I am a college student and started trading seriously back in 2010, so what I would like to do is put together a post for the younger traders out there as general advice based on my experience, including things I would do over again if I could could go back in time. This is geared mostly toward those of high school or college age, but I feel those that would classify themselves as new or inexperienced with regard to trading would find some use of this post, as well.
First of all, I would recommend that all young traders, regardless of their trading talent level, go to college and get a degree for starters. Even if, by chance, you’re one of the few making enough money to sustain a regular adult lifestyle, I would encourage all aspiring traders to actually get a bachelor’s degree. Like I mentioned in my previous blog post (Is it possible to trade binary options for a living?), making a living trading from home using your own funds is very difficult, even if you are very, very well-funded from the beginning. Even an experienced trader who has tens of thousands of dollars at his disposal to trade will find it difficult to make a living trading. That’s simply the unfortunate reality.
If you are fairly certain that you would like to pursue trading as a career, then looking into a major like economics, business, or finance might be the most pertinent avenue. However, these majors will likely teach absolutely nothing about how to trade profitably or the intricacies of technical analysis. In fact, at many universities, you might be more knowledgable about trading and how financial markets work in general than any economics professor. There is a definite education involved when it comes to learning how to trade and to do it well, but it’s not exactly something you’re going to be learning in a university setting.
However, what these majors will do is give you the skills to become employable in a wide range of professions. Each of those would bolster your candidacy for junior trading jobs for hedge funds, banks, private trading institutions, and so forth. Trading using a company’s funds can be much less stressful than attempting to trade relatively limited personal funds. There is also the opportunity for promotion as your trading skills/results improve and time put into the position increases. Also, you can always consider non-trading related jobs that still pay well like business/financial analysts and marketing executives just to name a couple.
Also, highly consider the possibility of taking an accounting class in college. It can be one of the most rewarding courses you will take and supply you with skills that other classes will not give you. Regardless, be sure to branch out somewhat in your course selection. Doing this your first year of undergraduate school is best. Perhaps you went into college wanting to be a trader or some type of profession related to your interest in the financial markets, and end up coming out a physicist or on your way to law school. Always keep your options open.
And once in college, time management and prioritization become vastly important. Never trade when you have work to do, are stressed out, or lacking on sleep or proper nutrition. It’s always best to trade without distractions. Moreover, never have the mindset that you don’t need to study hard because you feel you will have trading success once college is over. Trading is very difficult to do well in, so if one has never traded profitably over a long period of time in the past, it’s tough to assume that that’ll be the case in the future. In general, the higher your GPA, the better job offers you are likely to receive.
Now as for actually getting started in trading, my number one recommendation is to always stay on demo accounts as long as possible. When you first start out you will simply not be profitable. There is a strong learning curve. Only until you can prove to yourself that you can trade profitably for a period of several months, and able to maintain an in-the-money percentage of 60% over 200+ trades would I actually recommend that you move onto a live account trading real money.
If you are young, chances are pretty high that you don’t have a lot of money to waste, and going into live trading right away or before you have proven to yourself that you can trade profitably using the guidelines I have outlined above, is an easy way to lose money that you don’t need to. I lost money that I couldn’t afford to lose early on and it’s not a fun feeling. And if you do reach the point where you are able to trade live, keep your investment size reasonable, otherwise emotions will take over. The nice progress you made on your demo account compared to your dismal real-money performance will almost seem like the worst luck imaginable is corrupting your trading results. It’s a common complaint among beginning traders (demo results not matching real-money results), but the real undermining influence is emotions not bad luck.
While most people who look into binary options ideally view it as a form of trading that will allow them to quit their day jobs, work from home with their own hours, realize that it doesn’t necessarily have to be the be-all end-all career goal. The vast, vast majority of the world’s most successful traders actually work as part of a company and often eventually run their own funds, rather than merely toiling away in obscurity from home on their computer.