Whenever you’re trying to learn something difficult, it’s a long and bumpy road if you go at it alone. Trading is often thought of as one of the most difficult professions to make it in. You’ve probably heard someone once say, “Over 90% of traders fail.” Now, this percentage is thrown around and has some survivorship bias, so you should not be too put off by this saying. However, if you want to become successful in trading, you need to trade stocks with an experienced community.
Why You Need to Trade Stocks with an Experienced Community
Most beginner traders try to go at it alone, some become successful, but many lose focus and grit and quit the game. This happens due to the steep learning curve, causing those who want to be self-sufficient to fail because there are mistakes that could be avoided. That said, it’s always better to trade stocks with an experienced community, and you shouldn’t trade the markets alone, especially if you’re a beginner.
Experienced traders are there to help you along the way and potentially avoid some common pitfalls of trading. Now, when you’re first learning how to trade, you need to take in a wealth of information and, sometimes, key details are lost in translation.
Chances are, you’re going to start off with a small account. Now, I hear this all the time, “It’s hard to turn a few thousand dollars into $25K, 50K or even six figures.” That’s true, it is difficult to learn how to trade stocks with a small account. However, it doesn’t mean it’s impossible. There are some quick and easy ways to potentially improve your trading and become consistently profitable. Moreover, you could use these techniques and try to generate high returns.
Learn to Trade Stocks by Watching an Experienced Trader
When you watch an experienced trader trade live, you’re able to learn how to think like a trader and trade stocks. In general, beginners who have a mentor tend to make less mistakes because they have someone to help them fix those mistakes quickly or prevent them. Moreover, you’re able to learn how to trade stocks using a market-tested strategy.
For example, if you watch someone risking their own money and not trading on a demo account, you can see how to handle losses and gains. This is one part new traders need to understand. When you have losses or drawdowns, you can get into the psychology of trading by asking members of the community about their experience. When you have people to walk you through the trading process, you’ll learn how to develop a trading plan, risk properly and manage your emotions. You really can’t just learn this from anyone. You need to watch someone develop a trading plan quickly, execute and properly risk manage their positions according to the account size.
That in mind, you can’t just go out and join any trading community. You need to trade with successful traders who have consistently proven their ability to generate profits.
For those who don’t believe it’s possible to consistently generate profits and grow your account, just take a look at the images above. Those are real profits and you could do the same, but it’ll take some time and dedication to trading stocks. If you learn from traders like this, their knowledge should rub off on you after a few months. Thereafter, you could execute and follow in their footsteps, while continuing to develop your trading education. Moreover, when you join an experienced community of active traders, you’re able to interact with them and ask questions, if any.
Accountability Matters When You’re Learning How to Trade Stocks
When you trade stocks with an experienced community, you’re held accountable. You could write out your trading plans in the morning and show them to members in the community. Once the trading day is over, you could ask questions about your performance and seek improvement. When you’re held accountable and share your thoughts and ideas, experienced traders will let you know whether you’re thinking properly or have the “right” ideas. When other traders hold you accountable, you’re less likely to commit some common day trading mistakes.
Education and More Eyes on the Stock Market
When you connect traders together, they tend to drive each other to do better. That said, there’s an immense level of growth potential when you trade stocks with an experienced community. When you trade alone, your ego can swell and you may even think you know enough about trading stocks. The thing is, trading is about growing and constantly progressing asa trader. When traders share tools, ideas and trades, you’re able to learn different strategies for different markets. In turn, this should increase your potential profits.
Moreover, when you trade with like-minded individuals, they might call out a trade that you otherwise would’ve missed. When you have a group of traders all scanning for opportunities, there’s a high chance you’ll get some trade ideas from them. Traders in a tight-knit community constantly share their trades, news and other signals without wanting anything in return. It’s easier to find opportunities in the stock market when you’ve got hundreds of eyes looking at the markets.
The Bottom Line
When you’re learning how to trade stocks, you shouldn’t have to go at it alone. It pays to trade stocks with an experienced community. When you trade with a community, you’re able to watch the moderator trade live, ask questions, be accountable, learn about trading stocks and have more eyes on the market. Ultimately, this will help you develop as a trader and potentially generate consistent trading profits.
Jeff Williams is the lead trader of PennyPro.com. He is a short-term trader of stocks under $10 a share.