What Kind of Trader Are You? w/ BrianB
What Does it Mean to be a Trader?
Deciding to become a trader is the beginning of finding out that you don’t know what you don’t know. You find a broker, you stumble your way into a trading platform, you fund an account, and you’re on your way, right? But yet, ‘now what?’ remains. This is one of those moments where, if steered in the right direction, this person could very well be on their way to the best career they’ll ever know; Or, they could find themselves at the beginning of a very long, frustrating, and often expensive road.
So, what does it mean to be a trader? The flashing lights and promise of fortune is enough to draw anyone in, but is that all it takes to be a trader? Like almost everything in life, if you’re good at what you do, you’ll likely succeed. But that guy/girl you saw on the demo made you feel as though anyone could do it. Well, guess what? Just like Vegas, there’s an entire industry built around that draw.
So, what is a new trader to do? The first time that question was put to me, after many years of trading, I sat there with the phone to my ear like a deer in headlights. That question is the key to becoming a trader simply because it encompasses so many aspects of what it takes to be successful.
Can Anyone Make It?
I’m an ardent believer that almost anyone has the capacity to be a trader from the standpoint of a logical understanding of charts, patterns, and strategies, if not full-blown statistical probabilities. If it’s true that almost anyone can trade a chart pattern, why do so few make the turn to actual, professional, income-earning trader?
If you want to be a trader, the money part is easy, as long as you don’t focus on the money. What you have to eventually learn to understand is that when someone says there are 10,000 ways to trade the market, they mean that literally, and the actual number is probably higher. The reason for that is that each of us has a unique reaction and interaction with the market and trading.
Emotional Control by Knowing Yourself…
The absolute key to becoming a successful trader, in my opinion, lies almost totally within your own emotional ability to do what needs to be done in the face of all obstacles. To accomplish this, you have to have full faith and confidence in what you’re doing. The slightest bit of doubt can allow your emotions to take over and take you out of winning trades, take you out ahead of your planned stop, or keep you from even getting in. This is what your Emotional Response System (ERS) is actually designed to do.
In order to have complete confidence in what you’re doing, you have to be comfortable with it. It must fit you. It must be yours. Once you get to that point, you’ll understand just how completely immaterial what anyone else is doing. When what they do has no effect on you, you’ll know you have the confidence to carry out your plan – day in, day out, no matter what. Once you cross that line, you’ll then begin to grow as a trader and you’ll be able to slide in and out of the market, in alignment with your plan and in alignment with the rhythm and flow of the market.
You cannot do any of that unless and until you KNOW “What kind of trader you are”. If you can’t answer that question instantly, and definitively, you should work on it. You need to know this is who you are and that this is what you’re trying to do every day. There’s a whole host of Emotional issues that come along with this that you’ll need to overcome before you make the turn, and to be honest unless you know who you are as a trader, you stand very little chance, in my opinion, of getting over those emotional hurdles.
Defining Your Trading
So as a new trader, my advice is, first find your identity. It is absolutely OK that you don’t know what that is today. But start finding it. Just find a market that you can identify with. ES, NQ, RTY, CL, GC, ZB… it does not matter. It has to make sense to you. You’re looking for speed and rhythm that suits you. My attention span is far to short to trade Bonds. I know this about myself. So, no matter what anyone else is able to do in Bonds, I already know I will not succeed in that market. Find one that suits you. Next, comb through various chart patterns and time frames – Minute charts, Renko charts, Foot Print charts… I don’t care, find something that makes sense to you when you look at it. For me, this is Renko charts. The markets don’t pay any attention to time, so time immaterial for me. But that’s me.
Now, are you a scalper? Are you a short-term day trader? Swing trader? Find what feels comfortable to you, and why? The why is the part will become important later in your journey. You don’t have to go too deep, but have a good understanding as to why this works for you.
Once you start putting all those pieces together you’ll have a place to start. Now pick a methodology, or strategy that makes sense to you. Again, if it doesn’t make sense to you, you will never be comfortable with it, and you will likely never be able to trade it well. Fibs, Market Profile, Volume Profile, Break Out, Opening Swing, Opening Range… Find an approach that makes sense to you. You will likely change and tweak this as you grow, so don’t get too hung up on the specificities early on.
OK… You’ve got your market, your time frame, your charts, and your approach. You’re finding your identity. Now what? Well, to start, use SIM for a short time to make sure you know how to get in and out of the strategy. Once you know how to ‘drive the car’ per se, let’s take it out for a spin. Please, start in Micros. Start trading it. Create a plan each day and your job in the first few weeks is to see if you can even stick to a plan. It’s very likely you won’t, that’s normal. And this is why I say it is so important to have confidence in your approach. If you don’t, you’ll never get past this next hurdle. But if you’ve gotten to this point, you’ll have started to figure out, at the very least, who you are as a trader.
We can talk more next month about the really hard stuff you’ll experience next.
– Brian B. (CT Maven Trader for RTY)
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