We get a lot of young traders who are eager to earn money from the stock market and this post is for them. Here are a few things I typically advise youngsters before taking the plunge in the market:

1) Don’t rush to trade

Take your time to understand the basics of the market and how it functions. Don’t rush. The market has been here before you were born and the market will be here after we are all gone. So, what’s the hurry? Get prepared first (do paper trading) and then slowly increase your trading capital.

2) Read good trading related books

I strongly advise youngsters to read books from great authors such as Mark Douglas, Jack Schwager, etc. Good trading education is your quickest path to making money in the market. Be competent first, confidence will follow.

3) There’s no better learning than live trading

Just because you have memorized concepts of technical analysis or fundamental analysis, doesn’t mean that you have learned them. Real learning happens when money is on the line; when the market is going against you; when you are losing money and when you have to make decisions under pressure. Therefore, consider your learning from books to be a starting point of trading and not the end. The real master is the Market and there’s so much more to learn.

That’s one of the main reasons we train our students via live trading and not some theoretical framework.

4) Ask experienced traders about trading principles, not tips

When you get an opportunity to interact with professional traders, don’t ask what the next multi-bagger is going to be or where NIFTY is headed in the next few months. Ask what matters to your success: ask their trading style, their risk management system and their success rate. Ask what really would matter to you in the next 5-10 years.

5) Create your trading system

Just because someone sits all day in front of the computer and take 15-20 trades doesn’t mean that you should do that too. Ask yourself what your style of trading is going to be based on factors such as your patience, your capital, and other priorities. Not everyone needs to be an intraday trader to be successful; you can be a swing or positional trader.

6) Work hard

This one seems like an obvious one but it’s not. I am surprised with youngsters who want to get rich overnight but when I ask them to do the groundwork, their first instinct is to look for shortcuts. There are no shortcuts for success in the stock market. Either you work hard, be disciplined and succeed as a trader or you take shortcuts and end up in the graveyard with millions of other losers. Your choice!

7) Have realistic expectations

You cannot expect to double your money every month. People come to the market with insane expectations and when the results are less than spectacular, they just give up. You have to realize that a fixed deposit yields about 5-6% per year so if your trading methodology is yielding 10-15% per month, you are doing exceedingly well! Have some perspective and don’t get distracted by all the hype around trading.

If you work hard and stay consistent, you will be rewarded like any other profession. On the other hand, if you keep taking shortcuts and avoid the real work, be ready for a really big disappointment.

All the best!

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