You may be comfortable
accepting the fact that you don’t know everything there is to
know about trading yet, but you definitely should have a good idea
about several things when you get into trading. The first is why you
want to trade in the first place. People have a number of motives
for trading, all of which have merit, but you should be clear what
it is that is driving you into trading. Your reasons for trading may
go a long way in determining your trading style.
Profits
Probably every trader’s goal is to make money. But if that is
your main reason for trading, are you willing to do what it takes
to achieve this goal? It will mean you have to provide the seed money
and other resources you need to be successful, and it will involve
a commitment to learning to gain trading experience.
If trading is going to
be your business, you obviously have to put making money high on your
list of goals. That requires consistent, strong discipline and the
ability to control your emotions as none of the experience or success
you have gained in other areas will guarantee that you will be a success
in trading. Your trading approach may even be boring, but if your
real goal is making money, you will have to have the discipline to
stick with a trading plan.
Being ‘right’
Are you a person whose greatest satisfaction comes from being right
about things? Traders generally love to compete and be better than
everyone else in whatever they do. Just having the opportunity to
crow a little about their prowess is their biggest reward.
However, trading may be
one of the worst places to look to feed an ego. Whatever success you
have had in other aspects of your life may not transfer very well
to the trading arena, which has been known to humble even the strongest
ego. Of course, traders have to have a strong sense of ego to have
enough confidence to trade, but you’ll have to keep that ego
in check whenever you enter a market position if you want to survive
as a trader.
Excitement
Trading certainly can provide plenty of excitement, both highs and
lows, and that may be reason enough for trading. But expect to pay
an entertainment tax. Just being in a market position can be exhilarating
and can inspire you to keep up with what’s happening in the
market and in the world’s news events.
However, to be successful
over a longer term – unless you have deep pockets – you
usually will have to forego the excitement and emotion generated by
trading, just as you have to keep a lid on your ego trip. You naturally
will experience some excitement whenever you are trading, but it is
a factor you must control. If excitement is an objective of trading
for you, perhaps the solution is to have one account you trade conservatively
and another account where you get a little wilder.
