What To Know Before You Start Trading


Simpler Trading Team

5 min read

In some ways, trading for the first time is like riding a bike – an experience most people remember.

There can be bumps and bruises in learning to ride – although a little preparation can go a long way. That first kickoff without training wheels was scary, we know.

The good news is you can readily learn what to know before you start trading.

(Check out the video, above, for insight into trading this changing market.)

Start with trading psychology

Trading psychology is an important concept that new traders should grasp early. Trading is a game of probabilities. The market is unbiased. There are no differences between cultures, genders, or beliefs. The market is what you make of it. Nothing more, nothing less.

Once a trader grasps the importance of the concept of probability-based strategy, the idea that not every trade will be a winner makes more sense. Thankfully, not every trade is going to be a loss, either. But, it’s how you win and how you lose that sets new traders up for ongoing successes.

As traders improve skills, gain confidence, and have a system in place, their probabilities and winnings can improve significantly.

Kick fear to the curb

Like that first launch on the bike – fear has no place in trading. If a game show were made about trading, it would likely allude to the fact that trading is a game of probabilities. It would not promote fear.

Once traders become familiar with their trading systems and strategies, it is a matter of charting the course according to the signals the market gives. Even as traders gain confidence in their skills, they should be prepared that they will give back money to the market. That is the essential element of the psychology of trading.

All traders have to pay their dues and earn confidence. Whether this law comes from the cosmos or karma, it is a fact that new traders can’t skip steps of the journey without feeling the aftereffects. 

Traders must pay their “tuition”

Training and studying are the “tuition” traders pay as they gain trading skills. Traders should prepare themselves mentally and consider their first trade as an investment in themselves. 

A recommended reading favorite for Simpler Trading team members is Trading in the Zone by Mark Douglas. In the book, Douglas helps traders overcome mental habits that cost them. He teaches traders to look beyond random outcomes and to be comfortable with the probabilities of market movement that governs market speculation. 

Don’t skip steps, start small

Simpler’s traders recommend starting with small trades and taking it slow. Just as in a board game, skipping steps means the market will easily kick you back to square one.

Traders should understand when, and how, to get in and out of trades. Placing a trade with no idea how to get out of it can be a stressful and expensive lesson for anyone. It is essential that traders understand the process of trading and where to find positions.

Find a computer trading platform that fits you

A computer trading platform that can be studied in advance through online videos or by accessing the internal learning center is thinkorswim® by TD Ameritrade. This is almost a “standard” for traders of all skill levels. Simpler’s traders also use other platforms that may fit their trading style, and most of our team members use a combination of platforms.

Trading platforms promote internal learning centers that offer traders the ability to familiarize themselves with the platform. TradeStation and tastytrade are two other “Simpler style” trading platforms. Each platform has varying “bells and whistles,” and traders tend to select different platforms for particular trade entries and exits.

Prior to making that first trade, new traders can execute paper trades or use a trading simulator on a live system. This is an important step to follow before executing a trade with real money. A paper trade is a digital, online simulated trade that allows the practice of buying and selling without risking real money. Prior to online trading platforms, new traders would practice calculations, commonly on graph paper, before risking money live in the markets.

This learning process helps traders to build a playbook, or system, for trades.

Get help, find a trading mentor

New traders can benefit from a “trading buddy” or mentor who can show them the basics. It can be especially helpful to find a mentor to walk them through strategies and setups. Simpler Trading was founded on that very principle – helping other traders learn and grow skills.

New traders should find a mentor, learn to identify trades, begin to adopt their playbook, and get comfortable with entries, exits, and strategies before placing that first trade. An initial trade should be one you have worked through mentally and also one that makes sense to you. Traders shouldn’t rush to make that first trade.

Prepare properly to win at trading

Traders who plan to learn and learn to plan are, well, planning for success.

Remember that the psychology behind the trade is this is a probability game. Skill and success are acquired through experience.

There was no shame in learning to ride a bike with training wheels, and when it comes to learning to trade… don’t be afraid to keep practicing until you’re truly ready to launch.