Before you start trading, ask yourself these questions:<\/span><\/p>\n A trader must know his\/her own strengths to use them to their advantage. Pro-traders often show patience, firmness in following their plan, and control over their emotions when trading.<\/span><\/li>\n A trader must recognize his\/her own weaknesses to avoid them when executing their trades. Common weaknesses shown by traders are being greedy, being overwhelmed by emotions, and not following their trading plan.<\/span><\/li>\n It is important to know how much time you can commit per day to trading. This will help you figure out what kind of trader you want to be whether you are <\/span>a scalper<\/span><\/i>,<\/span> a day trader<\/span><\/i>,<\/span> a swing trader<\/span><\/i>, or <\/span>a position trader<\/span><\/i>. These will be further explained below.\u00a0<\/span><\/p>\n There are a dozen more questions you should ask yourself before you start trading. But, these questions should help you understand yourself more and establish grounds on how you are going to create your own trading setup.<\/span><\/p>\n This type of trader makes quick profits out of small price changes on their trades and they focus on making high volumes of small profits to accumulate large amounts of gains for the day. They also require a relatively strict exit strategy compared to other trading setups as one major loss may erase all their small profits.<\/span><\/p>\n Like scalpers, day traders buy and sell within 1 day but trade on a longer time frame. Day traders find the best opportunity to trade for the day and hold for a longer period of time to gain large profits.<\/span><\/p>\n Swing traders hold stocks or other tradable assets in the short-medium term (usually a couple of days to weeks). This type of trading considers the trend of a stock to tell which direction it is heading and execute an order. Unlike day trading, swing trading requires less time in monitoring your trades as there are no plans to make quick gains.\u00a0<\/span><\/p>\n Position traders buy and hold assets for the long term expecting an appreciation in value over the months or years to come. This type of trading removes the worry of short-term price fluctuations as this focuses more on the future value and outlook of the stock. Position traders consider the general market outlook, market trend, historical price data, and other fundamental factors that could affect their decision in purchasing the stock.<\/span><\/p>\n \u201cHistory repeats itself\u201d is a famous quote among the trading community when planning their trades. Backtesting is a strategy on how traders utilize historical price data and trends to help them execute and maximize their gains when trading. If the backtesting is proven valid on a market or stock, traders will grab this opportunity and use the historical data to their advantage.<\/span><\/p>\n The theoretical concept of backtesting is that the strategy that worked well in the past also works in the future, vise versa. Don\u2019t forget to take into consideration the market condition when utilizing a backtesting strategy. Strategies used in the past during a bull market may not necessarily mean it would work on a bear market.<\/span><\/p>\n Practice really makes perfect. This is one of the best pieces of advice for newbie traders entering the market without hurting your capital while executing your trades. This way, you will know which trading strategies and setups you are most comfortable with and confident to execute when trading in the future.\u00a0<\/span><\/p>\n\n
What are my strengths?<\/span><\/h3>\n
What are my weaknesses?<\/span><\/h3>\n
How much time can I commit per day to trading?<\/span><\/h3>\n<\/li>\n<\/ol>\n
Scalper\u00a0<\/strong><\/h4>\n
Day trader<\/strong><\/h4>\n
Swing Trader<\/strong><\/h4>\n
Position Trader<\/strong><\/h4>\n
Do a Backtest<\/h1>\n
Try Virtual Trading<\/h1>\n
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