Trading the markets isn't easy, in fact its probably the second hardest way to make money I know second only to boxing. A statistic recently relayed to me by a salesman at a brokerage who wanted me to open an account with them told me that the average duration for an account to be exhausted of funds is just nineteen days. So much for buy and hold. In these markets buy and hold wont work because most things except gold are falling, knowing how to trade allows you to go both long or short and in theory makes money in both rising and falling markets. So what is the big secret you need to know that all the 'big boys' won't tell you? Recent insider trading scandals may lead you to believe that you must have insider knowledge to make any money. The big secret is that there is no secret, to think there is a secret is to miss the point. Giving or taking tips is a fools game, if a tipster doesn't have access to insider information everything he knows is already in the public domain and therefore accessible to you. If it is insider information being offered to you or by you, then basically it means jail time if your caught, as I indicated earlier trading tips or insider info is a fools game and fools get caught easily.

If you do a cursory search in google you will find what seems an inexhaustible array of trading systems and e-books all claiming to have 'guaranteed success'. These guarantees often don't last long enough for you establish it doesn't work and basically they are scams. Every trading system has its counter system, that is there is someone out there trying to use the exact opposite system to make money. If any of these so called systems could generate enormous profits consistently they could be sold to institutions for hundreds of millions of dollars, if these schemers could actually trade and write software to make fifty percent a year consistently why are they selling e-books for chump change. The things you need to know to be a successful trader is that looking for entry and exit points is only a small part of trading. Speculation is in essence the ability to successfully predict future price movements, to be able to spot profitable opportunities and capitalise on them.
Psychology and discipline play the most important role in trading, finding an entry point to a trade is easy. With a vast supply of trading software on offer all generating signals you can find an entry point signal at virtually any point you like. You need to decide how much risk to take on and how you will feel once the trade is active, once you have taken a position in the market you have a bias in which direction you wish to see it move. If you cannot control this urge to think you must be right it can lead to you trading without stops or taking a position that is far to large. Some trainers or advisers will tell you to paper trade to build up your confidence first, paper trading just isn't trading. Writing down a price you like on the screen and assuming that you will get that price is poor preparation for trading. A real trade involves putting your own money into the markets, opening an order ticket and taking the price you see on screen after your signal has been tripped. Paper trading doesn't require as much forward prediction or any of the psychological effects that a real trade involves. Exiting a trade often involves a predetermined profit target and experienced traders can sometimes improve on this, firstly if they feel that the market is changing direction they can book a smaller profit early or if the market gains momentum take an extra profit. Inexperienced traders often try to get on a winning streak, taking very small profits because each 'winning trade' makes them feel good. The problem arises when this false confidence brought on by rapid entry and exit from the market for small gains turns to a loss. Because they wish to keep a winning streak alive they hang on until they are buried so deep that any chance of a profit on the trade is gone. Many small profits will be wiped out with a single loss, despite picking winning trades four times out of five you are still doomed to break even or worse. What is the best advice I think a new trader should receive? It would be 'go for broke', sounds like the worst advice ever but there is some logic to it. If you take your investment capital and put aside an amount you can't really afford to lose, say as much as thirty percent and try to get rich quick. Put the money in a derivative trading account and make the trade you think will make you rich, after much agonising and research you will probably pick a good trade and see it move nicely for you. Here is where the problems start, the money rushes in and you feel great, you put on another trade to get your next fix. Perhaps this one goes well too but the inevitable happens, after some losses you get depressed, and now the trades are to large for your account size. After experiencing the highs and lows of trading you will be in a better position to know if it is for you, most people get flat broke in the market and walking away with seventy percent of your money intact is no bad thing. Choose to stick around and it means that you have self belief and confidence to master yourself, for it is yourself you must master not the markets if you wish to do well.