Learning The Fundamentals Of Successful Trading
However, it’s essential to understand that spending less time as actively trading doesn’t mean your risk will be reduced proportionally.
The fact is; part-time traders need to devote at least as much attention to the fundamentals of sound trading and, in particular, risk management as their full-time counterparts.
On the other hand, they can save time when it comes to the number of strategies and technical indicators they learn and employ.
By learning and sticking to a proven trading method, it’s possible to earn substantial rewards from a limited investment of time. You can do this while avoiding some of the more common pitfalls which generally await the enthusiastic newcomer.
The Dangers of Trading Under Time Pressure
This has certainly been the experience of Shawn Banyai of Minneapolis, Minnesota. As the busy owner of a successful construction business, Shawn has always struggled with finding enough time to trade. In fact, because of intense pressure from work, he recently was forced to take a year away from the markets altogether. It was a decision Shawn made reluctantly, but looking back, it was a wise one.
Few things are more conducive to losses than the feeling of being rushed, trading with inadequate knowledge of the system and indicators you’re trying to apply, as well as the feeling that you need to get into the market on a less than optimal setup.
You unwisely do this rather than allow a short trading session to be chalked off as a blank. Shawn’s own experience provides a great example, as he remembers only too well. “I got started by getting sucked into a pump and dump,'' he recalls, “I was up big quickly and had no idea how I lost it all even faster.
"I got started by getting sucked into a pump and dump. I was up big quickly and had no idea how I lost it all even faster. I wanted to learn more about trading stocks, and as I researched, Jason Bond's name kept coming up."
Be Wary of “Market Insiders”
These so-called “pump and dumps” are questionable (at best) operations in which the price of a stock (usually a penny stock) is talked up through the spreading of overly-optimistic, misleading, and sometimes utterly false information by insiders who already own substantial quantities of the stock.
When the price has risen sufficiently, the insiders abruptly sell their stock for handsome profits, causing a collapse in the price. In most cases, this leads to significant losses for the unfortunate traders who were not in on the secret.
Some of these operations are frauds, which are of course strictly forbidden by Securities and Exchange Commission rules (SEC), but the potential rewards are such that some unethical operators remain undeterred.
Outright scams are relatively rare, but attempts to move the markets are not, and the sensation of confusion, even fear that comes with seeing a stock price move dramatically for reasons you don’t understand is a common experience for novice traders.
The Benefits of Getting a Sound Trading Education
The first and best protection, as many traders like Shawn have learned, is to acquire as much technical knowledge and practical experience as possible. Ideally, you can do so under the guidance of a reputable trading mentor like Jason Bond.
Secondly, this knowledge and experience must be shaped into a comprehensive trading plan that can be followed during all trading sessions. A practical plan that can be applied to all trades, winners and losers alike.
Thirdly, as when trying to acquire any new skill, it’s important to practice your trading skills as often as possible. This applies perhaps even more to part-time traders who by definition, are not getting as much live trading experience as their full-time counterparts.
These are principles which Shawn has taken to heart, and which he expresses in simple terms. Many a legendary trader would happily endorse this sage advice: “Start slow, and paper trade. Make sure you understand the information that people are giving you before risking all your hard-earned money. Be happy with multiple small wins.”
“I like the way Jason teaches, his energy, his passion.”
Building Confidence With Small Wins
Being content to build up your trading account gradually, by regularly banking small wins, is a great attitude for any trader to cultivate. It’s especially important for people who can only trade, or only want to trade, part-time.
It helps to build up confidence and remove a lot of the fear and self-doubt, which commonly plagues inexperienced traders.
Now, you might think that fear is not an unreasonable emotion to have as a trader. After all, fear of loss can act as a brake on the desire to take on undue risks in the pursuit of rapid profits. There is some truth in this idea.
But fear can also be a problem for the inexperienced trader. Successful traders know that losses are an inevitable part of the process, and with this understanding, they learn to accept losses calmly, without deviating from their trading plan. On the other hand, an excessive fear of loss can lead to potentially profitable trades being missed because of hesitation, or to entries you're taking with less than optimal timing.
In the worst case, like a golfer with the dreaded “yips” on the green, the fearful trader may find it virtually impossible to place any trades at all.
Washing Away The Fear by Trading Part-Time
One of the great benefits of trading part-time is that these very natural fears are significantly reduced when the trader has a steady and reliable source of income with which to replace any losses.
On the other hand, those who rely on trading for their livelihood must be very strong-willed to persevere through the inevitable losing sequences, particularly if the expectation of an income from trading forms a significant element of their retirement plans.
Of course, the freedom and independence that goes with trading full-time is nevertheless an enticing prospect for many.
“I’m already up over $1,200 in realized profits during my first week trading part-time.”
Enjoying a Different Kind of Freedom
For people like Shawn who’ve spent their working lives building a business, or those who’ve achieved a well-rewarded position in their chosen profession, the appeal of trading lies in a different kind of freedom.
It lies in the fact they can take the necessary time to learn the craft of trading safely, without jeopardizing their primary source of income. They also enjoy the prospect of adding significantly to their long-term wealth. Of course, this doesn’t mean that results always need to be a long time coming. In his very first week of trading part-time, Shawn banked no less than $1,200 in profits under the guidance of Jason Bond in his Freedom Trader program.
This kind of performance has given Shawn the confidence to achieve his primary goal of building sufficient wealth to retire early while having more time to enjoy the fruits of his success.