The first question I ever get from people thinking about taking up trading is whether it’s actually the right thing for them to do. The answer to this is very simple – yes it is. The more important question is:
What do you want to get out of trading?
As you’re reading this, I’m sure your quick response to this important question will be a slightly sarcastic, “obviously, I want to get money out of trading”. Let’s break this down for a moment though to have a think about what your real motives are. This is the first step and an extremely important one for when you ultimately develop a strategy and approach for trading that works for you, your lifestyle and the skills that you possess.
You see, trading is not ‘one size fits all’ and no single strategy will be the ‘Holy Grail’ that creates profit for every single trader. I strongly believe, and have proven time and time again, that anyone can learn to trade profitably, but only once they find a strategy that works for them and their goals.
Forget about money for a second… What are your underlying motivations?
So let’s have another look at the question and really consider it. What is it that you want to get out of trading? Money isn’t the most important thing in life, its only purpose is to be a facilitator for other aspects of life. Of course, if you don’t have any money then it’s a painful experience, but unless you have a real affiliation with pieces of paper with dead people’s faces on, then money is not your primary motivation. If you have money, what is it that you want to do with it?
This requires a deeper look at what values we hold and what inspires or motivates us. We’re not all the same and we’re all highly complex. Some people are motivated by spending time with their family, while others may be predominantly motivated by the feeling of success and recognition, which drives them to achieving the pinnacle in whatever they undertake. What is it that you value most? Take a minute to think about this and actually write down a list of your values and motivations; it will be cathartic and helpful for you to understand what’s going to drive you to achieving your goals in trading.
What would it cost to live the life you desire?
The next thing I want you to think about is how much money you will need to generate in order to feel satisfied and to be able to do the things you want to do; to be able to achieve the things you have just listed down that are important to you. We all have an amount of money that will make us feel comfortable (to live without worrying about making ends meet) and another amount that will make us feel financially free (to live exactly the way we want to, without restrictions). Really take some time to calculate that amount for yourself and write down the result; you can then keep this in your mind as we move onto the next stages of our development.
Why is it that we can’t just answer that we want to make as much money as possible and leave it at that? Of course making as much money as possible will allow you to do all the things you want, but with trading it’s just not that straight-forward and it will come at a price.
We all know the expression “time is money” and this is especially true with trading. If your primary concern is to be free to spend more time with your family, then your solution is not going to be to spend night and day in front of financial charts to make more money. You need to find out what your key drivers are in life, so you can shape a lifestyle incorporating trading that suits you.
But surely there are certain skills you need too?
One of the most common misconceptions of trading I have heard from my students is that there are certain skills that are necessary to be a good trader. People often state that you need to be a quick decision maker, have a good mathematical or analytical mind and be patient. However, this is not entirely true. Of course, having a good, solid base in these skills will be highly beneficial, but they aren’t essential. Certain skills pair with specific strategies to create a perfect mix. So that makes the answer very easy doesn’t it?
Match your strategy to your skillset. In the same way that a footballer who is good at marking players and tackling, but poor at scoring or crossing, will not choose to play as a striker — you also must not put yourself in a position that plays to your weaknesses rather than your strengths. This is something I will cover in greater detail in an article coming soon about matching your skills to a strategy type, as it is a lengthy subject that involves a great deal of self-analysis.
Successful traders find out how their stars align
Essentially, the crux of what I am saying is that successful and profitable trading comes as a result of the perfect ‘recipe’ for that trader. A successful trader will find how to ‘make their stars align’ by finding the right work/life balance, financial motivation and strategy that matches their skillset. This will mean the strategy is ticking all the boxes for something that works for the trader.
Once these boxes are ticked, it is then up to the trader to learn trading tools that work consistently. This is something I will also cover in a future article, as there are some simple ways of finding the right tools. You might have the perfect recipe, but we need to provide you with the top quality ingredients too.
Anyone can learn to trade profitably; we all have the ability within us, it isn’t an exclusive skill that only a few of us have. The real issues that stop people from achieving trading success are the issues that are never even considered. Take some time this week to consider the questions I have raised, including what it is that you want to get out of trading and we can then work together to make these aims a reality.