Introduction to trading

Invest in yourself as much as you can; you are your own biggest asset by far

Warren Buffet

Warren Buffet is right, you are your best asset. When it comes to your own financial success its very hard to find anyone who is going to care as much as you do about your money. Most financial advisors have more than one client and spend a lot of time trying to get new ones so they are really not focused on making you as much money as possible.

You on the other hand have more time and maybe less expertise than these individuals but the good thing is that if you put forth some effort you can be just as “good” as nearly any financial advisor and in many cases much better. So at the beginning of this series of articles I want to let you know up front that beating the market is definitely possible and highly probable as you gain knowledge in the markets.

Trading is the act of buying and selling a security for profit, in this regard we are all traders and here I want to give you an introduction to what trading is and what it is not to dispel some potential preconceived notions regarding trading as a whole. The entire purpose for trading is to be more active in the market to profit from definitive strategies which may include, pair trading, arbitrage, momentum trading, futures trading, options trading and many other types of strategies. While these may be foreign terms at this point but we will be explaining several different types of strategies to profit from the markets to make returns of 20% or more.

Some people say that trading is gambling and while there are some similarities between trading and gambling they are not by definition the same thing. Gambling, say in Las Vegas, is where you spend money to maybe make some money in games that are rigged so that you lose. Slot machines have win rates of 45-48% at best, basically every game has win rates under 50% so on balance casino’s make money based on this mathematical imbalance. However in trading you put money to work with the expectation of a profit, and while you can lose money in trading and many people do lose money you can be profitable by using a nearly infinite amount of strategies and none are illegal.

The problem that people have with trading is that they believe it is very simple and jump into it without knowing the best practices and end up losing money because of this lack of knowledge. The Trading Launchpad is designed to change this and avoid losses so we advise to not trade while you are learning, because the best way to make money in trading is to have money to trade with.

Most people don’t start businesses without any background or education in a given field, they start franchises and pay very good money for those businesses so here we take that approach, we expect for our students to learn the processes that work, learn the universal aspects to profitable trading so that you can maximize returns.

In the next articles we will dig down into the aspects of trading that will be your everyday, your everyday, things that many people find difficult and go through expectations in trading and other psychological aspects to this profession. To sum things up, trading…

Trading Rules

Trading is not a something they teach in school, its not a major in college and its not something career counselors will ever advise  you to do, but if you have been hit with the trading bug most of the time you have to find your own path. During this process you have to wander the minefield of trading education, and because there is no clear path or degree to trading most people fail. There is a statistic that 80-90% of traders fail, this is because there is a lack of education and mentorship in this industry and if you want to get involved you are likely to fall for the myriad of scams out there that promise riches. It is kind of like a fatherless boy looking for a father figure and he happens to find a criminal to show him the world, those stories don’t end well.

BUT! You are in luck, the Trading Launchpad is designed from the bottom up to give you that education to level you up quickly.

In this article though we are going to be touching on some of the universal rules of trading, if nothing else you will have enough information to go out on your own and make a go at trading and not have to learn these very important lessons the hard way.

1. Money management is the main reason you will survive in trading.

Money management is the boring thing that actually allows you to survive, its a bit like breathing, you don’t give it enough credit but if you hold your breath for long enough you will die. At the same time if you go all in on every trade you will not have an account for very long. Money management tells you how much money to invest per trade, when to exit trades at a loss and when to stop trading all together. If you cannot put those rules in place you will not survive.

2. Learn and then trade

About 99% of traders will jump into the markets using all of their capital, they go all in on this venture that they have no idea what they are doing. This is foolish and its understandable because its exciting to see everything going up huge in front of your eyes and you not participating, but its the wise move to watch and learn.

3. Cut your losses quickly

Trading is a game of attrition and survival so if you allow yourself to take massive loss after massive loss you will not have an account for long. There is another side of that though and its called death by 1,000 cuts, and that is not sustainable either and this is where you Money Management rules come into play. But you have to survive the bad times to thrive in the good times. So learn when and how to cut your losses to survive.

4. Let your winners run

Its pretty easy to find a winner in the markets, you already know them, you know the names and you likely were introduced into the markets because of these names. Whether its Amazon, Bitcoin, Apple, Tesla or the myriad of other assets, these are names that continue to run! But the problem that people have is that they don’t let these big winners run and they don’t know how to. When a winner is up big its very tempting to take profits, but if you sell out early then you cannot maximize your gains and when the gains are coming you need to take advantage. Your winners also pay for your losers, many end up taking lots of quick losses and sell out too quick on the big winners so when they do win they barely are up by the end up the run. But the main problem is that at the end of the run its hard to know when the run is done, so you are going to have a drawdown out from the top before you Money Management rules get you out. So if you are only up 20% and you have the drawdown at the top you will be break even, or even loose overall. So you have to let these big winners go and work, its a process but focus on this aspect.