Every trader needs some basic tools to get started, which include a trading account, charting software and trading funds. These three tools are all you need to begin trading, but they are not enough to make you a successful trader. To be a consistently profitable trader, you need to have an understanding of the markets and a basic skill set to trade the markets. Without these five tools, you cannot be a successful trader as your actions will be more like gambling instead of trading. Here is a look at how to acquire the five tools and skills needed to get started as a trader.
Why most traders make losses at the beginning
Most beginner traders will open a trading account and fund it, after which they do some analysis of the markets and place trades based on their instincts. Such traders quickly realise that their analysis might be flawed as the losing trades start piling up. The truth is that having a funded trading account is all you need to start trading, but without the right skills to trade, it is just a matter of time before you blow your account. Many traders asking the above questions are generally newbies or losing traders who want to become profitable.
Acquire some basic skills to trade the markets
There are several ways you can trade the markets profitably with the simplest methods being trading support and resistance zones as well as breakouts. Most beginner traders are overwhelmed by the sheer amount of information available on trading, but you do not need to learn every trading technique. You can learn how to identify key support and resistance and use this knowledge to make money in the markets. You could also learn how to trade breakouts by identifying pre-breakout structures and trading in the direction of the expected breakout. Learning these two basic skills can quickly transform your trading results and make you a profitable trader.
Develop the right trading mindset
Once you have the basic trading skills, you can focus on developing the right mindset for successful trading. The foundation for developing the correct mindset that could make you a successful trader is to always trade based on market structure. Therefore, every trading decision should be based on what you see within the markets, and you should never close your trades in a panic if the market structure has not changed. You should also never chase a trade once the highest-probability trade entry position has been eclipsed by the price moving either higher or lower.
Exercise patience and wait for your edge to play out
Trading is a game of probabilities, and once your trading decisions are based on market structure, you should wait patiently for the right trade setups to develop. Furthermore, once you have taken a trade, you must stand aside and let the trade setup play out either in your favour or against you. Either way, you should have a stop-loss order in case the trade goes against you and you have to close it.
You will also have many situations where the price might go against you for a while or trade sideways before heading in your preferred direction. These scenarios will test your patience, and you must allow the market to decide where the price needs to go.
Putting it all together
There are three physical tools that you will need to get started in trading: a trading account, funds to deposit into the account and a charting platform to perform your analysis. However, these physical tools will not make you a profitable trader as you also have to acquire basic trading skills, including the ability to trade off support and resistance zones as well as trading breakouts. Finally, you have to develop the right trading mindset by exercising patience and waiting for your trade setups to play out.
The bottom line
You will need more than just a funded trading account to get started in trading. You have to develop the right trading skills to analyse and trade the markets accompanied by the right mindset to be a successful trader. You need a combination of physical tools and mental tools to get started on the road to success as a trader.