I know so many things now that I wish I had known when I first started trading…
But I’ll let you in on a little secret … that wasn’t the case in the beginning.
I had to learn most of my trading rules the hard way … by making mistakes that caused me to reevaluate my strategies.
Ultimately, making some mistakes is unavoidable. But limiting your mistakes is crucial to success as a trader.
If only someone had pulled me aside on my first day in the markets and forced me to internalize certain lessons, I probably would’ve avoided a lot of bad trades in my first few years of trading.
Losses in the stock market are the fees you pay for learning.
— StocksToTrade (@StocksToTrade) February 20, 2023
But guess what? You’re in luck…
Today, we’re gonna do an educational lightning round — I’ll give you four crucial rules I wish I knew on my first day of trading.
By taking these rules to heart and enacting them into your game plan, you can potentially avoid the pitfalls that face many newbie traders!
Keep reading and I’ll show you…
Rule #1: Learn Before You Trade
Some newbies deposit money in their accounts and start trading immediately without a single ounce of trading education under their belts.
I shouldn’t have to tell you that this is a HUGE MISTAKE!
Would you speed in a Ferrari without ever taking a driving lesson? (I hope not!)
Trading without learning about the stock market is like driving an exotic car without a license … extremely dangerous!
Are you familiar with this trading “loophole?”
Are you familiar with the “loophole” that helps small accounts grow exponentially?
No, it doesn’t have anything to do with penny stocks or crypto…
And this strategy works regardless of whether the markets are up OR down…
This little-known options “loophole” is something you can use to grow your trading account right now…
If you’re wondering where to begin your trading education, I suggest starting where I did … in Tim Sykes’ Trading Challenge!
But if you’re reading this, you’re already taking the right steps in your trading education. Be proud and keep reading…
Rule #2: Start Small, Dream Big…
Even if you have disposable income, you should start trading with a small account.
I encourage everyone reading this to start small. Hit singles. Be consistent.
Only after you’ve proven your ability to increase a small account by several multiples should you consider trading larger sizes.
On the other hand, starting to trade with too much size can be a recipe for disaster. Think about it…
It’s unlikely that your first attempted strategy will be your ultimate bread-and-butter game plan.
If you’re sizing too big in the beginning, you could take such a big loss as to turn you off from ever trading again. (I’ve seen this happen many times before!)
However, if you start trading with a really small account, you’ll avoid taking such emotionally-damaging losses in the beginning.
This will help you build confidence so that you’re prepared when it’s time to trade a larger size.
Rule #3: Keep a Trading Journal
I’ve spoken before about the importance of keeping a trading journal, but now is the perfect time to remind you of this…
Tracking your trades will help you assess your performance honestly with some valuable perspective. For example…
Which setups are working for you? Do you have more success trading calls or puts, weekly or monthly contracts?
If you don’t journal your trades, you run the risk of making the same mistakes over and over again.
But by keeping a diligent diary of your plays, you can identify your strengths and weaknesses. You’ll see which strategies are working and which aren’t!
(And if you’re wondering what exactly to include in your trading journal, read my full breakdown by clicking right here.)
Rule #4: ‘Slow and Steady’ Wins the Race
Too many newbies get ahead of themselves in their early days as traders…
I’ve seen students start with a small account, book one lucky win, and then get overconfident…
They start overtrading, feeling invincible after their singular winning trade.
(Spoiler alert: This almost always ends in money lost, or worse, a blown-up account!)
How to find 3x, 5x, and 10x price explosions before they happen
If you get overzealous as a newbie, it won’t take long for the market to humble you. Trust me.
On the other hand, I think a main reason why I’ve thrived as long as I have is because I avoid this pitfall…
I’ve always been a pretty conservative trader, which has helped me weather the storm through dozens of different market cycles over 12 years of professional trading.
In other words, I won the race because I took it ‘slow and steady.’ I didn’t allow greed or impatience to force my hand into setups I wasn’t ready for.
Your trading journey will be long, so don’t feel like you need to speed through the early parts.
I’m telling you these things because I wish I knew them when I was first starting as a trader…
By following these rules, you’ll have a much better chance at a long and fruitful trading career than those who don’t.
Write these lessons down and pin them to your desk until they’re so ingrained in your psyche that you’re reading them in your sleep!