I have a hectic life, I’m new to trading, and don’t want to lose money… Is this you?

It was me, and in this post, I would love to share some thoughts and insights on what may be the most important decision new traders have to make. When to make the leap away from paper trading and go live with real money.

This article was inspired by a question we received that we here at Tackle Trading and we thought it would make an excellent article. The student question was “I’m currently struggling with time management and applying a new concept such as trading, into my life with confidence. I’ve only been able to watch a few videos, yet still do not retain enough confidence to trade outside of paper money. I know I should take the leap and use real capital, yet my confidence on a return at my current level is new. How should I move forward to build confidence?”

 

 

Let me start by sharing my journey into live trading. 

When I first left the ballroom after seeing my mentor Tim Justice demoing trades I ran home to try my hand at paper trading that very first night. What I discovered however, is that I knew almost nothing! I had to go to Youtube (the obvious choice for information when you don’t want to pay for education) and luckily, I found enough videos on the Tackle Trading Youtube channel to start practicing buying and selling stocks. I was told during the ballroom event to have at least 100 trades that were profitable before I even thought about trading with live money (I think that was supposed to mean to wait a few months). However, I managed to do about five trades an hour and within a couple of weeks I had several hundred paper trades under my belt and my six-figure paper money account was growing. So I figured it was time to go live.

 

 

My initial experience with real money and real losses.

I didn’t have any money, so I did what any overly excited trader without a mentor would do; I borrowed a bunch of money and funded my account on debt. Then, I went long on anything that was breaking out and often found myself making thousands by mid-morning only to find myself at a loss by the end of the trading day.  I found myself making money some weeks and losing others. Then with reminiscences of my previous experience in trading back before the tech bubble, one day I took a devastating 25% hit to my portfolio in a single day. That was a massive reality check for me!

 

 

 

The big turn around

I then began dedicating five hours a day to trading! Before you dismiss this amount of time I just mentioned, let me share with you my hectic life. I had two full-time jobs (today I have even more jobs), I am a single father, my girlfriend’s car is broken down so I was having to drive 10 hours round-trip to see her each weekend, and my commute to work can easily exceed two hours a day with traffic each way (welcome to Miami). So, I really had no time to invest in my education; until I lost half a year’s salary in one day!

 

 

Lessons Learned

1. You must find the time to learn how to trade with an edge. I found time during my commute to listen to books and made some life changes to free up time.

2. You must paper trade in a way that will prepare you properly for live trading, not by trading a paper $100,000 account. There is a huge psychological difference between losing paper money and real “need it to be my bills” money.

3. You need to stick to high probability cash-flow strategies as a beginner. Directional trades are not high probability!

4. Never enter a trade without an explicit exit strategy. Decide how much do you are willing to lose and the point of the trade you would exit in a winning scenario (you must be specific) and enter trades with OCO (one cancels the other) trades.

5. Stick to what works the best for you. This means keeping a log and analyzing your losing trades. You are not trading for fun, you are trading to make money!

6. Develop a routine, for me, this meant creating the Morning Market Report.

7. Do not give up if you take a hit, see it as a learning opportunity and go back to the drawing board.

 

 

So, you want to get more specific…

Like in any good movie with a sequel in the works, I’m leaving the best for next time.

In part two of this blog, I will go into the specifics of the above-mentioned lessons.