucky few. With only a small amount of capital to play with, you could find yourself falling at the first hurdle because you haven’t got enough funds to see you through the dips.
Make sure you start with a strong amount of capital to protect yourself from failure right at the very beginning.
5. Create a trading plan
Successful traders know how to create a trading plan that details their entry, exit and how to manage money in-between. It might seem like a chore to put a trading plan together, but it’s one way to help you become a more confident trader.
You can make the most of online platforms to help with the backtesting, which allow you to try out different strategies without the actual risk. This is very popular with traders who use algorithmic trading principles, and there are plenty of platforms out there to help you with this.
Backtesting and optimization are key ways to develop your trading skills and should form part of your continued learning for becoming a top trader.
6. Treat it like a job
It’s easy to become complacent with trading, but it’s not something you should approach like a hobby or something you don’t need to take seriously. The best traders are those that approach trading like a job, seeing it for the business that it is.
Like other types of businesses, you’ll make and lose profits, deal with taxes and other elements that will impact your life. Treating trading like a job will make you work harder to succeed and stop you making careless decisions.
7. Learn when to take risks
Taking risks is an important part of trading, but when and how you take those risks can be what separates you from the top traders.
Adopting risk management principles for traders will help you to better assess risks so that you can protect your capital, and doesn’t need to be as difficult as it sounds.
Your earlier trading plans will be crucial for helping you to manage your risks and stop you making costly mistakes.
8. Keep learning
While you might think you know everything there is to know about trading, there is always an opportunity to expand your knowledge.
Current affairs can have a significant impact on the trading world, and staying on top of the latest news can help you stay ahead of the game. There are some great financial news sources to help you stay on top of the market, so make sure you spend time each day reading about the latest developments.
You can continue to develop your skills by attending seminars and talks, investing in formal training and continuing to self-educate.
9. Know when to stop
It can be difficult for traders to realize when to stop trading, which is why you should be prepared to follow the trading plan you’ve set up initially.
If you’re starting to make bigger losses than expected, get out – don’t be tempted to wait it out and see what happens. There are always other opportunities that will come along.
Strong traders keep their emotions in check and think with their heads – don’t get sucked into the common trap of taking misinformed risks.
When other things are happening in your life that are clouding your thinking and judgement, take a break from trading – it will still be there when you’re ready.
10. Enjoy it
Trading offers the potential for you to truly love what you do. While the money might be an incentive, it’s the thrill of the chase that helps people to fall in love with it.
If you find that trading is stressful, keeps you up at night and has made you anxious – it might be time to pursue a different career.
One of the benefits, of course, is that you could retire before you’re 40 as part of a successful trading career – so it could be a case of short-term pain for long-term gain for many traders.
Trading isn’t a career for everyone, but if it’s something you’re interested in pursuing, then it’s worth exploring to find out if you could make a success of it and become a top trader.