Success in the financial market boils down to a lot of factors, some of which, may not automatically come in mind. Most traders who are new to the markets burn out within two to four years. A recent study found that 90% of new traders were out within four years of their start date. There are several factors at play for their exit, but the most common reason cited is losses. Losses experienced at the hands of an inexperienced trader. Here are a few things you should keep in mind to have success as an individual trader on the market.
Training and Mentoring Matter
Coaching and mentoring for online trading can mean the difference between making money and losing it. Consider that surgeons spend years dissecting cadavers and observing and assisting in procedures before ever leading a surgery of their own. A trading mentor should offer the same skill development for trading. A tutor will provide intensive mentoring and teaching to help you understand the market from an experienced trader’s point of view, rather than your own inexperienced view. These services can be valuable to anyone seeking to start with the fundamentals of online trading.
Understanding Strategies Fully
A mentor and teacher will help you understand basic strategies for the market revolving around technical indicators, chart patterns, and fundamentals. Technical traders who understand the ins and outs of a company will perform better than a trader treating the trade like a bet every single time. Experienced mentors will help their students understand chart patterns and how to spot them. Correlating this data between past prices and current trends can help you get a laser focus on finding the sweet spot for each trade you make.
Patience is Critical
One of the emotions that trip up new traders the most is impatience. A good mentor will help a trader establish a routine of patience and focus on building better risk management strategies. An experienced trader can guide you through the nervous days of making trades in positions that have turned away from your initial plan better than you could guide yourself in that same position. Managed portfolios are popular for a reason because most people find they do not have the internal fortitude to trade on a daily basis.
Role-Modeling Can Help
One of the best things a new trader can do is research experienced traders who have the same risk aversion. Observing experienced traders before signing on for a mentorship can help you decide if that trader is right for teaching you trading techniques.
Set Your Expectations Accordingly
Another common reason that inexperienced traders leave the market is not meeting their expectations. Whether that is through losing money or not making enough profit, your expectations should be manageable. A tutor or mentor will help manage your expectations for each trade you make, so you’re not getting greedy as the stock continues to rise. One of the most valuable assets in having a relationship with a trading mentor is letting their innate understanding of the market be your bellwether for success.