I got an email from my trading mentor and coach stating that he will be town this week for a trading seminar in case I wanted to swing by and say hello. Two and a half years ago, I was one of those people sitting in that trading seminar learning and taking notes on how to become a trader. I remember the exciting feeling I had on the first day of that seminar. By day two I had already decided that I was all in and trading was going to be my new gig. I had been unemployed for 6 months and with no job interviews pending let alone job offers pending. I needed a solution fast. At the same time, I really enjoyed being home with my kids. I didn’t have massive daycare costs and I wasn’t spending an hour sometimes more of sitting in traffic going to and coming back from work rushing to pick up the kids from daycare. I also didn’t have to gas up my truck twice a week either for my commute was to the grocery store and the kids after school activities. So the idea of going back to work really wasn’t that exciting at all. By day three I was signed up and ready to take control of my financial future. I went to the mall and bought a surface pro for my new business venture.
The following day I woke up with what felt like a hangover. I was overwhelmed with thoughts and feelings and they were all screaming at me asking, “What did you just get yourself into”? It was that all too familiar feeling one gets when starting something totally new and unknown. We all have been there. When every question in your mind starts with what if? Overcoming that feeling and the negative self-talk was harder than any analyzing any chart or learning a trading strategy. Now that I was over that hurdle it was time to get serious and I started asking the right questions. The first being what type of trading account did I need to start trading. This answer varies for everyone based on how you plan to trade and of course tax liabilities. The common trading accounts are Individual Margin accounts, Traditional IRA, Roth IRA or Rollover IRA accounts. You can also form a Corporation or LLC and trade as a business as well. A demo account or paper trade account is an account that allows you place trades without actual money being involved and it’s a great way to practice before placing real trades.
There is also the question of what type of trader you want to be. Being a day trader, swing trader, position or scalper comes down to your personal preference, market conditions and the capital in your portfolio. You don’t have to pick one over the other either. At times, I am all four and at other times, I only have position trades in my portfolio.
Figuring all these things out will not happen overnight nor should it. Treat trading like a business and not a hobby and build it right from the start that way don’t have to make corrections down the line. In the meantime open a paper trade account and get comfortable with the brokers trading platform and click away! Get plugged into our trading community, be a student and keep learning.