10 Essential Truths to Know Before Starting as a Trader

Want to become a trader? Know that the road is long, especially if you start from scratch and don't have an economic-financial background (e.g., a simple degree). The reward, for those who make it, is still high. Therefore, consistent with your financial and time availability, it's worth trying. Before taking the big step and deciding to become a trader, you should have a clear idea of what you're getting into. Some brokers often skip this point entirely, aiming to acquire new customers without, at least initially, offering an overview of trading activity. An overview that I intend to offer you in this article, effectively summarized in the form of 10 truths to know before deciding to become a trader.

It's difficult to learn

The road is uphill from the start. Obviously, there's no discussion on this point: if you want to become a trader, before frequenting the market, you have to study, and study a lot. The amount of study and the length of the training path logically depend on your initial background, but the preparation phase involves everyone, even those well-versed in economics and already accustomed to traditional (non-speculative or not completely speculative) investing. The truth is that online trading is something else compared to any activity an aspiring trader may have done before taking this path. It has its own dynamics, rules, risks (many), and opportunities (very many). How to study? How to structure the training path? Unfortunately, there is no official online trading school. You study as a self-taught person, or almost. An opportunity is represented by online trading courses, provided they are of quality, managed by professional traders. For the rest, everything is fine: the great classics (excellent for starting), videos, webinars, blogs. The important thing is to conclude the study of theory with a good dose of practice, which can be tackled thanks to demos, accounts that allow you to trade in the real market but with fake money.

Almost all traders lose money

This is the most unpleasant truth. The vast majority of traders end the year at a loss. There is a heated debate around the percentages. The most optimistic hypotheses speak of 85% of losing traders. The most pessimistic even 98%. The essence of the matter doesn't change: almost everyone loses. So... Is it worth it? Nevertheless, yes. Firstly, because the satisfaction, even in economic terms, for those who make it is logically (almost mathematically) enormous. Secondly, because in this 85-98% are also included absolute beginners, improvised traders, Sunday traders. Therefore, if you don't want to be part of the category of losers, you must commit yourself thoroughly, to shed the beginner qualification as soon as possible, to avoid the temptation of superficiality. The important thing is that you have it clear in your mind: online trading is a potentially very profitable activity... But risky.

You can make a living from online trading but...

Professional traders, or at least most of them, live off trading. They have made trading their main source of income. Some of them have become rich thanks to this particular form of speculative investment. In short, they have realized the basic premises, those that all beginners have in mind before starting. However, living off trading is not a simple achievement, but rather the goal of a path that often proves to be not only long but also bumpy. Few, indeed very few, have experienced this path without sad, even dramatic moments, without having long tasted the bitter gall of defeat. This generates stress and distrust but gives the achievement of the goal "living off trading" a special flavor, which is not only about money. So, if you want to make a living from trading, get it into your head that you will have to work very hard. There are no free lunches in life, even more so in online trading, which is, among other things, immersed in a truly competitive environment.

It's like a job

This is a truth that few people say. Online trading should not be considered a pastime. That's what gambling is for (which, beware, often turns into a vice). Online trading is an activity that requires a large amount of resources, not only financial but also intellectual and even physical. Above all, it requires time. Even those who do "swing" or long-term trading, thus keeping positions open for weeks or months, spend a lot of time studying and preparing the investment. The best way to achieve wealth through trading is to give it the same importance as a job. Obviously, a job can also be part-time, so it's not necessary to immediately transform it into your only daily activity. The advice is still to establish a very precise routine. How many hours do I dedicate to trading? In what part of the day? If you want to become a trader, you must first answer these questions. So, prepare to disrupt or at least heavily change your routine.

It's not just about the chart

Those who decide to become traders but find themselves in a condition that qualifies them as beginners often have a distorted idea about the analysis activity. They perceive analysis as a necessary tool for good trading, and indeed it is. However, they often perceive the concept of analysis in a distorted way. Analysis, in fact, does not only mean technical analysis, i.e., the one that starts from the chart. It's just a part of the whole, a tool that should be used in reciprocal integration with others. So, also practice fundamental analysis, that is, the study of the economic environment, financial and political news with a view to price forecasting. Practice, but this is a skill you will acquire over time, also institutional analysis, i.e., the study of the behavior of large players (who have more information available than any other independent trader).

Psychology is an essential part of online trading

This is also a truth that is often ignored. It's not by chance: it's quite shocking, as well as capable of distorting the vision that those who think about becoming traders have of this activity. According to the collective imagination, certainly fueled by the media and some film products, the trader is a calculating figure, with a strong personality, at ease with risk. The truth is different. It may seem trivial, but the trader is still a man. Therefore, he has his weaknesses, his moments of sadness and fear. All this, i.e., feelings and personal characteristics, are amplified during trading activities. Indeed, opening and closing a position, "putting on the plate" money that is almost always the result of one's work, is very stressful. Emotions risk taking over and compromising lucidity. Hence, the need to act on the psychological front. There is nothing easy in all this, but with a bit of practice and external help, it is possible, if not to remove, at least to limit the impact of emotions on trading activity.

Money management is half the work

Anyone who wants to become a trader knows that they must manage money if they don't want to lose. The first step to making money is not to waste it. This is a triviality. It is not, however, the way in which this concept (money management) is transformed and evolved when doing online trading. Money management, from a common-sense initiative, becomes an almost scientific practice, a discipline to be exercised pedantically. In online trading, money management is an omnipresent concept. So, if you want to become a trader, you need to know the money management techniques, officially "money management". Some are very simple, for example, the rule that it is good not to invest more than 2% of your account in a single trade. Others are more complicated but also more effective. The advice is to include in your training path many steps that concern money management. Once the techniques have been learned, the best thing is to test their execution in a demo account. Which, as already mentioned, designs a safe environment in which to practice.

You can start with little capital

To be honest, this is a truth that is often "communicated" to aspiring traders. After all, it is functional to the acquisition of new customers, to the expansion of the potential audience. It's a fact: to do online trading it is not necessary to have a four-zero account, and often not even a three-zero one. Some brokers, in fact, maintain a very low entry level, with a minimum initial deposit of a few hundred euros. However, not all that glitters is gold. At least two aspects have to be considered. Low capital corresponds to minimal gains. It's mathematics: if you start for example with 1,000 euros, and from a trade you gain 4%, you have pocketed... 40 euros. Low capital favors the use of financial leverage. In light of these minimal gains, beginner traders tend to abuse financial leverage, a tool that allows you to multiply gains but also losses. A useful tool, but very dangerous (dramatically dangerous) if used badly. The advice, therefore, is to set aside a nest egg to start your trading career in complete safety (or almost).

You can copy from other traders

The concept of "copying" has no place in the collective imagination. Those who copy, since school times, are not well regarded. However, only those who copy are able to succeed. Copy, in this case, is intended as emulation, as reproduction of others' actions with knowledge of the facts. Copying from great traders, with all necessary precautions, means learning from them. Some brokers have created platforms and programs that allow copying (with the consent of those concerned, of course). These brokers are to be considered if your goal is to scale this activity quickly, and without hurting yourself too much.

Robots exist

Exactly, artificial intelligence has also arrived in online trading. To tell the truth, it arrived there a long time ago, but only in recent years has it made such big steps as to truly represent an opportunity for traders. Robots in online trading are called Expert Advisors. They are programs that analyze the market, give signals, and open/close positions according to the trader's past and preset indications. Obviously, there are EAs with a high degree of automatism and EAs with a low degree of automatism. Among the best ones around is EvoForex, a particularly efficient EA, which has achieved important goals already in the first months. Obviously, these software have to be carefully evaluated, also because the risk is to set them up badly, and to make them ineffective or even harmful.