Habit 4 â Understand Risk Management
Never risk money that you can't afford to lose, aka, "scared money never wins".
An integral part of Risk Management is understanding the use of leverage.
Eg:If you have capital tied up in long options, and fall below the $25K daytrading rule, in order to daytrade effectively you have very few avenues open to you.
One effective avenue is the use of available leverage - enter prop firms.
Now, I would not expect, nor would any reasonable person, anyone to do anything for nothing, so yes, of course prop firms must make money on traders, it is their business model.
Making $5K can be as easy or as hard as one wantsâ to make it - the reality is that without adequate buying power you will never make it daytrading.
Goals and Objectives have their place in trading, but they must be simple and effective, delivering the anticipated results in a very short time, else they are likely to be gross misguidance, and nothing more.
If you want to be like a pension fund manager / trader, and work in a big bright office with people shouting and making silly noises all day, then the series exams are for you.
If you want to learn how to take money from other traders, especially the series 7 traders, then learn how to use leverage to your advantage with small risk, understand that TA really means Thick Analysis, and most of all, be willing to listen to what experienced traders have to say, whether you like it or not.
I have already learned some additional worthwhile information from experienced traders since I started this thread, and the majority of info has been by PM and e-mail!
Traders know traders by what they say (post), as the initial learning experiences are common for all, thanks to our "expert" book writers on the subject of trading.
Experienced traders reach a level where they have no interest in speaking with time wasters, which is very understandable, and at this stage the emotional side of trading is at its critical point.
Some want to share what knowledge they have acquired, but can't understand why so many are so ridiculous in what they post.
The answer is simple, they are still at the initial learning stage and when something does not make sense to them, or they can't understand it, they attach, and ruin it for themselves, instead of asking the right questions to make the knowledgeable trader part with some of that hard earned experience.
Trading is an Art, but not an Art like most think it to be.
Habit 2 â Think Common Sense
Beware anyone who is selling information, unless they are willing to show you their private account, in which case, if you are so lucky to find such a person, expect to pay out big money for the information, in one form or another.
