Before we start

In this newsletter, I will continue with the advice that helped me when I was starting my journey.

The 12 Advice

1. Staying informed

2. Emotional control

3. Understanding all types of market orders

4. Continuous learning

5. Timeline of your progress

6. Analyze your progress

1. Staying informed

Staying informed above what is happening in the markets is important. Being up to date about the trend of major indices is the minimum requirement. Market breadth analysis, important events like earnings call, central bank announcements, budget meetings and announcements etc. affect the markets indirectly and therefore affects the traders’ position sizing and risk. It is wise to stay informed about the markets and related topics.

2. Emotional Control

Emotions are inherent part of humans. It cannot be ignored, nor can it be given into. Emotions affect trading decisions and judgement. Out of the many emotions that traders go through, fear and greed are the two most common ones. Fear occurs when things don’t go as planned or rather go in the opposite direction of what expected. This doesn’t allow the trader to take further trades. The next emotion is of greed. Greed occurs when too many trades have been successful and the trader tries to go beyond the set goal/limit. This usually results in the trader taking trades that weren’t supposed to be taken. Be aware of the emotions and control them rather than avoiding them or being controlled by them.

3. Understanding all types of market orders.

Market order, Limit order, Stoploss-limit order, Stoploss-Market order, Stoploss order, After Market Order (AMO), Good Till Triggered order (GTT) are various types of market orders used to buy or sell instruments in the markets. Understanding these orders and how to place them is important for two reasons: It affects the price at which the instrument is bought or sold and If used well, they can make trading efficient. They can also be used to trail stoploss on already existing positions.

4. Continuous learning

A while after a trader starts their journey, they may feel that what they know is enough. But they usually forget one important thing about the market: the market is ever changing and evolving. It is important to evolve with the markets. This can be done only through learning new tools, approach, and techniques. Read books, go to conferences, look at other trader’s perspective. Learn the best from every trader and integrate them into your own system as you see fit. Continuous learning will also keep the mind in a creative state.

5. Timeline of your progress

A trader’s journey usually goes as follows: The trader starts analyzing the charts and forms trading systems. Then they refine the trading system and implement it consistently. Next, they scale up by increasing the position size or using leverage. Each step takes time. The timeline is different for each trader. The point is to stop comparing your journey with someone else’s journey. It is usually the first step that takes most of the time. But it is worth it.

6. Analyze your progress

When a trader analyses their progress, just looking at the P&L statements is not enough. The analysis must be based on how well the trade was executed, how well the execution points were followed, was there consistency while implementing the trades? etc. Analyse the learning, maintain trade journals and reflect on them. It is crucial to understand that only your trades are short-term but the game you are playing is a long term game.

If you have read this far and have found the newsletter interesting, you can check out my YouTube channel for many such knowledge nuggets and weekly market analysis.