How To Become a Better Trader
Enhancing Your Trading Skills Through a Funded Trader Program
The question on many aspiring traders' minds is, "How can I elevate my trading abilities?" This query has multiple avenues for exploration. Among these are seeking guidance from a seasoned mentor, formulating a robust risk management strategy, and mastering emotional control, to mention just a few elements pivotal for advancement. However, what if there existed a cost-effective and uncomplicated means to address all these crucial facets and more, facilitating your journey toward becoming a more proficient trader? Fortunately, there is such a solution. This guide elucidates how engaging in a funded trader program can be instrumental in augmenting your trading performance, all while safeguarding your capital.
Have A Profit Goal to Meet
As individuals, we try to build the different aspects of our lives around specific goals. To get the job we desire, we educate ourselves. When we’re trying to live a healthy lifestyle, we train. We save money if we’re trying to put our kids through college. All these goals have in common: they sit at the end of a journey.
Things are no different when it comes to trading. If you don’t have a clear goal, you’ll be unable to create a proper plan and design the steps to put it into action.
For example, a goal might be ending the month with a 5% profit. For a $5,000 account, this would mean a monthly profit of $250.
However, make sure to start small and have realistic goals. Otherwise, you will feel unsatisfied and anxious to hit a target that might be out-of-reach by design. The harder you try to pursue an unrealistic goal, the greater the risk of worsening your trading performance. Whether a particular goal is realistic depends on the trader’s style, the traded asset, the current market environment, and more.
Working towards your goal steadily instead of looking for a home run with a one-off trade is essential. This lesson is something that funded trader programs teach you from the start. In the case of the Trader Career Path™ program, the profit goal you have to reach to pass the test is between 6% and 7%, depending on the account size. For example, to pass the test for an account with virtual starting capital of $25,000, you need to reach a profit goal of $1,750 or 7%. Of course, you can always shoot for the stars and aim to hit even greater profits, but you should also bear in mind the daily loss limit requirement.
Have A Profit Goal to Meet
As individuals, we endeavor to construct various facets of our lives around specific objectives. To secure the desired job, we invest in education. In pursuit of a healthy lifestyle, we engage in training and fitness. When saving for our children's college education, we diligently accumulate funds. What all these endeavors share is that they mark the culmination of a journey.
Trading is no exception to this principle. Without a well-defined goal, crafting a coherent plan and taking the necessary steps becomes a challenge. Consider, for instance, a goal of achieving a 5% profit by month's end. For an account with a balance of $5,000, this equates to a monthly profit target of $250.
However, it's crucial to begin with modest and attainable objectives. Setting unrealistic goals can lead to dissatisfaction and anxiety, as you strive to reach a target that may inherently be beyond reach. The more one pursues an unattainable goal, the greater the risk of detrimental effects on trading performance. The feasibility of a specific goal hinges on factors such as the trader's style, the traded asset, the prevailing market conditions, and more.
In the pursuit of your goal, it is imperative to proceed steadily rather than seeking instant gratification through a single trade. This lesson is instilled from the outset in funded trader programs.
Implementing a Daily Loss Limit
Enforcing a daily loss limit rule serves as a crucial safeguard against the perilous pitfall that often ensnares beginners—losing a substantial portion of their capital in a single day. This common mishap can be attributed to various factors, including impulsive revenge trading, succumbing to emotional impulses, or yielding to unchecked greed.
But how does adhering to a fixed daily loss limit come to the rescue in such scenarios? Consider this scenario: you possess an account balance of $5,000. If you establish a rule to restrict daily losses to no more than 3% of your capital, you effectively cap potential losses at $150.
While this rule may seem reasonable in theory, many traders grapple with its application in practice. It's imperative to comprehend that a daily loss limit holds value within your risk management strategy only when it is followed unfailingly. In contrast, if you happen to incur the $150 loss within the initial hours of the trading session, it becomes imperative to halt your trading activities for the remainder of the day. Failing to do so may lead to futile attempts at recouping losses, potentially exacerbating the situation. Ultimately, you risk descending into a perilous spiral of mounting losses capable of swiftly depleting your portfolio.
Participating in a funded trader program provides an excellent opportunity to learn the art of establishing and adhering to a daily loss limit requirement. In these programs, a maximum daily loss limit should be set firmly set at 1.0%. To put it into perspective, for a $50,000 account, this equates to a permissible daily loss of no more than $500.
The pivotal key, not only for this rule but for all trading principles, is unwavering consistency in adherence. Repeatedly following these guidelines will effectively condition your mind to instinctively steer clear of breaching the tenets of your risk management strategy.
Establish a Maximum Drawdown Guideline
Beyond monitoring your day-to-day profit and loss, it's imperative to establish a comprehensive plan for nurturing the long-term growth of your account.
A valuable concept in this context is the maximum drawdown, which quantifies the extent to which your current trading account balance is permitted to dip below its highest point. To make this concept clearer, let's introduce some numerical context.
Consider the maximum drawdown for the $50,000 account within the program, which stands at $3,000. Now, envision a scenario where you conclude a trading day with an account balance of $53,000. In such a case, the balance is allowed to decrease to no less than $50,000, inclusive of open equity.
The concept of a maximum drawdown serves a dual purpose: first, it aids in fostering sustainable portfolio growth, ensuring the preservation of your profits over time. Secondly, it instills strategic thinking regarding long-term losses, prompting the development of a robust plan to mitigate them.
Picture this as ascending a staircase. Progress is achieved by consistently climbing two, three, or five steps forward, while occasionally taking just a single step back. This gradual and deliberate approach propels you steadily toward your ultimate goal.
Implement a Contract Limitation Strategy
A crucial component of an effective risk management strategy involves setting constraints on the number of contracts you trade. Funded trader programs impart this fundamental concept by introducing a tiered approach. This rule dictates the maximum number of contracts you can hold concurrently, contingent on your existing account balance.
As a general rule of thumb, the larger your account balance, the greater the number of open contracts you can manage. For instance, your rule should be a maximum of 3 contracts for a $25,000 account, whereas a $150,000 account allows for up to 15 contracts simultaneously. The rationale behind this rule lies in the potential for a trader with a smaller account to experience an overwhelming situation when juggling numerous concurrent positions.
Why is this beneficial? Firstly, it serves as a safeguard by limiting losses during periods of subpar performance. Furthermore, it amplifies your profits when you are enjoying a streak of successful trades.
Additionally, it fosters a tranquil trading environment, especially during times of heightened market volatility. Consider the ease of managing three open positions as opposed to twenty when the market is tumultuous. The greater control you exert over your open positions, the more secure your portfolio remains, particularly for novice traders.
Refine Your Trading Strategy Using Real-Time Data
Why the actual market? The reason is that a funded trading account empowers you to practice your strategy in a live market environment, allowing you to observe how it performs under genuine trading conditions.
Many traders come to the realization that their strategies may not be fully prepared to navigate the challenges of real market dynamics through costly trial and error. The harsh truth is that experiencing your strategy falter and result in financial losses can significantly impact your psychological outlook. Hence, it's imperative to dedicate ample time and effort to refining your trading strategy using live data before implementing it in the live trading arena.
Funding programs provide a supportive platform for you to experiment with various trading scenarios and enhance the effectiveness of your strategy by addressing its shortcomings. In addition to mastering the intricacies of trading, you can simultaneously work towards achieving funded status.
Secure Funding While Enhancing Your Skills
Funded Trader Programs offer an exceptional route to becoming a professional trader, even if your experience is not extensive. Crafted by seasoned traders who possess an in-depth understanding of the markets and risk management, this program provides a sturdy framework upon which to refine your trading abilities.
Upon successful completion of the program and passing the exam, you will receive an offer for a funded trading account, granting you the opportunity to trade on behalf of a proprietary trading firm. The remarkable aspect is that you retain 90% of the profits without risking a single cent of your own capital.
Curious about the capital available through a funded trader program? Let's consider the standard Funded trader program as an example. You can commence with $50,000 in virtual capital and progress to the $50,000 live account. Upon successful program completion, you'll receive an offer for a funded trader account of the same size as the one you selected during your training.
Moreover, there's no need for cumbersome licensing or protracted certification processes, as this most programs can be completed in just 5 to 15 days.
Keep it profitbale,