After reading my guide, making your fake money account, and hopefully doing your research , it is time to make your first trade. It is always exciting to get your first trade going, especially after spending all that time sifting through my stunning guideline and following the market every day. Heck, your fake money account might even be making a great return and you’ve already doubled your money. But your first trade is a new step in itself, but thankfully we have laid some great ground work. Now it is time to put some real hard earned money on the line and hopefully see some returns on your time. Here are some things to remember
Real Money- This is real money and if you haven’t played poker before, it will take a while to get used to how it affects you. Unlike your play account, you are probably going to weigh your decision more heavily and it is important to keep to your risk management on your trade
Trading Size/Management- being your first trade it is important to strictly adhere to your trading size and management. You should only risk about 1-3% of your account on a specific trade as your stop loss . So for example if you have $1000 dollars you should only be willing to lose $10-30 dollars on a specific trade.
Profit and Stop Loss- you should keep a target of a 2:1 profit to stop loss. So if you are willing to lose $10 on a trade, you should theoretically take your profit on a trade and close out once each reaches $20. This is more specific to day trading, but is more a guideline of how to look at your first trade. This ratio will give you a profit if you assume a 50% win rate * Win rate: how many times you win on a trade vs lose on a trade, if you win half the time it is 50%
Emotions- with real money comes real emotions. You may feel tempted to add to your trade if you see it going up ;however, this will lead to over exposure and you will be over leveraging your account on this trade. You also might feel like chasing your trade or doubling down when your trade is losing to hope to recoup your money. Try to avoid these when you first start. There are factors that where both these could make sense when fundamentals and analysis suggest it
Watching your Trade- if you don’t have time or even if you do, it is important to monitor your position. Especially, news updates and new fundamental changes that might affect your position. Obviously, if this isn’t your full time job that can be hard. So it is best to set notices on your trades.
Setting Trading Alerts
News Alerts- most platforms allow you to sign up for news alerts that are related to certain stocks or futures markets
Price Alerts- you can set price alerts on most platforms at specific price targets
Higher Price- set a price alert just below your specific profit sell price
Lower Price- set a price just above your stop loss price
STD Alerts- you can also set alerts related to a 1 STD move in that stock
Floors/Ceilings- if you are charting you can set alerts and your proposed floor and ceiling prices
Stop Loss- most platforms have an option where you can set a price target to sell at your loss parameter
Future Price- most platforms have an option that allow you to set a price target to sell at your profit parameter
Managing Expectations- you aren’t always going to make money on your first trade and that is ok. So make sure to keep your mindset in a reasonable zone. This trade is to dip your toe into the market and to set a baseline to starting to your trading guidelines . If you lose money , just accept it , analyze what you did wrong, and pat yourself on your back to sticking to your guidelines as those are key to your long term success.
Stick to Your Guidelines- stick to your trading guidelines. It is your key to long term success. Every trader struggles with this as we all have human emotions. But every trader that I have seen be successful stays with in their guidelines. All the ones I see crash and burn do not. This is the number 1 reason day traders have about a 99% failure rate.
Repeat- now that you have completed your first trade. It is time to analyze what worked and what didn’t. Then get into your next trade. We keep going through steps 1 to 9 over and over. Repeat, Repeat, Repeat.
In reference to the stop loss prices or sell profit target points, I don’t always trust the lower end platforms to actually work correctly. I have had issues with brokerage accounts where they ignore or remove your stop loss without your consent. They are legally allowed to do this with margin calls and other situations . And I have even found it happen with just glitches. That is why I recommend setting price alerts as well , so that you can watch it when the stock is getting close and manually create a market order.
In the next guide, I show you how to manage, add , and hedge to your positions in a strategy where you have different entries and exits . I only recommend getting to that level after going through steps 1-9 , 50-100 times. You need to create a good view, framework, and trading strategy before you really start getting into a little bit more of an intermediate trading level.
This is close to how I got started, but I had a leg up since I had played poker for quite a while and was similar to managing your bankroll and emotions. I also didn’t have the advantage of all the information I have given you, so you get to benefit from my painful learning process. I hope you found this helpful, and as always are welcome to message me with questions or comments. Also, please look at my other guidelines, blogs, and videos for more information and helpful trading tips. I also have a traveling section very similar to my trading guidelines but obviously for travel, hence the traveling reference.