Time to get started!
Content of the lesson
Hopefully, you have gone through all the previous lessons and reached this second last one. Here, we will try to tie together all you have learned and help you get started with your trading. At the end of this lesson, you will also get some suggestions on how to move forward and how you can learn more.
How to get started!
To be ready to start trading, you must have put in place the following:
- You have opened a trading account and transferred the amount you want to use for your trading.
- You have decided the type of instrument (stocks, CFDs, or futures) you want to start trading and the markets (the US stock market, European markets, etc) you want to trade on.
- You have decided the timeframe, trading approach, and strategies to use in your trading (for example, day trading based on quantitative technical analysis, in accordance with the strategies included in the course).
- You have decided exactly which strategies to trade with.
- You have made decisions about position size and rules for your risk management.
- You have decided which daily routines for each trading day.
- A written trading plan has been drawn up, where you will document everything about your trading.
- You have a trading journal, where key information and comments about your trades can be documented.
To be able to implement your day trading as you planned, you will need a trading software where your trading strategies can be tested on historical data and later implemented in live trading with real-time price quotes. Examples of such trading software, popularly known as trading platforms, are Multicharts, Tradestation, or ProRealTime, which we have looked at before.
Take the first steps!
Now, you have everything you need to start your day trading. However, taking the first steps may feel a bit difficult. Here are some tips that can help you overcome your initial fears:
- Always start with paper trading (trading without real money on the line) to ensure that you have mastered every aspect of the trading process: understanding how your trading platform works, knowing how to place buy and sell orders, creating and following a trading plan, and establishing the culture of documenting your trades in a trading journal.
- When you feel that you have learned the entire process and you are consistently profitable in paper trading, it’s time to trade real money. This is when the aspect of trading psychology (fear, greed, etc.) comes in. It is wise to start small and gradually grow. For example, you can start with half of your optimal position size until you are sure that you can handle the pressure that comes with having your money on the line. Then, you can increase your position size. Remember what we wrote earlier: to keep detachment to money trade smaller size than you’d like.
- Try to quickly find good daily routines that work well with the rest of your life!
- Use a trading journal and try to identify your most difficult psychological obstacles early on. Ask yourself questions to find out when you are most susceptible to deviating from your trading plan and why. Find out if a checklist can help increase your compliance with your trading plan.
- Join a trading forum and try to find trading buddies! It is of great value for both new and experienced traders to have someone to interact with.
Further reading
Here, we have collected the most important trading books that we recommend:
Questions
(1) Go through the points above. Is there something missing regarding what you need to get started or something that is unclear? Contact us at Quantified Strategies if there is anything you need help with.
(2) The first steps can often be the most difficult. What are your thoughts on your first trade? Are you mentally prepared and ready to follow your trading plan? Have you taken the time to master your strategies with paper trading?
(3) Trading can sometimes feel lonely, especially when things get difficult. Do you have a friend who is also trading or wants to start trading so that you can support each other? Two or more traders always think better than one! Networking is extremely important.