Mental Strength
Resiliance, patience and trusting in your data. Understanding the way a trading strategy works over a series of trades is critical to long term success. Every system loses trades from time to time, to expect anything different is a true sign of an ametuer trader.
How to Learn
- Meditate daily, there are mutliple ways you can meditate including calming the mind and clearing all thoughts, or another way is to go into meditation with a specific question or thought, and create pure focus on that concept allowing answers to freely flow to your mind.
- Read or listen to Trading in the Zone by Mark Douglas
- Intensive physical training combined with strong discipline can have a massive impact on mental resilience, bodybuilding programs that incorporate nutrition and excerise plan are a great way to develop mental strength as a secondary benefit.
Data Analysis
Knowing your data can help to understand the expecctations of a system and what should be happening and what is likely to happen. All of the data such as max losses in a row, maximum drawdown, daily drawdown, expected return, win rate percentage should be known before throwing excessive amounts of money at a trading account or prop firm.
Udemy courses and Youtube searches should provide enough about working with data, also playing around with excel spreadsheets will be hlepful in working with number based data.
Building your data with your trading strategies will be a massive help in knowing yourself as a trader, this phase is all about keeping the costs low and accounts small. Get the percentages worked out over 6 months to 2 years so that you can assess and analyse your own ideas and processes to improve and understand your own trading on a deeper level.
To build your data you need to trade on either a demo account or a small live account but be aware many demo accounts get deleted after a certain period of time which makes data building better with a live account.
Risk Management
Once you know your system and strategy quite well and have the data to back it up, you can move onto the risk management portion of learning. Trading in the Zone will help understand the concepts, along with algorithmic trading and backtesting with different risk settings, stops and targets.
To learn how risk management effects your trading account, you can figure out your risk settings and see how many losses in a row you would need to destroy your account and what the effect of different stop losses and percentage risk per trade would be.
You can use the strategy tester in MT5 to see the effects quickly if you know how to code your strategy into an mql5 program.
Research
Technical and fundamental analysis are important parts of trading. Understanding the effect of market conditions on a trading instrument can help gain an edge in the market. Effects can include indicator positioning compared with price, pricing structure, time of day and order flow of the market through to macro economic concepts, news announcements and crisis.
Continuous learning across courses, textbooks, youtube (on specific topics not influencer hype), learning how to use the platform, coding and testing what works and what doesn’t.
Bring it all together
You don’t need huge returns to do well in trading, if you can gain a consistent edge in the market and gradually gain a return most months with limited drawdowns, the mathmatical framework of trading can bring great benefits and offer a vehicle for you to utilise well into retirement.
But it doesn’t come without hard work, resiliance and discipline. For those starting young, even spending 20 or 30 years would be worth it to work this out alongside whatever it is that you do for a living, because you will have a financial vehicle you can utilise that is quite difficult to be taken away from you.