Stocks & Commodities V. 30:2 (50-55): Take The First Step by Tom Hamilton

Take The First Step by Tom Hamilton

So you want to become a trader? Don’t miss the critical first step that can make you the trader you want to be.

Surely after reading a few books and taking a course or two you’ll be ready to be a profitable trader. Unfortunately, most people entering the profession of trading will give up or go broke within the first year. It’s not because they read the wrong book or used the wrong software; rather, it’s that they skipped the first step: Knowing themselves. Professional traders and money managers understand that they have to find and adapt a trading strategy that will work for their own personality before worrying about the details of hardware, software, and indicators.

DISCOVERING YOURSELF

The critical step often missing in the process is the step of self-discovery. You must first understand how you think, how you learn, and what you enjoy. Without this knowledge, the process of researching a successful trading strategy is next to meaningless and you will likely suffer a high degree of failure before you even begin. Trading is one of the few careers where you do not need to demonstrate competency in it. Doctors, lawyers, electricians, and pilots, for example, all have to do so. With trading, however, you’ll be going up against someone with more experience and more knowledge than you have, and that’s how you gain competence.

So let’s start with the first step, an understanding of yourself.

THE RUSH FOR ANSWERS

Traders who look at different portfolio management techniques can quickly become convinced that active technical analysis is the best practice for their portfolio. Active technical management techniques can set them apart and give them a competitive edge. Opportunities are limitless, and so are the options to consider. But how do you manage such a portfolio? Many well-intentioned traders go right to executing tactics and skip any review of strategies.