Page 4 - Trading #101 Course – Part One: Trading Basics

TRADING #101 COURSE – PART ONE: TRADING BASICS /2017-10-06

It is important to “paper-trade” until you are consistently profitable. You need live
experience during a variety of market conditions to experience “draw-down” and how it
affects your trading psychology.

When “paper-trading” is consistently profitable, then and only then trade with real-
money. The “novice trader” will remain stuck at this level if they take the “easy” route of
rushing into the markets with real- money before they are ready.

Diminishing the importance of “paper-trading” indicates impatience, compulsive
behavior, gambling personality, a “get rich quick” mentality, and lack of discipline—. all
of which will keep you stuck at the “novice level.”. Your trading will be unprofitable on a
consistent basis until you either acknowledge it is time to change or you give up and say
that trading this is not for you.
Don’t forget that every “master trader” started at this “novice level”. The length of time
spent here depends on how well you work on your emotional stability and development.

Profit zone: The “novice trader” is consistently losing dollars in his practice “paper -
trading” account (or in his live-trading in the market with actual dollars if he is currently
live-trading).

Trading Style

(Select one style that describes your current trading method):

1. Trend Style

The trend trader or investor likes to trade with the overall trend regardless of time frame.
He uses technical and/or fundamental analysis and signals for trend identification, trade
entry, and trade exit. He rarely uses a stop and reverse (“SAR)”. He does “scale in”
and “scale out” of trends as needed to maximize profit.

Trends can be found on just about any time frame. “Stops” are adjusted or trailed just
enough so the trader can stay with the trend even during corrections within the trend.
(can use trend lines, and “advanced techniques” such as the Elliott Wave, and “classic”
technical analysis).

A day trader could be classified in this category when trend trend-trading intra-day time
frames. Trend traders usually are not averse to authority figures, and they feel
comfortable “belonging” versus being a “loner.”. These tendencies allow for a
comfortable fit of going with the crowd of traders in a trend.

4 | P a g e