Becoming a Trader: A 4-Step Journey

Becoming a trader is a difficult mission, but not impossible. This is regardless of the level of preparation, as long as it is not abysmal. Basically, anyone with an average level of preparation can become a trader, if they put in the effort and know how to train themselves. However, difficulties arise from the fact that there is no real official path, there is no university - for example - that teaches online trading. For this reason, we propose a 4-step path that can be followed by almost anyone, and is easy to understand.

Study the markets

It is unthinkable to become a trader without developing an in-depth knowledge of the markets, the dynamics that involve them, and the way they are "managed" by investors. The first step, therefore, is to study in a general way, without focusing on a particular asset. This is because some dynamics are repeated regardless of the asset being traded. In this phase, it is essential to study classic manuals, which certainly, at least in their respective first parts, allow you to acquire a basic understanding. This is also a particular phase, as it differs based on the background of the aspiring trader. Some aspiring traders are more advantaged than others due to their personal training or, more often, their educational background. It is up to the individual how much and how to study. Below are two general tips. Firstly, approach studying in a "professional" way, that is, dedicating time regularly, trying to establish a sort of routine. Secondly, consider the general educational content that brokers are increasingly creating. Some brokers take a broad approach and provide training tools for absolute beginners.

Make the right strategic choices

The second phase is crucial, and consists of making some decisions that will undoubtedly determine the characteristics and, why not, the hopes of success for the future trading career. Becoming a trader also means choosing well. Here are the most important choices that those who intend to pursue a career in trading must make. Asset. "What do I invest in?" This is one of the first questions a trader must ask themselves. The answer is less obvious than one might imagine. This is because the most useful advice is to focus on a small circle of assets and specialize only in that. Jumping from one thing to another causes a dispersion of energy and, in the long run, produces ineffectiveness. Broker. This is by no means a trivial choice. In fact, one broker is not the same as another. They differ in a whole series of aspects, given the necessary but not sufficient condition of honesty and possession of a regular license. Evaluate brokers based on parameters such as the comfort of the trading environment, the range of assets offered, the offering of analytical and educational tools, and costs. Type of commitment. Do you plan to become a professional or part-time trader? Will trading be just a hobby for you or, on the contrary, do you intend to make it a job? Your general approach to the activity will depend on these questions. The choice between professionalism and non-professionalism is one to be made almost immediately. Capital. What resources can or do you want to put into play? It's up to you to decide. Certainly, starting with a large capital provides a significant boost to trading activity. However, be very careful not to overextend yourself, that is, not to invest a good part of the capital produced through sacrifices. Investing money that "you need in life" can cause an exponential increase in stress.

Identify a strategy

This is also a crucial phase... And not at all simple. This is because trading without a strategy is extremely dangerous, in fact it represents the fastest path to failure. Improvisation, when it comes to trading, should be banned. After all, improvising in trading is a bit like gambling. So a strategy but... Which strategy? Around the internet you can find packaged strategies, ready to use? Much can be said about their real value, but the truth is that the best strategy is not a packaged one, but a personalized one. That is, tailored to your own possibilities, your own trading approach, your own goals. The advice is yes, perhaps refer to an existing strategy, but tweak it to make it suitable for your trading activity. In any case, a trading strategy worthy of the name should cover areas such as money and risk management, technical and fundamental analysis, and pure trading operations. There is a lot to decide. However, once the exact strategy has been identified, trading becomes easier, at least from an emotional point of view. Navigating by sight generates stress, in trading as in life, while having a "plan" reassures, as well as setting up an optimized and, at least potentially, effective path. Obviously, the strategy must be tested before being used. This leads us straight to the last step.

Practice

In theory, at this point you could be ready for the market, to become a full-fledged trader. In theory, indeed. What about practice? Normally, one should practice by trading, but this would be dangerous. The risk of losing money in this hypothetical phase would be very high. Brokers, aware of this dynamic, have put in place tools specifically designed to allow aspiring traders to practice: demo accounts. These are accounts that look in every way like real accounts, with the only difference being that... The money is fake! The trader therefore simulates the trading activity, and this allows them to test their skills and strategy. Not only that, it also allows them to "try out" the broker and the platforms. Demo accounts have only two limitations. First, often their opening is linked to the opening of a real account, so they are only free on paper. Second, they do not allow practice regarding one of the biggest challenges a trader must face: emotional pressure. This is in fact generated by risk, but if the risk does not exist as the money is fake, then the emotional pressure cannot be "simulated". This is a structural limitation, insurmountable, a problem for which - quite simply - no solution can be found.