Are you a new trader, feeling overwhelmed and unsure about where to start? Let me share my story of how I got started, the mistakes I made, the lessons I learned, and the joy of my first profit.
My starting
When I first started trading, I was eager to jump in and start making money. I thought it was as simple as buying low and selling high, but I quickly realized that there was much more to it than that. I made many mistakes, such as not having a trading plan, not doing enough research, and being too emotional when making decisions. I lost money, and it was disheartening. I knew I had to make changes if I wanted to be successful.
The big loss
One of the incidents that shattered my confidence was trading in Unitech. I started trading in mid-2007 and at that time markets were booming. I used to do BTST ( buy today sell tomorrow). In those days anything I buy was going up in next day or the next few days and I was on top of the world. I was overjoyed by finding this way of making money. I almost doubled my capital in 6 months trading in stocks and futures. But my success was not long-lasting. As the 2008 financial crisis bubble burst, markets started tanking like a waterfall.
At that time, I had Unitech stock position, little aware of the crisis, I didn’t exit and started buying at lower levels, I kept adding my salary in Unitech to bring my average price lower. All this time I always felt that the market will recover and Unitech will give me profits. But Unitech kept falling and in a few months, I was sitting on a loss of 3 lakhs. 3 lakhs were more than my year's salary at that time and it was time to tell my family about this incident. They were in deep shock after hearing this and asked me to stop trading immediately & that was the end of my trading career (as per my family : ) ).
New Beginning
After 2008, I kept myself connected with traders and kept learning this art. The first change I made was to develop a trading plan. I set my goals, identified the risks, and established a strategy to manage them. I also started to research stocks and analyze their trends and patterns. I learned to be patient and wait for the right opportunities to buy and sell. Another change I made was to control my emotions. I learned to be objective and not let my feelings dictate my decisions. I also learned to manage my risk by setting stop-loss orders to minimize my losses. With my new approach, I started to see some success. It wasn't easy, and I still made mistakes, but I learned from them and kept going. And finally, I made my first profit. It was a great feeling knowing that my hard work and dedication had paid off.
Right way of trading
I learned how to control my emotions and not let them dictate my decisions. And I know, as a new trader, making mistakes and losing money is common. But it is important to learn from those mistakes and make changes to become profitable. I have been there, and I know how it feels. But with determination and a systematic approach, you can turn your trading around. Here are ten steps that helped me become a profitable trader:
1. Develop a trading plan: Without a trading plan, you are just gambling. A trading plan helps you set goals, identify risks, and establish a strategy to manage them.
2. Research: Do your homework and analyze the stocks you want to trade. Don’t trade or invest in someone else’s suggestions or tips. It's your money and you have to decide based on facts, not on the beliefs of others.
3. Practice: Before trading with real money, practice with a demo account or paper trade to get a feel for the market.
4. Start small: Don't trade with all your money at once. Start with a small amount and gradually increase as you gain experience and profit. It is always wise to trade small when we are learning as the chances of making an error are high. This single step can save many traders from losing big capital in the initial days of their trading career.
5. Manage risk: Set stop-loss orders to minimize your losses. Don't let your emotions dictate your decisions. Keep daily stop-loss limit as well. When I started trading, after my first big loss, I kept strict stop loss on every trade as well as a daily stop-loss limit. This helped me survive my learning phase.
6. Be patient: Don't rush into buying or selling stocks. Wait for the right opportunities to arise. Don’t make the mistake of taking a trade just because you are bored.
7. Diversify: Don't put all your eggs in one basket. Yes, initially I made the mistake of taking one trade in the morning and sitting a full day seeing its profit/loss on the terminal. If you are an intraday trader then taking 2-3 quality trades is good for diversification as well as risk management point of view.
8. Learn from mistakes: Make a daily trading journal as no one is perfect. Learn from your mistakes and make changes to avoid repeating them. You will be 1000 times better than one who is not learning from his/her own mistakes
9. Stay informed: Never stop learning. Keep exploring charts, and strategies. Keep up with the market and its trends to stay ahead of the curve.
10. Take profits: Don't be greedy. Take profits when they're available, and don't hold onto losing stocks hoping they'll rebound. This is very important.
I've followed these steps and have seen success in my trading. It wasn't easy, and I still make mistakes, but I've learned from them and kept going. I now have a profitable portfolio that has given me a sense of financial freedom.
I still remember, in 2011, April was the month when I was net profitable. It was the first month where I made profits and it was the beginning of something new, something I really wanted for years. I kept trading the same way with discipline, planning, and system. There were a few losses after that, but now I was confident and kept moving further. This boosted my beliefs in systematic trading and to this day I have not looked back.
Also, trading has given me a sense of freedom that I never knew was possible. I now have the flexibility to work from anywhere in the world and make my own schedule. It's not always easy, but the rewards are worth it.
In conclusion, my first trading experience was full of mistakes and lessons learned, but it taught me the importance of having a systematic approach to trading. I encourage all new traders to do their research, develop a trading plan, and not let their emotions control their decisions. Trading can be a challenging but rewarding journey, and with the right methods and approach, anyone can achieve success in trading.
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