When I first entered the markets, I didn’t know which way was up. Even the market I ended up starting with, I was hardly able to articulate what it was. It’s called a contract for difference (CFD) in case you’re wondering. They are not available in the US, but are hugely popular method for trading in many other parts of the world. I found myself bombarded with literature, websites, subscriptions, and articles. There was just so much information coming at me, I had no idea where to begin. It felt like every new piece of information I managed to gleam, would lead to another hidden gem that I needed to know. I felt like my education, whilst moving forward was also very stagnant. I had no path to follow, and just sucked in all the information I could find. The issue with this approach was that I didn’t know how to connect the dots and put it all together.

Now that I am somewhat of a seasoned veteran, I know that there could have been a much clearer path towards my trading success. Much of what I now know turns out to be fluff, and hasn’t really assisted me in making money. It’s a shame that for all the knowledge, I only use a small fraction of it in my own trading. The way I would suggest anyone entering the markets to begin their education would be to forget about strategy. Forget about the perfect system, and forget about the best indicator to use. Instead start with the absolute fundamentals of successful trading which are; money management, and psychology. If you can understand these factors in depth from the outset of your trading, then you will give yourself a much better chance of success.

To begin with, focus on money management. In my opinion, this is hands down the number one key to successful trading, with psychology coming in a close second. Money management can take a very poor (but overall winning) system, and turn it into something that is highly profitable. If you think about the second part here, psychology, then let’s say for argument’s sake that you use good money management, but your psychology is not in check. At this rate, you could quite easily display all the traits of someone that does not have a successful mindset, but if you are using the virtues of money management, then the damage to your account will be minimal. If you have good psychological traits, but don’t use wise money management, then you could blow your account up in no time.

So my advice to anyone reading this is; put the book about the perfect indicator, or system away for the moment. Just find as much information on money management as possible. Before you even utilise a system, write down via an excel spreadsheet what your tolerance levels are. By this I mean, how much you could stand to lose on any given trade. Work out how many losing trades it will take to make you go broke. If you do this, and keep this in mind at all times, then the system you decide to use will look so much clearer. You will understand that probability is a numbers game, and just because a system has worked in the past, bear in mind that the markets have no memory. You will have losing streaks. Even on a 70+% accuracy system. The point once again is that using proper money management may well save you from disaster. Learn this, and you may save yourself your account.

Finally, if you also concentrate on why traders fail, you will see some familiar traits amongst all the good literature. Most people fail for a certain number of reasons. Find those reasons, and make doing the opposite your priority in trading.

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