Become a Successful Trader

April 21, 2011

Before I Started Trading I Wish I Knew…

If you’ve traded for any period longer than a week you’ve probably learned a thing or two about yourself, the markets, and human behavior. This section is devoted to the things you wish you knew BEFORE you started trading, in hopes that other traders can benefit from your stories. I’ll share mine a bit later on!

Knowing what you know now,

What’s one thing you wish you knew before you started trading?

Post your comments below!

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About Tim Racette
Tim Racette is a day trader of 15+ years in the E-mini futures and swing trader of stocks. Mountain biker, lover of the outdoors, and explorer. Tim is an ASU Sun Devil and a Chicagoland Native now living in sunny Scottsdale, AZ.
  1. I wish I had known how important psychology was going to be on the process and my own development. If I had a framework for understanding my emotions after trading (regret, anxiety, frustration, elation, relief) I would have been better able to handle the inevitable draw downs of an inexperienced trader.

    • Nothing can fully prepare you for what it feels like making that first trade. Even buying 1 share of stock and watching it go up $0.50 or down $1.00, there will be some level of emotional impact which has an effect on the actions of inexperienced traders. Every mistake is something that we have control over and can be corrected, it is never the market’s fault. Thanks for your starting off the thread Ross!

  2. I wish I had known that during a period of good trading, draw down some cash before trading bigger positions. I don’t get overly aggressive with a new account until I have returned in chase 2-3 times their investment.

    If you just keep pushing up your equity without taking out some profits there will be a day or week or month when you just mostly lose money. If you have some of their money in a safer place, you will right yourself sooner and not get as depressed by your so called stupid trades.

    • Once you’ve built up your account, removing the profits for the week is very important, IMO. Physically touching the money and then depositing it back into your checking or savings account to invest, buy toys, or invest makes what we’re doing real. The money goes from this abstract # known as our account value to a tangible object that we can tough and buy things with.

      I take it you manage OPM then Allen? That adds a whole other level of human emotions in the mix, your investors! Thanks for the comment.

  3. I wish that I found out earlier that I was ‘the losing trader’ even though I truly ‘believed’ that i was not. Once I accepted this fact and left the ‘delusion’, I was able to identify where the most probable entries against amateur traders. I HOPE that more and more traders think like I used to because it makes my job easier and easier…….


    • I’m pretty sure no one starts out on the right side of the market, even the greatest traders like Paul Tudor Jones, Martin Schwartz, and Jesse Livermore made a lot of the same mistakes. What sets them apart it seems is their ability to trust their setups and methodology and not let the emotional attachment to the money come into play. I think this starts with finding a $ amount to risk per trade that has no affect on you emotionally. Newer traders should spend the time developing their methodology with 1 and 2 lots and earn the right to trade larger once they’ve developed their mindset. We’ve all been there I’m sure, thanks for sharing Keith!

  4. Where do i start lol. Most importantly for me i wish i started with a plan that out lined what the heck i was trying to accomplish, and most importantly money management. Its not till you get a year or so under your belt that you begin to understand all the trading axioms like “keep losses small and let winners run”.Or “preserve capital”. Which seems like common sense but when your getting your feet wet you tend to ignore them. So i say having a plan that outlines what you would do in the case of losing capital and taking losing trade after losing trade.Very important stuff.
    You wouldn’t go into battle or try and build a house with out a plan so why try and put your hard earned money to work with out a plan???

    • Spot on Mike. figuring out how not to lose will teach you how to win, only in that order. It’s the losing trades that teach us, so stating out with a defined risk per trade (I recommend somewhere even less than 1%) is vital. Then having a determined loss threshold for the day (I use two stop outs for a particular market) will allow you to live to trade another day. A key aspect. Thanks Mike.

  5. I wish I had understood better that the market always give you a second chance. It’s not rocket science. It’s about who plays the game longest. He wins.

    • Longevity is surely what makes a trader successful, there’s no denying that Gigi! Treating your capital as you would your kids (or if you don’t have kids, like a freshly waxed exotic sports car). You wouldn’t throw your kids (or your sports car) in front of a freight train, throwing impulse orders out in the market is doing just that. Treat your trading capital with patience and respect and you will be rewarded.

  6. That NO ONE knows which way the market will move. There is no trading system so reliable you can ignore all others.

    That a given brokerage firm’s analyst for each commodity usually is that firm’s biggest trader in that commodity.

    That the quality of a broker by his firm’s management is can he generate commission 2.5 times the amount of the initial deposit into a new trading account.

    That brokerage firm managers have no concern about whether their firm’s client’s make money other than to extend the number of trades which can be made to generate commission as long as possible before the account is closed.

    That “Running the stops” is a contact sport.

    • Haha, I like your comments Roger, especially the last one 🙂 You’re absolutely right, no one can predict market moves. After reading the Black Swan you may even rethink your entire outlook on the markets, I know it had an impact on mine. Trading consistently is very difficult, exploiting the good times and preserving capital during the bad times is the only way to survive in the long term. Newer traders can stop searching for the holy grail of trading systems, it doesn’t exist. As Jesse Livermore says, speculation remains the same, it always has, it always will.

  7. CFTC works with the big grain companies and large fund managers to protect (to a large extent) them from peons (whistle blowers) who have evidence of market manipulation or illegal activity on the part of the big boys… as do all regulatory agencies I have come to know how they function. Think “Bernie Madoff” and the SEC, which was repeatedly told Madoff was doing improper if not illegal transactions and documentations.

    • There are definitely a lot of theories on government manipulation especially in the currency markets. I ask someone to find a country where manipulating the currency resulted in a success, you will find none. A free market with government intervention and manipulation becomes a highly unstable market causing extremes in price movement, exactly the opposite of what they’re trying to achieve.

  8. One thing I wish I knew before I started trading would have been to focus on one thing at a time, no need to rush. As a beginning trader there’s so much out there to learn and it can become very overwhelming. Splitting my focus over too many indicators, methodologies, and markets caused a lot of frustration and I really didn’t accomplish as much as I could, had I focused on one thing at a time.

    Focus on one simple strategy and master that strategy on one particular market and time frame before expanding. It’s best to take it slow and under trade. Your strategy will evolve, but building the core is the first step.

    So to newer trader’s my advice would be to pick one market, one strategy, and one time frame to stick with for at least 1 years time.

  9. Once you learn technical analysis, your trading will make sense and have a direction. You won’t care if the market goes up, down or sideways.

  10. Prepare for a shock. This is the hardest thing you will ever attempt to succeed at. Success in this arena requires excellence. Anything less will render you shark food.

    Success here not only requires mastery of the markets you trade, but self-mastery as well. Think you’re a turd with low self-esteem? You’re toast. Emotional problems? Toast. Undisciplined? Toast. Unorganized? Toast. You’ve heard about fear and greed in the markets…that’s the only thing that moves price, and it’s all emotion. Tip: don’t fight it-harness it.

    The personal progress made in effort to become a successful trader is worth the price of admission.

    Good luck and God bless.

  11. I wish I’d known that it’s never Trader VS Market. It’s Trader VS Trader. Like great athletes. They never compete against another player or team, they just keep their focus regardless of any externals, and try to do better every time they engage in their sport.

    • I meant to write it’s the trader against himself, but even that’s not true.
      It all depends on how much you are willing to allow the Cosmos to give you.

  12. I wish I’d known how Important selection of Brokerage Firm and the Relationship with assigned Broker IS. I have had 3 Brokerage Firms last 2 are Great. Adding too this, it is so important to really know the Platform, before Live Trading…

    • I can relate Clayton. I made a few user errors my first few months trading a new platform. It pays to get a complete handle on your trading platform on SIM before going live. There’s no rush. The markets will always be there.

  13. I wish I had know that success would take years, not just months. It really is like that story of the guy who was mining for gold for years and gave up three feet short of a huge vein of gold. The most difficult thing is not knowing how close or far you are to success. You feel you are getting better, but you just don’t know how good good enough is. It’s only when you start seeing those flecks of gold in the dirt and rocks you are digging through that you start to really believe you are going to be successful.

    And guess what? Success is mostly determined by your attitude. Namely, if you can learn to feel calm, cool and confident while trading, while at the same time being completely disciplined, you can be successful at it.

    So mastering trading is like traveling to a city for the first time without a clear map. You don’t even know what it’s like to get there, until you get there. Only then do you know, because you are learning a whole new way of looking at everything.

  14. I’d like to know who CAN teach me trading instead of trying to learn is mylelf. It’s VERY DIFFICULT to reassign your mind after YEARS of misconceptions and missed ways to REAL SUCCESS and REAL UNDERSTANDING that works in the market.

    • Hi Nicolay, I think the biggest part of trading (as I convey a lot on my blog) is the aspect of grasping the mindset. To do that as traders there is a lot of self exploration and individual thinking that must occur. Soak up as much knowledge as you can from other traders around you, but don’t be afraid to interpret the data and come to your own conclusions. There’s no WRONG way to trade (in a sense).

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