If you are thinking about getting into the stock market for all of the glamour and the money, you might want to think again. Trading is hard work and the learning curve is steep.
Unfortunately, none of the trading gurus will tell you this. Why would they? They are too busy selling systems and stock picks that will make you rich overnight.
So I thought I would put together this list of my top 10 trading truths that no one else is going to tell you:
1. Trading is hard work
Yes, it’s true. If you want to be successful in the market you are going to have to work your ass off. And then you are going to have to work even harder. Why? Because trading isn’t Vegas. Trading is a JOB. Period.
Don’t believe me? Go down to Wall Street. Watch all of those guys is suits coming and going. They are your competition. And they are going to WORK. When you trade the market, you better be going to work as well.
2. Trading is frustrating
You will place trades that will do the opposite of what you think. You will close positions that will take off without you. You will get shaken out, fakedout and sometimes you won’t even get in.
It will make you want to break things.
3. Trading is boring
For all of the glamour and excitement of money and high finance, trading can get very boring. You have search through hundreds of charts to find potential trades, and when you do you can pick a position that goes nowhere, or bounces back and forth in a channel of boredom.
Better get used to it.
4. Trading will make you crap your pants
Yes, it can be THAT scary. After all, we are talking about money here. Most people have a love/hate relationship with it. Put enough of it into the market and you will find out EXACTLY how you feel about it — and some of that knowledge will scare the CRAP out of you.
5. Trading will cost you money
It will. Especially in the beginning. You are going to have to learn how to do this. You are going to take trades that make no sense and will crash and burn faster than you can pull out. You will have no idea what “cut your losers short” means. You will chase trades. You will average down. You will revenge trade.
It’s going to happen.
6. Trading takes a long time to learn
For most average Joes and Janes, the learning curve for trading is steep and it takes a long time to grasp. That’s because trading well often times flies in the face of conventional thinking. And that makes sense, doesn’t it?
If most of the people in the market lose money then you are going to have to act differently than most people. Unfortunately, humans like to run in groups. So acting alone will feel strange and difficult.
7. Trading is all about psychology
Whenever I visit a trading forum I inevitably see the same thing — tons of open and active forums discussing the current state of the market, new indicators, new trading systems and new entry methods. The trading psychology forums on the other hand resemble ghost towns! For some reason no one wants to talk about their own psychology and how they view/feel about managing money, having money at risk, or following rules.
This reason alone should make you want to pay more attention to it.
8. Trading will bring your biggest fears to light
Afraid of going broke? The market will expose that fear. Afraid you’re not good enough? The market will expose that fear. Afraid you don’t know what you are doing? The market will expose that fear. Afraid you’ll always be a failure? The market will expose that fear. Not only that, the market will take those fears and DISTORT them and project them back to you 1,000 fold.
Now do you understand why trading psychology is so important?
9. Trading will make you think you are a loser
In the beginning, you will do everything wrong. You will buy the top. You will sell the bottom. You will average down. You will listen to the news. You will anger trade. And you will LOOSE. All. The. Time. You will loose so much that you will start to FEEL like you ARE a loser.
This is where most people quit. I myself went through a 3 year losing streak before I figured a few things out. And yes, it sucked.
10. Trading will demand everything you’ve got and more
Time. Money. Attention. Energy. Resources. Patience. Determination. Commitment. Creativity. Strength. Honesty. The market will demand all of these things and more — and you have to be willing to go for it, 1,000% if you want to get good.
But here’s the thing — if you love trading — really love the act of looking at charts and searching for trades and analyzing data — if that speaks to your personality — then making those sacrifices will be very rewarding in the end.
It’s just like any other thing that requires proficiency. If you want it bad enough, it’s yours. Just be ready to pay the price. And if the market isn’t for you, well, then, there are TONS of ways to become successful and yours is out there waiting for you.
11. Trading is about losing
If all of those other truths weren’t scary enough then this one will be downright terrifying. That’s because trading well is really all about losing and accepting/understanding/managing losses. That’s because, in trading, the winners take care of themselves. It’s the losers that you need to manage.
ANYONE can manage and accept a winning trade/week/month. It’s how you handle the losers that will determine your trading chops.
Does all of this sound grueling? Well, it is. Can grueling things be challenging and life affirming and thrilling? Yes, they can. But you have to be willing to pay the price. Are you willing to pay the price? Think long and hard before you get involved in this activity.
Trading has driven more than a few men insane. It’s caused others to lie and lose everything (Madoff), and others yet to scam people out of millions (Jordan Belfort).
But if you get it right, trading can be like nothing else. To call a good trade. To work out a profitable system. To manage money and watch it grow. To find that undiscovered stock before it takes off. That’s what this is all about.
Good luck to you all. Until next time…