Being a successful trader allows you to travel anywhere you like, buy the things you want and invest in your financial future. Although it is not an impractical dream, it is not always easy as it takes a high revenue stream and a lot of time to become financially independent.
Once your comfort level for how many losses you can take has been established, you are ready to begin life as a trader. A fast computer with lots of storage and some investing revenue is also vital. Trading software also tops the list as a must have. There are quite a few out there to choose from. However, the one that you choose would be in direct correlation to who your broker is and what software he is using.
Avoiding the Usual Pitfalls
One pitfall to avoid as a trader will be your tendency to want to depend on instinct and not on the tools and training provided. The secret to successful trading is to make your money on successive trades instead of putting all your investment in a lump-sum on one trade.
The key to keeping track of the money you are making is to group your winnings and directly correlate them to your losses. For example, if you make $600 as your average winnings and you lose $240 your average profit margin is $69 per trade.
The inherent secret to making money is limiting your losses and increasing your winnings. Do not double up on losses, chances are that if you lose on one trade, a consecutive trade on the same stock would also produce a loss. You also need to give your money time to run if it is winning more than losing.
There must be an end game or cut off point at which you decide to stop your trade on a particular commodity. There is no sure fire way of calculating this but the rule of thumb is to not run your entire winnings in the hopes that the profit margin will double or triple. Commodities are unpredictable so make a plan and stick to it.
It is imperative that you keep a keen eye on what is happening with your stock, one day they can roll out the red carpet then the next they can pull the rug from right out under your feet.
Traders should explore the option of going short especially when the stock you are trading in drops in value. That is how you will make money and stay in the game.
Going short simply means that you purchase stock from your broker and sell it. After a while, you purchase it back and sell it back to your broker for less than the original sale price.
Being a trader is hard work. You have to invest mentally and financially to realize the rewards. Nothing in life that is worth anything is free or cheap one must expend either time or effort or both to maximize on gains and expand your profit margin so that your reserve revenue grows exponentially.