Everyone wants to make more money. That’s why trading and investing make such attractive side-hustles and even more attractive professions. Many people will have a go at trading and fail. Beginner’s luck is real and most enter the markets during extremely bullish conditions when assets are moving straight up.
The “it’s easy money” and “I’m quitting my job to become a full-time trader” self-proclaimed geniuses are everywhere during these conditions. That leaves them vulnerable to corrections which they aren’t sure how to handle. Their lack of preparation and understanding of market cycles leaves them buying dips over and over until they run out of capital and end up selling at a large loss.
As with any hobby or profession, there’s preparation that should take place prior to engaging. Most who start out aren’t prepared to do their due diligence and learn how markets work. If you want to be good at something you need to study for hours and hours. Practice makes perfect.
I’m going to share with you how to get started in this crazy world so you don’t become a rekt noob.
Be ready to learn
If someone told you they’d give you $500,000 for making a free throw with a basketball — but you had to give them $25,000 if you miss — would you take that bet? If you were a professional basketball player with hours and hours of practice, yes you probably would. But if you’ve never shot a basketball before in your life, you’d turn it down, because 99% of people with zero basketball experience would miss the shot.
This is exactly what happens with trading and investing. There’s so much to understand and everyone wants to start making money right away. This leads people into blindly following random cartoon characters trading “calls” on Twitter or jumping into every large pump they see without understanding what’s happening.
Many people end up losing a lot of their net worth through being over exposed and putting too much of their money at risk, without having the slightest clue what they’re doing with it. Imagine telling a friend you lost $10,000 because you listened to a cartoon animal on Twitter. Sounds silly, doesn’t it?
Pick and choose your signals
Knowing where to start learning about the markets can be challenging. Here’s my tips on where to go first.
You’re probably already on Twitter. Make sure you follow accounts that post multiple viewpoints on assets. You want well thought-out content that shows logical reasoning. Skip to the end of the blog for a list of accounts I’ve learned a lot from so far.
Unfollow people who share outrageous upside targets all the time and never once mention risk management. Those posts will not help you — they make you feel. You want posts that make you think. Emotions will only hinder you, while thoughts will improve your chances of success.
What to learn before you start trading
If you came here to find the cheat codes on how to become a good trader or investor then you came to the wrong place. You will never find the easy answer because there is no easy way to learn the markets. You have to work hard and study independently if you really want to conquer them.
Here’s some very important information you can learn to give yourself an advantage against other market participants.
Learn about market cycles.
- What is a bull market? How do they work? How do they end?
- What is a bear market? How do they work? How do they end?
- Learn the psychology of a market cycle. You can use this to gauge your feelings on the market as well as the feelings of those around you. Overall market sentiment can be a valuable tool if used properly.
- Where can you learn about all of this? Google. That’s where I started.
Once you understand market cycles you can shift your focus to understanding market structure.
- Market structure is one of the most useful bits of information you can have for long-term investing. It can also be useful on lower time frames for day traders.
- I recommend studying Wyckoff accumulation, Wyckoff distribution and re-accumulation. The information you’ll learn from these will completely change your view on the charts.
- It’s not enough to simply know what these patterns look like. I recommend reading in depth into what each stage of these schematics means, why they happen and how volume plays an important role in the structure.
I have made more money just from understanding market structure and cycles than any other techniques or strategies I’ve used. Once you learn to dollar cost average in and out of these structures/cycles you’ll be feeling like a genius.
The most important thing is to not try and buy the exact bottom or sell the exact top. You’ll waste a lot of your time trying to plan for the bottom or the top rather than just learning to recognize it after it’s already happened. Remember, we enter into these markets to make money. The only way to make money is by taking profit, and securing it on your hardware wallet. Make profit taking a habit. Once it’s a habit you can become a profitable trader or investor.
Successful traders never stop learning
My last bit of advice would be to share your ideas. There’s always more to learn and the only way to learn from others is by sharing your ideas publicly and asking questions to those more experienced than yourself. I had many helpful mentors when I started out. The advice they gave me was invaluable and I would not be a full-time trader if it weren’t for them.
Ready to start? Here’s what to do now:
- Go make an account on a charting platform like Tradingview or Trendspider, practice charting for yourself and study the charts. Live-action charting is where everything happens. That’s the best place to learn by trial and error.
- Don’t be afraid to be wrong, everyone was new once. We all started off learning with zero knowledge. Just be conservative with your capital until you feel more confident.
- Make sure to study your ass off and understand that you will not become a profitable trader overnight. It will take hours and hours of free time to get the hang of this. Set some goals, be honest with yourself and don’t be afraid to fail.
Do you have what it takes?
Nebraskan Gooner’s top traders to follow in 2021:
Published at Tue, 23 Mar 2021 16:50:33 +0000