Hopefully you’ve already been placing virtual trades with the broker you’ll use for real money trading and already have a feel of the technical aspects of placing trades. Review the steps below as you prepare to make the transition to real money.
If you’ve never made a real-money trade before, start with a simple trade of a share or two just to test your understanding of your broker’s system and to practice going through all the steps of following your rules to execute your order. You may or may not actually be profitable on this very first real money practice trade. That’s okay. It’s better to learn how to carefully follow your system on a “throw away” trade before you commit to fully sized positions in subsequent trades.
Tracking your trades (also known as journaling) is critical to your long-term success. Journaling helps you see mistakes you might be making in the markets. It can help you maintain confidence in the face of a stiff losing streak and it can help you stay focused on properly executing your system. Journaling also helps you identify improvements you can make to your system (and to you) because it will show you areas where you don’t follow your rules. We’ll get more into this aspect of journaling in the next lesson.
Remember, your success is not dependent on the outcome of any one trade. Your success will come as you closely follow your system and exercise proper money management. Journaling will help you do just that.
We encourage you to get in the habit of recording your trades into your journal immediately after making them. Doing so will help you to keep your focus on properly executing your system and approach to the markets.
Initially the focus of your first few trades is all about getting set up to make the transition to real money and to do a few trades with just a little bit of money as you practice everything you’ve learned to this point including journaling.
Your first few real money trades are are also about you getting a feel for your emotional response to the ups and downs of the markets. As you place these trades, monitor your emotional responses to wins and losses. As you get deeper into trading, monitor your emotional responses to winning and losing streaks.
What you find out about you may surprise you. That’s okay. You can make money from the markets consistently in a variety of ways using a huge number of strategies. What you want to do is find the one strategy that works for you and that is easy for you to follow consistently. This strategy may be different than what you thought it might be and that’s okay.
The next lessen will spend time going over how to cautiously adjust your approach over time as you learn new things about your chosen strategy and about your emotional reactions to the market as you trade with real money.