It is true that every trader has a tale to tell and indeed some might come from quite challenging situations while others had millions to start with.
Personally, I believe that it is better for one to start trading with smaller amounts of capital. This would allow you to experience the turbulence of trading live without incurring too much risk. Nevertheless, I would always advise anyone who wants to start to trade to quickly move from trading the demo account to trading live. Trading live would allow you to understand the demons in you and to slowly slay each one that confronts you as you become a better trader.
Anyway, in this post, I would like to highlight some key takeaways from 2 traders that have been interviewed by the Stocks and Commodities magazine. They are Kevin Haygreen and Gavin Mok. Kevin is a full time home based futures trader based in Britain while Gavin is a part time currencies trader who trades from Melbourne Australia.
Kevin has a rough start in life, after having been thrown out of the house penniless at the age of 16. Trading is a passion for him. I think that this is one of the pre-requisites of a successful trader, you need to be passionate about trading in order to succeed in it.
Kevin mentions that he got his confidence trading the markets over time. Time here plays a crucial factor in his life as it heals both his life pains and encourages him to become a better and braver trader. One of the things that he said in the interview that really caught my attention is when he said:
The only thing that separates the winners and the losers is that one person wanted it more than the other.
I just couldn’t agree more with the above. Its about who will put in more effort when things are going bad for him and continue to persevere. Perseverance and patience. 2 main key characteristics required of every trader in order to be profitable.
Kevin offered some very good advise. You could have heard of them somewhere else, but nevertheless, the advise is timeless. Here is what Kevin said:
My advice would be to make sure that they have enough capital to give trading a proper go and be flexible in their trading, because markets change and you need to be able to turn your hand to different strategies if you want to last as a trader.
Many among my friends want to start trading with a small capital. I have advised them to save that capital until it is large enough for them to be able to trade using proper risk management strategies. It is from my own experience that I know that trading with a small amount of capital puts you in a higher probability position to wipe out your account. Kevin also mentioned about the need to be able to turn your hand or in other words, to be flexible and trade according to the way the market is moving. This means that we as traders need to continuously be on our toes and utilise strategies that suit the way the market is moving. As we know, markets either trend or range. We need to ensure what it is doing in order to deploy the most suitable strategy to trade. If the way the market moves doesn’t require that you enter a trade, then the best thing to do in my opinion is to stay out or you’ll experience the occasional Ouch!
Moving on, we learn about Gavin Mok, who started in the equities market and traded stocks listed on the Singapore stock Exchange. Being a Singaporean myself and having traded stocks on the Singapore Stock Exchange for the last 11 years, I can feel the closeness of my own experience with Gavin’s. I too started with around $3000 and that was when I was still an undergraduate studying in the National University of Singapore (NUS). I remembered the days when I researched at the Business Library in NUS and got a few books that got me started on Technical Analysis.
Gavin got his confidence from the records that he made of his winning trades. It makes him feel confident in his ability to trade. He said:
I have a list of consistent winners. It is these winners that make me feel confident in my ability to trade in different market conditions and manage my own account.
Many a trader have espoused the need to have a trading journal and the above statement from Gavin have definitely supported the point again. Keep a journal, be it a small notebook or a trading blog, as long as you have proper records of your trades, you can and will learn from them as time goes by. Markets repeat itself and you might just be rewarded by the scribbles that you made a few years ago that is now giving you that confidence to make a trade that could yield you significant profits.
Anyway, there are still a number of learning points that we can take from Gavin. Many beginner traders believe that they have to attend trading courses costing thousands of dollars before they can ever trade properly and with confidence. Gavin however is a testament that one can be a self-educated trader. He learned to trade through trial and error in small trading accounts and he understood the importance of being able to study the market and develop trading strategies of his own. I too am a firm believer in this. I believe that it is important that you devise or derive your own trading strategies that you can be comfortable with and confident in. Nothing can be better than having a strategy that consistently works for you, even though it doesn’t for many others. Most important is having something that you can understand and apply in the markets to rake in the profits consistently.
Gavin’s strategies are based on trend following. Although he takes short term trades that doesn’t last more than a few days, he still sticks to the adage that “The trend is your Friend”. Personally, I understand what he is doing. Some might remark; “How can you say that you are a trend follower when you don’t hold on to your trades for more than a week?”. I believe that this can be done. Gavin increases the probability of his trades by ensuring that he does not trade against the trend. He mentioned:
I like to trade pullbacks to join a trend, and I use some classical technical patterns. My favorite technical patterns are triangles – ascending and descending triangles. The reason for trading these patterns is simple: they make a lot of sense to me. I feel blind when trading indicators or patterns that do not make sense – they are indicating that the market is taking a short break and building strength for the next powerful move. Anticipating the next move is all I do in order to profit from the market.
As Gavin has mentioned, it is important that you take trades that “Makes sense” to you. The trade has to have the rational element to it. If not, it could just be another gamble. This I would like all traders to be aware of.
Gavin practices discretionary trading and is doing some testing on his automated system. He risk 1% of his capital in every trade and to him averaging down is a definite no. He spends about an hour preparing his pre-market journal and that journal will always be displayed on one of his trading screens.
There are so many learning points in this interview that other traders can learn from. Like Kevin, Gain also gives the advise to take your time in learning to trade and never to rush to get started. He believes that like any other profession, you have to make sure that you develop your skills and are able to work independently.
I couldn’t agree more with Gavin. For me, I just love to work independently. In fact I thrive working independently and it also is a form of freedom to me to be able to make decisions on your own. I hope that you have enjoyed this post and have gotten some key takeaways for yourself.
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Ardy is a Professional Forex Trader specializing in the Forex market. He trades using both Technical and Fundamental Analysis and mentors other traders how to trade the Forex market using proprietary trading strategies which he has developed over the years. He started investing in equities in 1999 and trading Forex in 2008. He is the founder and lead currency strategist @ Forexachievers.com