In trading courses I ran in the past, here are a few questions I encouraged students to think about and answer. Once they answer these objectively, I help them clear it up through a back and forth email dialogue. I thought I would share them here for the benefit of our readers:
1) Why Do You Want To Trade? The obvious answer is to "make money" but the successful trader takes this a step ahead. Are you trying to get to a profit margin that will allow you to quit your day job and trade from home? Are you retired and want to stop touching your savings to live so you want to trade to make up for that? Are you trying to create wealth with long term positions while still enjoying your career outside of the markets? When students answer this question properly, it is easy for me to guide them into the right markets, time frames, and strategies.
2) What Is Your Strategy? This one is key. you must have a detailed strategy, I tell students to be as specific as they can. In other words: When exactly do you buy and sell? How exactly do you handle stops and targets and so on? From my experience, the more you can make market speculating 100% rule based, the better you will do. Even though I tell students to be very detailed here, I always end up adding rules they did not consider
3) What particular Markets Will You Be Trading? This one is again quite important as everybody is different in some way. There are 4 major asset classes and many markets within them. They all have pro's and con's but the beauty is that a set of markets like the Futures may be perfect for one person and the Stock markets may be appropriate for someone else. By knowing someone's goals, life style, account size, personality, and so on, it is easy to steer them in the direction of a set of markets that helps them achieve their goals in the safest and most efficient way possible. Also, within each asset class, the markets are very different. Maybe you trade the stocks
5) How Much Time can you invest? This again is an important question. This will determine whether you should be a day trader, swing trader, and so on Neither is right or wrong, better or worse. The key is to make sure you put yourself in the best position to succeed and depending on when you can watch the markets or do your analysis, there is a quality low risk market moving 24 hours a day, 6 days a week. This question goes deeper as well For example, if you have plenty of time and want to be an active trader, I would still never recommend that someone sit in front of the screen all day. The best active day traders make their money in the early morning and there is a very specific market reason for this that we go over in class. Make sure when you answer the time issue question, you are not only thinking about today but also 5 and 10 years from today. I thought like this and it has guided me to quite a great life but all from planning.
5) How Much Time Do You Have? This again is an important question. This will determine whether you should be a day trader, swing trader, and so on Neither is right or wrong, better or worse. The key is to make sure you put yourself in the best position to succeed and depending on when you can watch the markets or do your analysis, there is a quality low risk market moving 24 hours a day, 6 days a week. This question goes deeper as well For example, if you have plenty of time and want to be an active trader, I would still never recommend that someone sit in front of the screen all day. The best active day traders make their money in the early morning and there is a very specific market reason for this that we go over in class. Make sure when you answer the time issue question, you are not only thinking about today but also 5 and 10 years from now. I thought like this and it has guided me to quite a great life but all from planning.
1) Why Do You Want To Trade? The obvious answer is to "make money" but the successful trader takes this a step ahead. Are you trying to get to a profit margin that will allow you to quit your day job and trade from home? Are you retired and want to stop touching your savings to live so you want to trade to make up for that? Are you trying to create wealth with long term positions while still enjoying your career outside of the markets? When students answer this question properly, it is easy for me to guide them into the right markets, time frames, and strategies.
2) What Is Your Strategy? This one is key. you must have a detailed strategy, I tell students to be as specific as they can. In other words: When exactly do you buy and sell? How exactly do you handle stops and targets and so on? From my experience, the more you can make market speculating 100% rule based, the better you will do. Even though I tell students to be very detailed here, I always end up adding rules they did not consider
3) What particular Markets Will You Be Trading? This one is again quite important as everybody is different in some way. There are 4 major asset classes and many markets within them. They all have pro's and con's but the beauty is that a set of markets like the Futures may be perfect for one person and the Stock markets may be appropriate for someone else. By knowing someone's goals, life style, account size, personality, and so on, it is easy to steer them in the direction of a set of markets that helps them achieve their goals in the safest and most efficient way possible. Also, within each asset class, the markets are very different. Maybe you trade the stocks
5) How Much Time can you invest? This again is an important question. This will determine whether you should be a day trader, swing trader, and so on Neither is right or wrong, better or worse. The key is to make sure you put yourself in the best position to succeed and depending on when you can watch the markets or do your analysis, there is a quality low risk market moving 24 hours a day, 6 days a week. This question goes deeper as well For example, if you have plenty of time and want to be an active trader, I would still never recommend that someone sit in front of the screen all day. The best active day traders make their money in the early morning and there is a very specific market reason for this that we go over in class. Make sure when you answer the time issue question, you are not only thinking about today but also 5 and 10 years from today. I thought like this and it has guided me to quite a great life but all from planning.
5) How Much Time Do You Have? This again is an important question. This will determine whether you should be a day trader, swing trader, and so on Neither is right or wrong, better or worse. The key is to make sure you put yourself in the best position to succeed and depending on when you can watch the markets or do your analysis, there is a quality low risk market moving 24 hours a day, 6 days a week. This question goes deeper as well For example, if you have plenty of time and want to be an active trader, I would still never recommend that someone sit in front of the screen all day. The best active day traders make their money in the early morning and there is a very specific market reason for this that we go over in class. Make sure when you answer the time issue question, you are not only thinking about today but also 5 and 10 years from now. I thought like this and it has guided me to quite a great life but all from planning.
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Author: Nayeem Syed helps people get started on trading. Contact Nayeem for a FREE report on setting up Cashflow using 7 different proven strategies.
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