Beginning to Trade
The aim of this document if to prepare you on the right path before you starts
trading.
I will share some basic rules that I've made for myself and the tools that I think
you should start with.
These are the bare minimum and also good enough, now and forever.
The things mentioned below are the minimum work of knowledge that you
should know. Having said that, they are also perfectly enough for you to make
profit with, forever, in any market.
Before we Start, Please know that you're listening to me, someone who
1. Borrowed money from his mum and lost it all in the futures Market.
2. Borrowed money from his friend and lost it all again with Leverage.
3. Have made several losses and makes losing trades almost every day.
You've been warned, you're listening to someone who is all of the above.
Beginning.
I am sure you all have already decided to trade or learn to trade, hence I don't
need to discuss the benefits of it.
So rather, I'll start with why it'll be difficult.
Before you begin to trade, Please Know.
Trading is
Lonely.
Stressful.
Rarely enjoyable.
And once you get better at it, it gets boring, monotonous.
If you're looking to make it your profession, you'll loneliness, Unless you decide to
make a fund or trade in a small firm or group.
Please keep these in mind. I've battled all of them above.
How can you learn?
To get familiar with TA, You can read the book 'Technical Analysis of the Financial
Market by John Murphy'.
It is an extremely basic book which covers the Basics. It doesn't give Strategies but
rather introduces the concepts.
You can skip the chapter of Dot and Cross Trading and Computers in trading.
You can then read my book here to get a bit of more practical concepts for
trading.
1. Preparation.
You cannot enter a trade as soon as you start your trading.
There are 1000s of assets available to trade and millions of opportunities.
Wait for an Entry.
Draw the chart Patterns. Wait for the desired results and movements to take
place and then enter.
Look at these basic patterns- click here
Cure your rush of entering a trade. Waiting is what makes a trader. Wait for an
entry.
Remember this; your aim is to identify movements before taking them, then
waiting for further PA to prove it.
Identify Patterns.
2. Risk to Reward.
As a general rule, it was better to take entries which provide assymetric risk to
reward.
If you're going to trade for 1% profits without looking at the downside, you'll end
up losing all your funds.
There is no fixed rule for how much profit you should aim for, what should the R:R
be, but please make sure that the invalidation point or the SL is smaller than the
reward. This is a good start.
There is no point in taking a trade which can rice 1% profit with an invalidation
point it 3-4%.
Don't risk more than the reward is.
The below chart shows a trade with 2.5 R:R
3. Getting there Fast.
Please don't trade with big before you've started small .
Paper trading isn't going to give you real like experience but it gives you access to
the platform, learning it, feeling the rush and the stress.
If you want, you can start with an insignificant amount of money.
To speed to the process, start with the lowest time frame, find the pattern, find
the breakout points, find the fake outs.
Go with the pace you're comfortable with. Take breaks. Take breaks.
The idea is to get you used to the live markets, fast. Understand the movements.
Quickly.
4. Tools of the Trade.
There are billions of Indicators.
The list below is the only things you should concentrate on for now.
This is Enough, trust me.
A. Support Resistance, both horizontal and trend lines.
B. Fib lines.
C. RSI Divegenxe.
D. MACD
E. EMAs
F. Volume
G. Chart Patterns
My books contacts the tutorials for all of the Above Except Fibs, CryptoMellany
had a tutorial for that.
You can view any tutorial for basic MACD on youtube.
5. Risk Management.
I have talked about risk management in detail. It is the toughest thing to do, not
following it will get you rekt for sure.
Here is a complete 4 part series on it. Link
6. Don’t start following for more and newer indicators. The world is an infinite
place. We will understand order-flow, Heatmaps in future which isn’t necessary
for profits.
7. Don’t trade Alts with Leverage. This doesn’t need an explanation. The volatility
will kill you and your trades. Alts provide enough volatility to trade with big
swings, no need to add more fuel.
8. Don’t listen to anyone on twitter, including me.
Conclusion.
Mark your patterns before trading.
Look at R:R before every trade.
Practice on LTF, a lot, fast.
Stick to the tools shared above, it’s enough, for now.
Risk Management = Survival.
EmperorBTC