Looking back at my journey I realized I haven’t been doing things in the right order. So I have written down a road map to becoming a consistently profitable trader. I am happy to share it with you in the hope it will speed up your development as a trader (as well as mine).
Here is the road map:
- Know WHY you trade
- Learn to trade
- Develop a trading strategy and plan
- Back-test your strategy
- Practice
- Trade live and be consistent
- Become funded and scale up
- Invest
- Spend
Why Trade
Trading is hard. The most important thing you need to know is WHY you want to trade. Otherwise, you will give up. To read about why I trade and why I think you should too, you can read this post.
Learn to Trade
Becoming a trader is a process. And although some people have a natural ability to be successful in trading, most others do not have this.
I believe anyone can learn to trade the markets.
I have written a series of posts, that will help you to Learn To Trade. It will help you get started trading the way I do. I highly suggest you go through the articles in order. The first post can be found here.
E-book
If you rather have a printed version of the posts, then I have got you covered as well. I have created a printable e-book. You can get the e-book version here. Or you can get a printed book here at a small cost.
Other learning resources
Develop a Trading Strategy and Plan
Every trader needs a plan.
Plan your trade and trade your plan!
My Trading Plan can be found here. I hope it will show you that I trade according to a plan and that luck is a minimal factor in my trading. You can copy the plan and tweak it to make it your own.
Learn my trading setups as well.
And …
Get access to My Trading Log
Backtest Your Trading Strategy
An important step in becoming a consistently profitable trader is that you not only develop a trading plan that fits your lifestyle and personality but that you also thoroughly test the strategy on past data. This will help you become an expert in trading the strategy and you will build confidence in the validity of the strategy.
Get Free charting software from Tradingview to do backtests
I use Tradingview to do most of my chart analyses. I also use it to test new strategies by back-testing them using the replay function of Tradingview and by forward-testing them using the paper trading feature.
Practice Your Trading Skills
After completing the above steps you are ready to practice what you have learned so far.
You can open an account at a broker and start practicing on a demo account.
Demo accounts are mainly good for practicing trade operations, like placing and managing trades. You can also use it to forward-test new strategies.
Trade Live and be Consistent
Now it is time to fund a real account and practice trading very small position sizes. This is a big step as with real money on the line, however small amounts, you will be able to practice the mental aspects of trading as well as the technical and operational aspects.
I started small and continued to scale the account by compounding profits and making regular additional deposits. This has made me slowly become more accustomed to larger trade sizes.
Check out SimpleFX if you are looking for a broker.
Become a Funded Trader
One way to make money trading is to become a trader funded by a prop firm. A proprietary trading firm is a company that lets you trade on their trading account. They have strict trading rules. As long as you don’t break their rules and make a profit, you will share in the profits. As these firms can offer large accounts the profit splits can be sizable. However, this will only work if you are already a consistently profitable trader.
I will soon share my experience trading at prop firms.
Invest
You can become financially secure and independent by trading. You do not need a boss to trade. However, it is still an active income. If you do not trade, you do not make any money.
To become not only financially secure and independent but also financially free, I invest.
Spend
Remember your WHY!