Everyone has received calls, myself included, from brokers who claim and often promise that you need to invest as little as $100 to make more than $1,000 in a month. Such claims have hurt the reputation of financial trading, making it look like pure gambling or a scam.
Here’s the lesson I learned: The minimum required amount to invest with most funds management companies is US$10,000. Additionally, you will need to keep the funds in the account for at least three months before deciding to withdraw.
Such lessons are why it was time to write my third book, ‘The Secret Method – How to create long term success and consistency in Forex and Commodities Trading Business’. Officially releasing on Amazon on 30th September 2021, the book talks about how I built my trading career as Proprietary Trader and why I now trade Forex and Commodities. It contains some of the unique trading strategies that I have created and trade over my trading experience of over 15 years.
Many who lost their jobs during the pandemic began looking for alternatives to generate consistent income every month. I want this book to educate those looking for ways to start a business as a trader or gain some knowledge on how to start trading in Forex and Commodities markets. This is so they are well informed about how the markets work and are better positioned to make the right decisions whether trading for themselves or through brokers. With practical examples and illustrations, I demonstrate that anyone can be profitable using a systematic and consistent approach by keeping things simple, even when trading for as little as a few minutes per day.
Here are my indispensable learnings about the financial market:
WHO SHOULD BE YOUR TRADING GURU?
There are four main players in trading markets. The book shows the difference between these four players, including Brokers and Market Educators (the other two are revealed in the book, and I bet you are intrigued and excited to find out!) and who should be your trading mentor if you want to succeed in this market. Remember – the best mentor is one who teaches you to think for yourself.
To pick a mentor, look at the basics – their track record, if their strategies agree with you, and how much time they are willing to devote to guiding you. Get to learn from mistakes your mentor has made so you don’t repeat them, helping you avoid pitfalls. And honestly, the trading hustle can feel isolating, so having a motivating force helps more than you know.
THE BUSINESS OF TRADING
Trading can be treated as a business like any other business that needs capital to start with and the right management control to succeed in that business. This is one of the reasons why traders fail in the market because they don’t treat trading as a business vehicle; instead, they treat it like going to the casino and gambling.
Like any other profession, you need to learn the skills, have the discipline to follow the rules, develop or have a system to follow, and have a reasonable amount of funds to keep aside for investment. In the book ‘Secret Method’, I speak about Risk Management rules at the core of what we do as proprietary traders.
KNOW THE HISTORY OF SPECULATION
Speculators are sophisticated investors or traders who purchase assets for short periods of time and employ strategies in order to profit from changes in its price. They’re important to markets because they bring liquidity and assume market risk.
My earlier book, ‘The Trader’s Guide: A Step-by-Step Guide on How to Generate Consistent Income from Trading in Forex and Commodities Markets’, discusses speculators in more detail. It is particularly important to know the roots of being a market speculator to be guided in our future trading.
PRICE ACTION TRADING
Price action gives us an edge in identifying the potential direction of the market. It is the art of taking advantage of the price movements for profitable trading. Our primary goal is to trade with this edge and trade using movements from one point to another using price charts. Once you understand and master price action, building a system around it will only be an extra confirmation, taking the guessing game out of traders’ decisions.
POWER OF A TRADING STRATEGY
If you think you can rely on just instinct to trade, you’re dead wrong. A good mechanical trading system automates the entire process of trading. It provides an answer to each decision a trader must make when trading, making it easier to trade consistently and save time. The system explicitly defines what should be done at each stage of trading, not just when placing a trade.
If you know that your system makes money over the long run, it’s much easier to read signals and trade during periods of losses. If you rely on your own judgment during trading, you may find that you are fearful just when you should be bold, and courageous when you should be cautious. Therefore, adopting a consistent approach along with having a trading system in place, in addition to risk management rules, can keep the impulsiveness away from our trading decisions as proprietary traders.
A TRADER’S EMOTIONS
Ironically, emotions control 80% of traders’ decisions. When it comes to emotions, no two traders are the same. As we are all sentimental beings, we need to control our feelings when trading by first learning who we are emotionally. When it comes to trading, people often just put their money in and blame the market when they don’t gain expected returns. In reality, it is like any other business or qualification; you need to learn the skills from the right source and apply risk management rules to succeed.
Apart from a basic understanding of math, finance and business, be willing to dive deep into research and solid market analysis. It would help if you had the right starting capital and sound management to succeed. Through the process, develop your own trading style and strategies, but know that you have to be adaptable to the market. Not making mistakes is impossible; so instead, keep track of your wins and losses and the consequent learnings in a training journal and reread it often. Finally, stay in the game. Good times are fickle, but good traders are consistent.
Maitha can be reached at [email protected]