So, you’ve decided to give trading a whirl, eh? Welcome to the first day of the rest of your life, your trading life that is! That’s great, but now what? Does one jump right into the market and buy everything that moves upward? Do you take that hot tip from your buddy at the tavern? Do you trade Equities, Commodities, or Indexes? So many choices!!! So little experience.

Well, you’ve come to the right place! Rookie corner is a new blog series on Tackle Trading where each week we are going to focus on traders who are just getting their feet wet. This weekly get together is going to focus on all the basics, from opening your first account, all the way to understanding what a spread trade is. First, let’s explore what circumstances might have brought you here, as I think one will find a common thread for the majority who take this great journey.

There are common threads that bring many of us to the world of trading. Let’s see if this one rings a bell, so you received your most recent investment statement from your financial guru (see advisor/broker) and then you suddenly recall a conversation you had with this individual and something was mentioned about the stock market going up 8 – 10% on average per year and you notice that your account has either barely budged or has even lost ground somehow. At this point, you may start asking yourself questions about how guru-ry (I know that’s not actually a word but darn it, it should be) your financial guru is? After your initial anger and sadness subside you might start looking even harder for answers to this extremely widespread problem. You may search on the internet for answers, you may think that a different financial guru will be better than your current one, you may even have an epiphany and decide that it is time to take matters into your hands! This ah-ha moment usually comes after one realizes that no-one cares more about your money than you do. This is scenario one.

In scenario two, we have a different set of emotions to deal with. The first scenario dealt with anger, despair and loss. This next one is more of a greed/fear factor. Here’s the picture, you are standing around the water cooler at work and your buddy Jack has been talking about how he has been killing it in the markets for months now and he will not shut up about it. You start to think that you are more intelligent than Jack and you are more capable than Jack and you have a better grasp of how the world functions than Jack and yet you are missing out on all this easy money that Jack is supposedly raking in. At that moment, you decide to act and throw some money at the market. This is where things can get a little funky.

Let me ask you this, if you were going skydiving for the first time, would you throw on the parachute and just have at it? Hopefully not as I expect that would not turn out well. When folks encounter scenario two they do pretty much just the same as skydiving without experience or help. They throw their hard-earned money into the market and the professional traders eat their lunch!

I am certain that most of us can relate to one of these two experiences or at least parts of either one. Hopefully, these experiences spurred you onto approaching the markets the right way. I am guessing that if you are reading this page then you have decided that learning about the markets before you throw your hard-earned money at it is the smart play! I am also certain that if you have come this far in your journey and have the taken the actions necessary to be reading this that you will be willing to go further and expand your market knowledge and put yourself in a position to be successful.

So, here is what we will do going forward. We will move step-by-step towards the goal of being successful traders. Oddly enough, that is where we need to start, goals. We need to know where we are headed before we start out on our journey. It’s like this if you had a bow and an arrow in your hand and someone blindfolded you, are you likely to hit the target or to be a successful archer? Probably not, the reality is we need a target to shoot for and only after we can see our target clearly then we can be successful in hitting it.
So, next week let’s find our target!

Happy Trading.

~Greg Holmes