I’ve been chatting to some brand new traders recently. Some of them had the right idea of what trading is all about but a few of them were quite a way off the mark.
I thought it would be a good idea to go right back to square one today.
If you’re a brand new trader, this one’s for you.
And if you’re an old-hand, it won’t do any harm to double-check you’ve got this basic building block securely in place too!
Here’s the very first question you should ask before you even open your trading account:
What it is you actually want to achieve by trading?
I know making money is sure to feature somewhere in your answer. But even that is going to mean vastly different things to different people.
Write down exactly what it is you think you want.
The way I see it, there are 4 different ways to answer that question…
Trader A is the ‘pocket money’ trader. He’s aiming to tuck a couple of hundred of pounds aside whenever he can, so he can treat the family to a summer holiday courtesy of his trading skills.
Trader B has bigger aspirations. He’s hoping to build a full-time home based trading business so he can eventually retire rich beyond his wildest dreams.
Trader C would be happy with twenty quid here and there (so he can show off a bit to his mates down the pub about how he’s been making money from the markets).
And Trader D, deep down, isn’t really bothered if he makes much money at all. He’s in it just for the adrenaline rush. Even though it might take a bit of persuasion before he’d actually admit this!
These are all very common real world situations. I have come across every one of them in my communications with traders.
And you know what? There’s no right or wrong approach. The guy who sets out aiming for a multi million pound trading empire is no ‘better’ than the guy who has smaller targets in his sights.
The trouble is, traders are not always honest with themselves when they first come to the markets.
It’s easy to get brainwashed into following an unrealistic get-rich-quick agenda.
But the get-rich-quick agenda might not be right one for YOU (in fact, it’s almost certainly not the right one).
After all, what’s wrong with taking things steady, accepting there’ll be a learning curve to navigate, and getting rich slowly?
If you do take things a bit slower you’re much less likely to quit too early out of frustration (when the overnight riches don’t appear inside your first week!) and you might even get to enjoy some of the scenery on your journey.
So to protect yourself against the pressures of bad thinking it helps if you have a meaningful goal in mind.
A starter goal – one that’s meaningful to you personally and your current situation.
So let’s get your starter goal pinned down, and then we’ll look at the very first thing you need to put in place in order to achieve it.
Your Starter Goal: what is it you really want from trading?
There’s no right or wrong answer because there’s a space in the markets for every kind of trader.
But have a think about where you stand at the moment.
Your perspective is sure to change over the months as your experience grows. It’s an organic path you’ll be following, nothing is set in stone. But for today, just so you have a starting-point, how would you best describe yourself?
Are you looking for a reliable second income? A brand-new income stream that could help you afford those little luxuries – you know, the meals out, the weekends away, the latest tech gadgets – and let you earn it all in a way that doesn’t encroach on your current daytime commitments, or on the way that you like to spend your free-time.
Is it that you’re looking for a new mentally stimulating money-hobby? Starting out on a small scale – maybe aiming for a couple of hundred pounds a month (just be warned that once you see what you’re actually capable of you might suddenly take your hobby a lot more seriously!)
Or could it be your first step into a brand new full-time career? A way of leveraging your skills and entrepreneurial appetite into a fully-fledged venture of your very own.
If you’ve not already done so, write your starter goal down now.
Keep it to just a sentence or two. But do make sure it really is what YOU want from trading, not what someone else says you should be aiming to achieve.
Businessman’s Mind – the first step to achieving your starter goal
But let me tell you, it doesn’t matter where you see yourself heading eventually, the key to getting exactly what you want from the markets – whatever that may be – is to treat your trading with the right mindset from here on.
Forget any notion of ‘playing the markets’. This is real business. Even if you’re a trading hobbyist you should operate in a business-like manner. It’s the sure way to enjoy the positive results you’re looking for.
Remember, when you enter the markets you’re walking into the same arena as the professionals. You can’t expect to compete without preparing and executing your trading campaigns in a the proper manner.
(If you’re just after a quick thrill – the kind that Trader D in our example above was seeking – that’s a slightly different matter. And you’ll just need to accept you’re vastly reducing your chances of actually making any money.)
But don’t feel overwhelmed or out of your depth by all this talk of running things like a business. It just needs a subtle change in your thinking. And the first step is to get your ‘starter goal’ firmly in mind. Everything else follows on as a natural result of having that in place.
And once you elevate trading from something you’re ‘going to have a punt at’, to a solid, potentially life-changing enterprise – even if you’re funding it initially with just a couple of hundred pounds – I think you’ll be thrilled when you see the potential you have at your own fingertips.
By the way, once you’ve got a goal to aim for, operating in a professional, business-like manner is the easy bit.
You just need to follow a regular step-by-step process of analysing the markets, finding opportunities, and then applying yourself with discipline to trading them.
You might already follow a business-like trading routine. But if you’d like some help getting one in place be sure to spend some time over in the Trader’s Nest trading School.
It’s completely free of charge to enrol and study!