Should you trade? That is a big question, it is something that you need to ask yourself, in fact, it is something that everyone who is thinking of treading will need to ask themselves, this is for the simple reason that trading really is not for everyone, in fact, it is for the few due to the number of requirements that it requires and the stresses that it can put on you. So let’s take a look at what sort of things are required, so you can work out whether it is the right thing for you.
Do you have disposable income?
One of the main rules of trading is to never trade with money that you cannot afford to lose, so you need to be able to say yes when asking yourself whether you have disposable income. This is money that will not affect your life in a negative way should you lose it. As soon as you get into the territory where you will be missing out on things or even worse not being able to pay bills if you were to lose the money, then you need to take a step back and wait. Do NOT trade on money that you need, if you lose it, it can lead to a very dark spiral, so be sure that any money that you are willing to trade with, you can consider lost as soon as you deposit it into your broker account.
Do you have a lot of free time?
Time, something that a lot of us complain about not having enough, the unfortunate thing about trading, is that you need quite a lot of it. You need it for both learning and for actual trading. While you can make do with an hour two each day, and a lot of traders actually do. This will dramatically slow down the process of learning and developing your own plans. Trading takes a lot of time, the initial learning can be so intense that it can take a couple of hours to learn even the basics, so if you are struggling for a time through work and family life, you may struggle to pick it up. This is not to say that you cannot, just expect it to be a long process.
Can you deal with stress?
Stress, a major factor with trading and for a number of different reasons. A lot of people find it hard to deal with stress, when they are put under a lot of it they can either freeze up or the quality of their work takes a hard hit. With trading, you need to be able to deal with it, as soon as stress begins to take over, it will inevitably lead to mistakes and ultimately a loss of money. There are certain techniques that you can use to help reduce it such as taking breaks, but ultimately if you are not good at naturally dealing with it, you could find trading to have quite a negative effect on your stress levels and overall well being.
Do you like math?
The majority of people when you ask them whether they like math or not will simply state no, most people hate it. Trading has a lot of similarities with math and uses it in pretty much every aspect, working out take profit levels, how much to risk, currency changes, resistance levels, all of it requires an aspect of math, yes there are calculators for a lot of these things, but you will need to be able to get a grip on the underlying equations and statistics if you want to become successful. So if you dislike maths, there is a chase you could dislike trading too.
Do you get lonely easily?
Trading is not really a social thing, of course, there are ways that it can be, but for the majority of people it is quite a lonely experience, you will spend a lot of time by yourself looking at a computer screen, reading, learning, practicing. The only way to get a better understanding of that experience is to do it, so there can be extended times of being by yourself You can break these up by taking breaks, going out and those sorts of things, but that doesn’t change the fact that there will be a lot of lonely nights by yourself, just you and your computer screen.
Are you a rule breaker?
A lot of trading is about making rules, when you first start you will be told that you need to create a trading plan, this plan will contain a lot of rules that you will need to follow, in fact breaking any one of them will result in what is known as bad trades. If you are something that does not have the discipline to stick to the rules, then you will end up making a lot of mistakes and bad trades.
Can you control your emotions?
Are you able to control all of your emotions, we are thinking about emotions like greed or overconfidence, one is a very negative emotion of wanting more while the other is a good emotion of believing in yourself, but both can have the same devastating impact on your trading. Trading is an emotionless thing, it doesn’t care about how you feel or what you want, it cares about the money. If you let emotions get the better of you it can cause forced trades for more risk, which ultimately will lead to losses.
Do you like risk?
Trading is risky, there is no other way to mention it, there is a reason why any service that offers trading opportunities needs to note on their site that there are a lot of risks to it. There is a good chance that you could lose everything you put in, and there is a certainty that you will lose some of your trades, the majority of them when starting out will be losses. If you are afraid of this, then trading is not for you. If you are not happy with a minimum of 1 out of 3 trades being a loss, then trading is not for you.
Do you understand that it is not a get rich quick scheme?
With its rise in popularity, also comes the rise in its advertising. The majority of adverts you see these days are from brokers offering low entry limits and great leverage, or from affiliates stating how easy it is to make money, not to mention the thousands of scammers and lies out there. You need to understand that trading is not a get rich quick scheme. In fact, those that are profitable now, probably took over a year to break even. There will be losses, there will be wins, but one thing for sure, you won’t wake up rich the next day, it will take a long time to get there.
There are of course many other things that you will need to ask yourself, but these are some of the major ones., Trading is certainly not for everyone, the majority of people who start trading will quit after a month or two, either from losing the money in their account or by finding everything a little too much. It can be overwhelming, but if you found that you are able to cope with a lot of things mentioned above, then it may be something worth trying. Start with a demo account, work your way up, it is a slow and long process, but ultimately a fantastic opportunity to make changes in your life.