So lately I’ve been more active on StockTwits and a few forums – Something, admittedly, I don’t like to do because of the nonsense and trolls. However, there seem to be traders/people who are new to markets. Just this week I had an associate refer someone to me to help with trading and I think this is as good as time as any to discuss a few things.
First, like everyone else you come to the market to make money, a lot of it. When I asked him what his goals were, what did he consider good money monthly his answer was what I expected. He wanted to go after home run stocks, the big hit. Heres a tip: If anyone tells you you’re going to make a ton of money when you first start or show you beaches/yachts ( think Tim Sykes) the chances are it’s not going to work. – Trading takes a TON of work, probably as much as going to Med school or similar. What ends up happening is traders come in, catch a hot hand then think they have it figured out, only to lose it all a short while later. You’ll go through stages of different strategies/systems books etc. until you finally convince yourself that this is the one that works for you. – Not to be harsh, I am just attempting to lay out realities so you don’t go through this costly learning curve and hopefully get to making money.
So going back to the first question I asked him. How much do you want to make every month/week. This and how much are you starting with are probably the two most important questions you can ask yourself. Why? Because this should dictate which product(s) you should and should not be trading to reach your goal. Again, I come from a traders mindset not an investor – someone who is here to trade to build wealth/income quickly not wait 15 years for a payout.
Second, he asked me what books he should read to start. The answer also depends on question one. If you’re here to trade then read books on technical analysis – Support/resistance/wedges/triangles etc. – The rest you just don’t need. Sure, there are some good market history books ( Reminisces of a Stock Operator, Market Wizards etc.) but those books won’t teach you to make money. If you can learn to trade a wedge or a double top off the start and just stick to that I don’t care what stock or futures product you trade you should be able to make money. Make this easier, not harder.
Last, he asked how long he should expect before he started making money. This was hard to answer. Everyones journey as a trader is different and what works for me may not work for you so the question can’t really be answered. However, I do believe that the fastest way to learn is to trade on simulator for a while and trade like it’s real money. Put real effort into it, not a half assed attempt and be deadly serious about it because that focus will carry over to trading with real money. Putting in the screen time to watching price action (how patterns react to patterns – support/supply levels) is going to give you a feel for the market, something that cannot really be taught, in my opinion. A traders feel for the market is a big deal and that really comes from seeing a certain situation (pattern recognition) play out over and over.
Again, not saying I am right or wrong nor that I am a guru of sorts, just sharing what I know and what’s helped me.