The Best Advice for A Trader Starting Out

I’m taking a break from my regular routine this week. Hopefully you are too.

The long lazy days of summer are a great time to kick back. They’re an opportunity to switch off from the daily grind. The hustle and bustle of the office can feel like an eternity away.

Well, maybe in an ideal world…

If you’re like me, you never completely wind down…you’ll still be thinking and planning. My wife jokes that I relax by reading a book about trading. I just can’t help myself!

And thanks to the wonders of technology, I can still access the markets. I’ve been downloading the daily data from our beach house. I then run the system and send my subscribers the signals.

Today’s update will be a bit different to usual. I’m going to share a message I wrote a while back to a young man — Jonathan. He’s 23 years old and facing a problem.

You see, Jonathan is a casual investor who works full-time. His goal is to build a large trading portfolio. But a lack of capital is holding him back.

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Knowledge is everything

Jonathan also tells me that he fears picking the wrong stocks. He worries about buying the losers and watching the winners race off.

Reading Jonathan’s email got me thinking. Starting out is a unique time — and it doesn’t matter how old you are. You can start something new at any age. I’ve done this many times.

Two words describe my emotions at the start of a new venture: enthusiastic uncertainty.

I suspect Jonathan can relate to these emotions. In fact, I’m sure enthusiastic uncertainty is familiar to you as well.

You might not be 23. But you may be facing similar challenges.

This is what I wrote to him:

You’re already a few steps ahead of most 23 year olds. You have a starting stake…that’s a plus. Even better, you’re actively thinking about strategies to grow that base. 

The first thing I say to people is to be patient. It takes time to make money. Forget all that “get rich quick” nonsense. It almost never works.

Overnight success stories are great. There’s only one problem. I’ll bet you’ll find just about all of them were a decade or so in the making. 

I think you’re on the right track. Knowledge is everything — and I suspect you’re learning a lot. Experience will come in time.

You need to think about what sort of trading style fits your personality. This isn’t something you can answer over a weekend. It may take a few years to truly understand what’s right for you.

Patience is key

Let me tell you about myself…

I’m patient. I’ve also developed strong emotional control. These traits are ideal for a trend following strategy.

I also like consistency. This makes system trading the perfect fit. 

It all sounds so simple. But it wasn’t. These connections didn’t happen overnight. 

I guess the basic mental wiring was always in place. But it took years of practice to hone my mindset. I still work on it all the time.

No one is born successful. It’s something I believe we learn.

I’ve been trading for years. And do you know what? I’m still learning. Still evolving.

There’s a book I suggest you read: Market Wizards by Jack Schwager.

The book is a series of interviews with top traders. They all have different styles and approaches. The one binding characteristic is they’re all hugely successful.

I first read Market Wizards when I was your age. I was working on the foreign exchange desk at Bankers Trust, and I was struggling to find my way.

‘Market Wizards was a revelation…a pivotal point in my career. I began to think differently about trading strategies.

Learning through the experience of others is a great shortcut. It can save you years of trial and error.

I found that I could really relate to a couple of traders. These were the chapters I read and re-read many times. Their methods became mine.

You mention fear. This is a trader’s worst enemy. It stops you from pulling the trigger on trades. And if you can’t pull the trigger…you can’t be a trader.

Sure, you’ll probably miss a few good trades due to lack of capital. But you’ll likely also avoid some that don’t work out — think positively.

The important thing is that you manage your risk. Make sure you stay in the game. If you do this, then I’m confident you’ll get on some great moves over time.

Remember, the race is long. Start with baby steps and build-up. This will help you manage your fears. It will also mean your early mistakes shouldn’t be too costly.

I wish you all the best, Jonathan. You’re doing better than you think!

Starting out is something we all do. I’m sure you’ve got your own vivid memories.

I’ve had some great mentors over the years. Learning from them made a huge difference to my career. I hope my experiences can be just as helpful to you.

Until next week,

Jason McIntosh,
Editor, Quant Trader

PS: Your Five Step Beginner’s Guide to Technical Analysis: Up your investing game today. Sign up now (free).


Jason McIntosh is a professional quantitative analyst. Before he graduated in 1991 he joined Bankers Trust — a Wall Street investment bank — to be a trader. After Bankers Trust was taken over in 1999, Jason, already financially independent, co-founded a stock market advisory and funds management business called Fat Prophets. At 37 he sold his part of that business and retired. These days, he’s a private trader and system developer. In 2014 he launched the wildly successful trading service: Quant Trader.


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