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To become a professional trader, you must learn trading basics and advanced basics. Once these are mastered, you can learn proven strategies and gain experience in implementing them.

Also, it's important to be realistic about this profession. There is no perfect method of trading that consistently produces only winning results. However, if you practice learning to discriminate accurate information from that which is incorrect or misleading, you can spend most of your time focusing on information that will make you a more efficient and profitable trader.

Trading Basics

One of the most efficient methods for learning to trade is learning market and trading basics. A solid understanding of the basics provides the foundation that will support your entire career. This first level of knowledge is required before more advanced trading information can be successfully implemented.

Books on trading found at your local bookstore or reputable trading websites can provide you with all the trading basics you need at a relatively low cost or no cost. The basics include all of the factual information about trading, such as:

What markets to trade
How prices move (
bid and ask prices)
Order types and how to place them
Risk management
Trading hours
How to monitor trading performance
How much capital is required to trade efficiently

Trading basics are typically factual in nature, and there isn't much subjectivity. One information source may say to start currency or forex trading with at least $500, while another source may say to start with at least $1,000. One source isn't necessarily right or wrong. The information from multiple sources is indicating that you should definitely start with at least $500 and ideally with $1,000 or more.

Learning the Advanced Basics

Learning trading basics gives new traders an opportunity to learn about the various markets and the one in which they want to trade.

When learning the basics, traders determine if they want to trade stocks, futures, options or forex trading. Upon making this choice, they can then delve deeper into the trading basics specific to that market.

For example, a new options trader needs to learn about options Greeks, which help determine the price of an option. Those interested in futures trading need to learn about ticks, points, and the various specifications for each futures contract they may want to trade. Stock traders need to learn how to short sell, how dividends work, and the differences between pre-market trading and trading during normal hours. Forex traders need to learn about pip values and daily rollover rates.

Books on trading and instructional websites can offer information and lessons on these and other more advanced basics topics.

Trading Systems and Techniques

The next step is to learn strategies that will produce a profit in whatever market you want to trade. Such strategies are subjective, which means the source of the information matters. Free resources may provide generic strategies that worked at one time, but no longer work.

Finding viable strategies requires much more research and verification than learning trading basics. When learning strategies, review charts and look for examples of the strategy at work. If it seems it could be profitable on your own small real-world test, then continue investing some time in the method. If not, leave the method alone.

The best method of learning a trading technique is to find a professional trader that will teach you their trading technique. Some professional traders offer websites or books highlighting their methods. They may also provide personal mentoring, which is the most direct approach to learning how to trade.

It is also possible to learn a discretionary trading technique without any form of instruction. Self-learning is fine, but it may take longer to come up with a profitable system when compared to learning a system that is already profitable.

Many professional traders develop their own trading methods by continually studying charts, noticing certain patterns or tendencies, and then developing a system that exploits those tendencies. This may take months or even years of testing before the trader finds a viable method that produces profits consistently.

Gain Some Trading Experience

Practice doesn't make perfect, but in trading at least, perfect practice makes improvements. You'll never achieve perfect results because not all trades are won, even by professional traders. And that is okay.

You don't need to win every trade to produce a good living. What is required, though, is implementing your method nearly perfectly. This is within your control, while results are not. If you do the right thing, favorable results are more likely. Doing the right thing is following the methods you have learned and opted to use.

Use Paper Trading for Training

When first learning a trading method it may seem very easy. However, once you begin to implement it, it may be harder in actuality than you had anticipated. Most traders quit at this stage and seek out another strategy. Unfortunately, these types of people rarely become successful. Even a simple trading strategy often requires at least several months of hands-on experience before the method starts producing profitable results.

Many trading platforms offer a paper trading capability, which is trading with "fake" money instead of your own, real dollars. As you develop trading strategies, you can try them out with paper money and real-time market movements. Some platforms also offer historical market data, and many professionals use this to back-test their trading strategies to test whether the trades would work under various known market conditions.

As a trader progresses and gains more experience, they will likely find ways to improve their strategies or notice other market tendencies that can be exploited if another strategy is formulated. A successful trader may also find that a strategy that once worked is no longer performing well. In this way, a trader is always learning from their experiences and trying to find better ways of performing their job. They are simply adapting to changes in the market that may make current strategies obsolete but provides an opportunity for a new strategy to be deployed.

The Balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal

1. Stick to Your Discipline

Discipline can’t be taught in a seminar or found in expensive trading software. Traders spend thousands of dollars trying to compensate for their lack of self-control but few realize that a long look in the mirror accomplishes the same task at a much lower price. The important lesson is that, once a trader has confidence in their trading plan, they must have the discipline to stay the course, even when there are the inevitable losing streaks.

2. Lose the Crowd

Long-term profitability requires positioning ahead of or behind the crowd, but never in the crowd because that’s where predatory strategies target. Stay away from stock boards and chat rooms, where people are less than serious and many of them have ulterior motives.

3. Engage Your Trading Plan

Update your trading plan weekly or monthly to include new ideas and eliminate bad ones. Go back and read the plan whenever you fall in a hole and are looking for a way to get out.

4. Don’t Cut Corners

Your competition spends hundreds of hours perfecting strategies and you’re in for a rude awakening if you expect to throw a few darts and walk away with a profit. The only way to achieve long-term success is with hard work and discipline.

5. Avoid the Obvious

Profits rarely come from following the majority or the crowd. When you see a perfect trade setup, it’s likely that everyone else sees it as well, planting you in the crowd, and setting you up for failure.

6. Don’t Break Your Rules

You create trading rules to get you out of trouble when positions go badly. If you don’t allow them to do their job, you’ve lost your discipline and opened the door to even greater losses.

7. Avoid Market Gurus

It’s your money at stake, not theirs. Keep in mind that the guru might be talking up their own positions, hoping the excited chatter will increase their profits, not yours.

8. Use Your Intuition

Trading uses the mathematical and artistic sides of your brain so you need to cultivate both to succeed in the long run. Once you're comfortable with math, you might want to try to enhance results with meditation, a few yoga postures, or a quiet walk in the park.

9. Don’t Fall in Love

If you're too in love with your trading vehicle or investment, you give way to flawed decision-making. It’s your job to capitalize on inefficiency, making money while everyone else is leaning the wrong way.

10. Organize Your Personal Life

Whatever is wrong in your life will eventually carry over into your trading performance. This is especially dangerous if you haven’t made peace with money, wealth, and the magnetic polarity of abundance and scarcity. Keep your trading needs separate from your personal needs, and take care of both.

11. Don’t Try to Get Even

Drawdowns are a natural part of the trader’s life cycle. Accept them gracefully and stick to the time-tested strategies you know will eventually get your performance back on track. Don't try to make up for a losing trade by trading more. Revenge trading is a recipe for disaster.

12. Watch for Warnings

Big losses rarely occur without multiple technical warnings. Traders routinely ignore those signals and allow hope to replace thoughtful discipline, setting themselves up for pain. In short, keep an eye out for early signs that market conditions are changing and creating risks to your positions.

13. Tools Don't Think

Some traders try to make up for insufficient skills with expensive software, prepackaged with all sorts of proprietary buy and sell signals. These tools can interfere with valuable experience when you think the software is smarter than you are. Use tools that fit well with your trading plan, but remember that, ultimately, you are the one calling the shots.

14. Use Your Head

It’s natural for traders to emulate their financial heroes, but it’s also a perfect way to lose money. Learn what you can from others, then back off and establish your own market identity, based on your unique skills and risk tolerance.

15. Forget the Holy Grail

Losing traders fantasize about the secret formula that will magically improve their results. In reality, there are no secrets because the road to success always passes through careful choice, effective risk management, and skilled profit-taking.

16. Ditch the Paycheck Mentality

We’re taught to grind through the work week for a paycheck. This pay-for-effort reward mentality is at odds with the natural flow of trading wins and losses during the course of a year. In fact, statistics indicate that most annual profits are booked on just a handful of trading days.

252The number of actual trading days during a typical calendar year, as most markets are closed for holidays and weekends.

17. Don’t Count Your Chickens

It is okay to feel good about a trade that’s going your way, but the money isn’t yours until you close out or cover the position. Lock in what you can as early as you can, with trailing stops or partial profits, so the hidden hands of the market can't pickpocket your gains at the last minute.

18. Embrace Simplicity

Focus on price action, understanding that everything else is secondary. Go ahead and build complex technical indicators, while keeping in mind that their primary function is to confirm or refute what your eye already sees.

19. Make Peace With Losses

Trading is one of the few professions where losing money every day is a natural path to success. Every trading loss comes with an important market lesson if you’re open to the message. Also, know when to quit and take a break from trading. Accept the losses, take time to regroup, and then come back to the market with a new perspective.

20. Beware of Reinforcement

Active trading releases adrenaline and endorphins. These chemicals can produce feelings of euphoria even when you’re losing money. In turn, this encourages addictive personalities to take bad positions, just to get the rush. If you're trading to achieve a rush and excitement, you are probably trading for the wrong reasons.

The Bottom Line

Most traders fail to tap their full potential, eventually cashing in their chips and finding more traditional ways to make money. Become a proud member of the professional minority by following classic rules designed to keep a razor-sharp focus on profitability.

How do you build the skills of a confident investor?

There's no magic secret. Becoming a financial investor takes time and dedication. But learning professional-grade investing skills could help you take the reins on your financial future. If you're ready to put in the work and learn, we'll teach you the strategies and skills it takes to make the right moves in any financial market. Sign up for a free introductory half-day class with Online Trading Academy and start to learn about our step by step trading and investing strategy.