Trading is a skill that takes time to master but once learned, it can be a great money-earning opportunity. Some people have even quit their jobs to pursue their trading career.
However, trading is full of ups and downs. It will teach you a number of lessons throughout the period, some of which can even be applied in real life.
Here are some 4 lessons in trading that actually apply in real life:
Patience is a very important virtue that trading will teach you and you will most probably treasure it for the rest of your life.
The market often moves in a trend, and trends usually moves in ups and downs. Rarely do you find a trend moving in a completely straight line.
Beginner traders usually panic when the trend starts moving in the opposite direction even though a trend’s support or resistance has not been broken warrant the worry. This panic causes them to get out of the trade too early only for it to shoot up or down in their original direction.
An experienced trader will always wait and be patient. Soon after the trend will resume its original direction and they will be in profit again. The market has a way of playing with people’s psychology.
If you are not patient, you will be missing out on a number of potential opportunities. It is also important to note that in trading, patience is mostly about trusting your strategy.
If for example, you have a reliable swing trading strategy, then you should trust that it will work during the period you’ll be in the trade.
Of course, sometimes there will be a need to cut losses or push stop losses to break even but it should never be done out of panic. Patient traders learn to apply the virtue in real life because they know from experience that in the long run they will be rewarded.
2. Helps avoid greed
Trading is an investment and should never be treated as gambling. In every investment, you learn to analyze the risks involved and also the rewards you will get.
Trading teaches you to minimize risk and maximize reward. If you get too greedy, then you will ultimately end up losing. Traders know the consequences of greed and hence will avoid it even in their daily lives.
3. Not everything comes easy
As mentioned earlier, trading takes time to master.
During that period, you usually undertake a number of online courses, read a lot of books and do a lot of research. It is not an easy process as is most things in life. Trading teaches people to persevere and with time they will get better and better.
Some people have been trading for more than 5 years, but are still learning and perfecting their skills. Trading might seem easy, but you have to work hard to make it easy.
4. You learn to move on
Truth be told, you can never be 100% right all the time. You may be so confident that it’s a buy, only to watch the price plunge down and hit your stop loss.
This is a common situation that traders face and they learn to count it as a lesson learned and to move on. If you dwell on the loss you made for the day, then you might probably quit trading or worse make a revenge trade to get the money you lost. Revenge trades are often disastrous.
In life we are also faced with such situations, as a trader, you learn to move on.
As you have seen, the lessons you learn from trading can really help shape your life. They help you learn to be patient, to work hard, to manage risk without being greedy and to let go of the past. By doing all these, you become a better person in trading and real life as well.