November 18, 2012

The Minimum Requirements of Becoming A Trader

The Minimum Requirements of Becoming A Trader

Read this and at least be aware of what waiting for you, or don't and go through hell like most do in this business early on including myself.

For those who are new at trading (a quick reminder for myself) except for those with tonnes of money to be play with, here are the minimum requirements:

  • Only demo-trade for at least three consecutive profitable months in a row. Do not proceed to step 2 until you have completed this one. "How to be great at something, if a mistake has a decent chance to literally kill you?" I know, that trading-simulation is far than perfect for your preparation. However, for those who are new, it is essential. You need to know how to work with your trading platform, how to put open/close your trade, how to put stop-loss, etc.
  • Only demo-trade on daily and weekly time-frames. It won't show as much signals as the lower time-frames are, therefore you won't be tempted to over-trade. You will develop the habit of a patience trader right from the start. Most didn't have this privilege, because all they want is to be rich, quick.
  • Fund your account and continue to only trade daily and/or weekly time-frames until you are consistently building your account for more than three months. On any one trade, don't risk more than 5 percent of your account.
  • Remember this! When you decide to day trade on a smaller time-frames and you don't follow your plan accordingly, you will find yourself in a deep doo-doo. And while you are in it, please, put all the blame on yourself.
  • Stop trading! If your account suffer the loss more than any percentage you've planned before you trade.Go back to demo, and figure out what went wrong. Your live account can always wait. 
  • Go back to live account, only after you have found out what went wrong and fund your account back to its full strength. It doesn't matter if this process takes one month or one year. 
  • Look at the graphic above, remind yourself, you want to be a high quality trader so the market won't have to kick you off.

You will suffer loss, and maybe you will blown one or two of your account. The goal of this is to learn about yourself and the market without doing anything stupid while getting your feet on the ground. The ultimate goal, is to build an account to a size where just a few good trades a month produces a staggering income.

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About ArrowFX

Technically analyze the forex market mainly on USDJPY, EURUSD and GBPUSD by using market rhythm method started by Philip Nel on Forex Factory. The thread started on 2007 and still alive.
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