PRINCIPLES OF TRADING: INTRODUCTION
Trading is an active participation in the financial markets. Those who partake in buy-and-hold investing are called traders. Also called market players, they seek to gain from short-term price moves to profit in bearish or bullish markets instead of waiting for long-term uptrends to appear.
Anyone can be a trader, and any trader can work from home, set their own schedule, and unlock endless opportunities, which makes trading more appealing. No need to attend specialized trainings or obtain advanced degrees to master the art of trading. All it takes is empowering yourself, due diligence, extensive research, hard work, discipline, well-laid trading plan, and consistency. It is really difficult to become a successful trader, specifically to surpass all the obstacles along the way and contend with erratic market movements. Also, an aspiring trader needs full commitment (in terms of finances, emotion, and time) and a strategic approach.
Without further adieu, we will give an overview of what we are going to discuss in the next series of this tutorial.
- Trading styles - Position trading, swing trading, day trading, and scalp trading
- Trading tools - Computers (or laptops), analysis, order execution, testing, and software
- Types of orders - Limit order, stop order, stop loss order, conditional order, market order, and duration order
- Trading plan development - Trade filters, market, indicators, chart interval, position sizing, and entry and exit rules
- Trading plan testing - Backtesting, forward performance testing, and in-sample and out-of-sample testing
- Actual trading - Fills, errors, trading conditions, and technical problems
We will also touch on the following topics:
- Leverage and margin
- Record keeping
- Strategy automation
- Trading instruments
Many studies showed around 90% of active traders fail within the first year. Even seasoned traders like Warren Buffett sustained massive losses and downfall. No one’s spared from downfall, and success comes from countless failures and perseverance.
Now, let’s start the ball rolling. The next tutorial will talk about charting.
Principles of Trading: Charting
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