I once read about a conversation between a top trader and a
trading psychologist. The psychologist asked the trader what he saw
when he was looking at a chart. The trader answered that he was
dissecting the chart bit by bit, ascertaining what the market
participants were thinking at each turn in the market, and then
established where he would buy or sell short the market
himself.
The psychologist intervened and said: “what you are really
seeing is the cumulative experience of all the charts you ever
looked at”.
The best way to learn to trade using charts is to look at
charts. I am probably not going to win the Nobel prize for that
statement, but it sums up the essence of trading using charts. You
need to get your hands dirty.
Finspreads offer an excellent charting package and it is
free for our clients. It offers real-time prices and you have a
wealth of technical tools available on the platform. If you need
help with the indicators, you should sign up for one of my trading
workshops at our London office.
The main problem with charts is the hard right edge. The hard
right edge is the white space next to the last price entry on the
chart. It is so easy to see place trades with the benefit of
hindsight, but once you are faced with the hard right edge, you
know for real the challenge of trading.
Having the right attitude and the necessary tools will help make
your trading easier and more manageable. Let’s take a look at some
components that you should consider for your trading.
First, make sure that you have adequate capital to trade
with. Spread betting allows you to start trading with small
amounts of money and build up to higher levels when you are more
confident. Finspreads offers some of the lowest stake sizes in the
industry, from just 10p per point for your first few weeks.
Secondly, you need a trading plan that clearly states your aims
and objectives before you put on a trade. Consider whether you will
invest in a trading system or a trading method to determine your
entry and exit levels for your trades.
Thirdly, consider a trading course to help get you started.
Trading should be taken seriously and serious traders educate
themselves to become more successful. Trading is an ongoing
education process. It is never too late to start learning and one
should never feel that one knows enough. Make a point of attending
one of my workshops in London and come and meet other traders who
are also starting out.
I also highly recommend the following books, which are a great
help and inspiration for many traders.
- Market Wizards by Jack Schwager. (Brilliant).
- Reminiscences of a stock operator by Jesse Liverore. (A
classic).
- The day trader - from the pit to the pc by Lewis Borsellino.
(Must read).
Good luck in your trading,
Please remember spread betting is leveraged
and can result in losses quickly exceeding an initial outlay. It’s
not suitable for everyone and you should make sure you fully
understand the risks involved. If you have any doubt, please seek
independent advice.