Can you live from trading?

The answer is yes, obviously, but with lots of nuances. The first thing we need to invest in the stock market is money. Without capital we can not speculate and it is our main tool of work and therefore the first thing that we have to do above all is to protect it ; Since without capital we will not be able to continue investing. It is especially important to protect capital and not squander it in the early years of trading, when we are still learning and gaining experience.


With much capital it is much easier to live in the markets, because you only need to earn a small annual return to get a significant sum. It will also obviously depend on what capital we consider necessary to live; This would be a very subjective matter. You have to be realistic and have realistic goals. If we have a thousand euros (on the stock market, it gives for very little) it will take many years if we do it very well, to have enough money to consider ourselves being able to live in the markets. Having little capital will initially prevent us from diversifying.

The problem again is the rush. It's a loop; As we have little money, and we want to earn a lot, the investor chooses to take risks much higher than his capital could allow and that leads to rapid ruin looking to make money quickly . There is only one way to win and survive the markets and it is to earn money little by little, while managing the risk. The moment we forget about risk management, we will have a lot of ballots for the market to leave us with nothing. In that sense it is never advisable to play in an operation more than 2% of the capital available to invest. For example if I have ten thousand euros, to invest, it would be advisable in each strategy, to use stops-losses that if they jump, they involve losses not exceeding 200 euros. Although it is obvious, it is well to insist; It is much easier to consider living on the markets with a million euros to raise it with 500 euros. The saying money calls money is a reality.

We should not be in a hurry to become traders and those in a hurry usually last very little in this business. In this sense, what I consider to be misleading advertising is very harmful. If we have low start-up capital we must have realistic objectives and protect capital and manage risk above all else. Pirmero should be thought in terms of risk and later profitability. Most traders think only of the hypothetical profitability and only remember the stop when the strategy accumulates heavy losses.

There may be some delusion that thinks pushed by that type of advertising, that the bag is easy and that reading a manual you become a trader and you are ready to operate. We could put, for example, the picture of a surgeon and say that the surgeon is making 30,000 euros a day with binary options without effort and without knowledge, while operating a patient with an open heart, but that is a chimera. Without knowledge and with complex products, their passage through the markets will be very brief and surely that investor would end up cursing the markets. Obviously giving that facility image is much better for marketing financial product companies, but it is not the reality. It sells such an idyllic image of trading, speaking only of the positive aspects of trading that more and more people want to dedicate to this. If we do trading we can consider ourselves traders, but if we want to live trading we will need a lot more than calling ourselves traders or putting on a tie. The habit do not do the monk. The results will be those that judge us as traders, nothing more.

It is also usual to imagine idyllic images: a trader on a paradise beach with a portable operating and with a smile from ear to ear while taking a daikiri. Apart from the fact that sand and laptops do not live well, let's face it, trading like any other discipline, you have to learn first and it requires effort and dedication . It's true, Spain is the country of the pelotazo, is in our culture, "I want to become rich without doing anything." To those who like that philosophy to forget the trading. Trading is study, discipline and effort. 95% of private investors lose, do not forget that statistic and most of them have not tried hard to learn how markets work, nor do they have any method of trading,

The bottom line in this sense would be to invest or speculate in the markets with money that we urgently need or that we need to live or for indispensable expenses . When this happens the psychological component will affect us even more than usual, conditioning us to lose the capital. We should only invest or speculate in the markets that money that we are willing to lose, although obviously our intention is to monetize it.

To control the emotions it is important not to flatten yourself above our possibilities . I guarantee you that investing small amounts is not the same as investing large amounts of money. It could be done a test, although it can be very expensive, so it is not recommended. Buy an asset with 0.1 lots and place a heart rate monitor, record the results. Then buy 8 batches of an active and look at the variation of your pulse. Surely seeing the strong variations in your account before small movements of the market, anxiety will appear, they will get nervous and that does not help to make a good trading. The calmer we operate the better results we can get.

Another false false premise is to think that the goal is to guess what is going to happen in the market . The trader has to take advantage of what the market does, not guess it and should never fight the market. The market is always right. In this sense many beginners say phases as ridiculous as "the rise or fall is false." If I buy an action at 6 euros and sell at 7 euros, say what they want, we have won a euro per share and we do not care if a good analyst tells us that if it is overrated or if it is an unreliable rise ... that Is literature. The trader only cares to sell higher than what he buys.

It is important to keep in mind that traders coexist with losses . Losing is part of the business. You have to know how to take them. The stops are put to jump, when they have to jump; They are our lifeline. It is impossible to always win. In that sense the experience is important, since in the early years it is very hard psychologically to see how you jump a stop losses and then the asset evolves as you initially thought. That pushes many traders, stop using the stops, step that will lead them to ruin and get caught.

Imagine that they have a method that has made them earn money for 5 years after 300 operations and suddenly they come 5 months bad, where they lose part of the cattle, would be able after 4 bad operations following their investment method, follow the fifth ?

Now imagine that you are starting, have not tested in demo, nor tested your system, are testing it directly in the market and have 4 bad operations, would you be able to follow the fifth? Surely not, because you do not trust your own method. As I would like to explain, trading is not a question of faith, but of mathematical hope, probability . If we have a method that ultimately earns money we will follow it, but we must therefore make sure that the method is winning, and that it is in the medium / long term, not at a given moment in the market; Demo testing is very important.

Do not listen to siren songs. Without training and without knowledge they will be pasture of the market, the machinery will devour them. Formulate yourself, take time to learn and venture into the market slowly until you are ready. Your account will thank you.

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