When looking to put your money into the stock market, whether you’re planning for retirement, or seeking to generate income from trading, there a myriad of ways to go about it.
Starting out as a trader or investor can seem daunting and overwhelming. The allure of controlling one’s own financial destiny is what brings retail traders to the market like moths to a flame.
After all, what’s more entrepreneurial and capitalistic than building your own wealth with nothing more than your brain and a computer?
How to Get Started as a Swing Trader
When a new trader starts out, they have some choices to make. They’ll need software, education, and capital to get off the ground. The internet is host to thousands of vendors and options.
How do you choose? Well, where I trade and spend my days, we answered that very question with a quick getting started guide. The most important part of any kind of trading or investing, believe it or not, is your risk management.
Risk management is what keeps us from blowing up our accounts, failing to diversify our investments, and from over leveraging ourselves in certain positions. There are many more ways to fail as a trader than there are to succeed. It’s for this very reason that risk management is the single most important aspect of trading and investing to master.
After you have established a risk profile for yourself, it’s time to practice. And traders practice using paper trading accounts. These are usually free and a close simulation to what you can expect when you’re finally ready to put your hard earned capital to work for you in the markets.
One of the hardest things to do in trading is learning to keep objectivity from becoming subjectivity and influencing your decisions and rules.
Trading is more of an art than a science. It requires knowledge of macro and micro economic principles in order to fully digest and comprehend the market landscape that is constantly changing, evolving and acting upon insane amounts volatility.
How to Find Trade Opportunities
So, now you have your fancy broker and your rules for trading in place. What’s next? Finding trade opportunities is the second most important thing a trader has to do.
You can master risk and understand how to execute in the face of defeat and finally become ok with accepting losses, but if you can’t find winning trade setups, your life becomes exponentially harder.
So, how do swing traders find trade ideas? Personally, I use several different proprietary market scanners that I’ve tweaked and developed over the years. They are my eyes on the market, and as such, provide me with 95% of my trade opportunities.
Once you’ve found a strategy that’s suitable for you and figured out your risk tolerance and your account size, all that’s left is the execution.
How to Execute Your Trading Strategy
As my professional trading friend Jeff preaches and harps to all of his swing trade students, risk management is the ONLY thing that will keep you in the game long enough to figure out what you’re doing and to finally start turning a profit.
Just because 90% of retail traders will fail, does not mean they have to. When seeking mentorship, don’t be fooled into thinking that somebody who flaunts their Lamborghini or private jet is going to take you from step one to multi-millionaire.
If you run those numbers, the odds are massively stacked against you and instead, you fall victim to targeted marketing. Seek a humble, respectable trader or group of traders to learn from and build your strategies with.
Realize that if it was easy or truly a get rich quick system, everyone would be doing that instead of working a normal job. Becoming a self-sufficient master of risk is the only way to survive in this game, and to build your wealth organically in the markets.
Author bio – This article was written by Joshua Rodriguez, owner and founder of CNA Finance.