Trading's a very serious business and getting ahead of everyone else in trading will take some serious work. There are some things that beginner traders can do and if done properly, they might just get into the top 10% part of the traders that are actually successful.
How much time will it take to learn everything?
When traders start out on their trading journey, their mind is occupied with just one question, how long will it take to make it? It is a basic human tendency that we want results for the efforts that we put in and it is quite valid too.
But it should be noted that anything that is good will not come fast. Take trading, for instance, I have seen traders that have done things in the right way but still, it took long for them to make it.
While I have also seen traders that started doing good within a short period since they started. The main reason for this is that the trading journey of every trader is very subjective and it will vary from one another.
Time taken by traders to learn the skill and find success in the market will vary. You as a trader might be a quick learner while another might take some more time.
Hence, traders should not ponder over how much time will it take, but rather they must figure out what exactly they should do that can shorten their learning curve.
I will discuss just this in the blog post ahead. Do not skip anything as it might be the deciding factor in your trading success.
How to shorten the learning curve?
1. Pick a strategy or style on the basis of your personality
This is a big mistake that almost every trader has made. They pick any random strategy or a style that they first come across and they trade based on it.
After doing so, they realize that the strategy or the style wasn’t suiting them or that they rushed in it.
Whereas, a person that is more of an impulsive trader and wants things to happen at a fast pace then they will be suited to scalping more than swing trading.
The key here is to identify what type of a person you are and then pick a strategy or trading style that compliments your personality.
Not many people do this. They want to straight away start trading and earning profits, only to end up losing.
If you put in the efforts and time to carefully select what is right for you then you are putting yourself way ahead of the others and you are making your journey easier than others.
2. Have a defined set of rules for your trading strategy
After you analyze yourself and narrow down a trading style and strategy on the basis of it, you should write down the rules for your strategy.
These rules are the instructions for yourself in order to take trades and you are to follow these rules at all times.
For instance, a defined set of rules may look like this -
i. Trend established by moving average crossover.
ii. Price is making higher high higher low or lower high lower low according to the trend.
iii. Wait for price to break previous swing high or low.
iv. Entry taken at 61.8% or 50% of the Fibonacci retracement.
v. Stop loss to be placed at the previous swing high or low.
vi. Targets according to 1:2 RRR.
Once you have such a set of rules clearly written down, then you will only trade what is in front of you and not what you want to see.
I have seen many traders that take trades based on a gut feeling that the price will go up or down.
Traders that do not have set rules will face a lot of difficulties in their trading journey and they will end up losing a lot. Hence, I seriously urge you to have a defined set of rules of your strategy from the beginning itself.
This will only help you save time and money that could get wasted unnecessarily.
3. Learn from your mistakes
As a trader, how will you know if you are making a mistake? How will you know that your actions in the markets are costing you money?
Maintaining a trade journal will allow you to identify such mistakes, hence it is very important to have one. So a trade journal is basically a diary or a book where traders keep a record of everything they do in the market.
You should write down the entries, exits, targets, their rationale for the trade, your psychology during the entire time, etc.
This will allow you to have a record which you can analyze and scrutinize in the end and spot any shortcomings.
If you do not have any way to identify these shortcomings in the first place, then you will never be able to know that you have a problem.
This will only lead to you making such mistakes again and again in the market and will end up losing your capital.
These mistakes that traders make can teach them a lot. It could arguably be one of the best learnings traders can ever get.
I myself religiously maintain a trade journal and it has been beneficial for me right from the beginning.
Not all traders maintain a journal and it will reflect from their results and their trading process. Make sure that you do maintain one and get ahead of these unsuccessful traders.
4. Have a realistic goal
Sorry to break it to you but trading is not a get-rich-quick scheme. It is a serious business that must be treated that way.
If you expect to amass wealth within a short time from trading then you should stop and re-evaluate your priorities.
It is not bad to have expectations but these expectations should be practical and reasonable. Expectations in trading should be on the lines of return on capital.
For instance, if you have $10,000 in your trading account, then your expectations should be to earn x% of this capital.
In any business, the business owner will expect an ROI, return on investment, the same should be applied to trading.
Now, a good ROI in trading could be 25% on capital per quarter, but this will vary. The forex market will not reward the traders consistently, the traders have to put in the work to deserve the returns.
For some traders, 50% return on capital at the end of the year will suffice while for some it might be less. These values are determined on the basis of the expectancy of your trading system and strategy.
If you have a well-tested strategy then you will know how many returns you can expect in a year from it. You would then break it down into monthly or quarterly terms and set your goals.
This is a practical approach to trading that not many traders have. They will blindly set an absurd target in dollar terms but don’t have that much capital in the first place that will fetch them that amount.
This leads to them taking overly risky trades and eventually going bust. This indicates that they do not understand this business and that they do not know what risk management is.
They go on to learn this simple yet important aspect of trading quite late in their journey.
Hence, if you want to protect your capital, achieve consistent and low-risk returns on your capital, want to be ahead of the herd and want to shorten your learning curve, then have a realistic goal.
5. Learn from someone who has already done it
When you are just starting to learn about forex trading, you have two options, to learn on your own or to have a mentor guide you through the journey.
There is so much content on the internet through which you can and will surely learn a lot but learning from a mentor will be totally different.
If you do it yourself, it might take you long before you actually get ready to trade in the live market. You have to figure things out on your own, have to find the right sources for knowledge, practice, stay accountable to yourself, etc.
This often ends up taking a lot of time. On the other hand, if you have a mentor, you will be put in the right direction straight away.
The mentor has already been in your shoes and they know what exactly you need at that point in time and they will help you out.
Mentorship will be an ongoing process where the mentor will structure the entire process accordingly and you will hone the skill as you progress.
One of the biggest advantages of having a mentor is that you will have someone to hold you accountable.
There will be someone to make you stay on track and if you deviate, they will bring you back on track. Hence, having a mentor is a huge advantage and will cut down your learning curve by at least half.
What might take you a year to learn might just take you 3-6 months to master.
Do you think you are ahead of the 90% of traders?
Learning in trading is never-ending. You will always learn something or the other from time to time. But the initial knowledge that you gather before you actually start trading is very important and it need not take up a lot of time.
All that I have discussed will surely help you shorten your learning curve drastically and it will put you on the path to success that only 10% of traders achieve.
Do you think you are ahead of the remaining 90% of traders? Do you follow all that we have discussed in this blog post?
What are the things that you don’t follow and do you think will make a difference in your trading journey? I’d love like to know.
Feel free to ask questions through the comments section and I will get back to it at the earliest.
Don’t forget to share this blog post with every trader you know and let them also shorten their learning curve and propel themselves ahead of the 90% of traders.