I was not good at managing money, but when I started trading forex, I learned the art of money management because it was required in this field. Having the right money management strategy allows traders to continue trading even when they are experiencing losses. This strategy didn’t just help me get better at trading but also allowed me to manage my money in a better way, especially at the time of cash crunch.
How does trading change your life?
- Thread starter Paul Sachin
- Start date
If you can learn to "read the market", you'll take almost all of the guess work out of trading. Your brain becomes a money machine.... and you can take money from the market any time you want... like an ATM (not limited to $300/day withdrawal, however.)
Nobody can fire you or lay you off. You'll have financial security.
That's the REAL reason most get into trading. It's just a job*.
* Has great perks however.
In what other job can you take off any time you want without getting the stink-eye from the boss (wife not included, of course).
Or dip out for a hair cut...
Or play golf any time you want...
Or go on a 3-month vacation if you want, and you job will still be there when you return
Or "go to work" in your underwear?
Or drink beer while you work?
Plusses all around
Can you elaborate what is meant by reading the markets? It seems a direct contrast to what most educators preach to developing traders of sticking to fewer setups, wait for the trades to come to you, and not try to make money everyday.
"Read the market (or each issue)" is what you are doing when you look at a chart and try to figure out whether you should buy/sell/hold or do nothing just now. If you're trading the stock index futures, there usually are at least a few "setups" every day.... having "worthwhile profit potential with controlled risk... and significant probability of being correct". If you know what those setups are and are watching for them, you are "reading the market (or issue)". You said in a prior post, "Personally I've taken thousands of trades and these days everything is very tightly controlled as to risk, drawdowns, market situations I will and won't get involved in, etc." So why would you ask about what it means to "read the market"? You're apparently doing so every day. (??)
"Direct contrast to what most educators preach"... I don't know what they would be teaching that would be in contrast to what I said above. (??)
"Sticking to fewer setups". You want to trade as many setups as you can recognize and execute "on time". Each trade stands on its own merit. The more good ones the better.
"Not try to make money every day". HOGWASH! However, it's often said that traders... especially inexperienced ones... lose because of "overtrading". If you limit yourself to making "proper trades", there is no such thing as overtrading.
Since starting trading, I find I keep much more up to date with world news, events and pay more attention to what is going on in the world than I used to. I think this gives fuel to personal growth as well as financial growth.
I don't recall posting that. anyhow, I wasn't trying to dig at your post, just trying to understand what you mean. the post can easily be interpreted as just showing up and trade, without planning or preparation the night before, especially with the way you wrote about taking out the guess work, as if you know what's about to happen next. while I agree that by looking at the charts, you develop a sense of path of least resistance, price will always do what it wants in the short term, which makes every trade a calculated guess. and there are certainly days where nothing should be done.
on the note of setups, some traders trade one setup across multiple underlyings, others like to focus on one underlying and trade multiple setups within that underlying. personally, I'm still trying to find my niche, and at times, it feels like I'm trying to do too much, when I should be focusing on fewer setups and be more selective about what I trade.
But by my understanding, reading the market can be broken down into identifying the overall trend, areas to do business, and understanding the balance between buyers and sellers. it's a sort of intuition that you develop through thousands of hours of screen time.
Wednesday, 4:50 PM... Mountain Time.
Exactly right. You can "see what's about to happen next"... the start of moves both up and down. What you don't get to know is how far they will run or how long they will last. You have to play that part by ear.
But knowing the start is something. Play that!
Trading has made me more responsible in terms of money management. I also imbibed the habit of saving money, which I didn’t use to do earlier. Trading has been a rollercoaster ride for me where I experienced both profits as well as losses, but the same has made me tough psychologically.
If I had to answer this question some time ago, I would have blamed it for all the stress in my life. But now that it has taught me how well I can manage my money, I will call it a good decision I’ve madeso far. Profits and losses are a kind of equals in my trading career but I know what I am doing and to what extent I will be taking risks.
I really believe that when you work on building good trading habits, you are not only working on one aspect but are improving your klife as a whole. For instance, trying to make the best decisions in an environment that’s extremely risky and stressful has made mentally stronger. I’ve become more disciplined and have learnt to manage my money better.