If you’re brand new to trading and are determined to become good at it, the first thing you should do is play SwingTrader on ChartGame.com, it’s completely free. Once you can get from $100,000 to $1 billion on ChartGame without breaking a sweat, you’re ready to start trading with real money. ChartGame isn’t the only way to learn about technical analysis, emotional control, and bankroll management (poker is remarkably good for the latter two), but if you don’t play ChartGame you do need to learn these concepts one way or another. I can get to $1 billion in ChartGame in a single 2-4 hour session, depending on how lucky I get with the charts. But it took me about 2 weeks to learn how to do this. When teaching my friends, I’ve found that it usually takes them about 2-3 months to get to the point of being able to beat ChartGame, but if you’re especially gifted you can learn how to do this in less than a month. I don’t think my 2 week datapoint is a fair comparison because I was already a winning trader prior to playing ChartGame. Anyway, if you can’t get to $1 billion in ChartGame, I’m sorry to say that you really have no business trading. If you think you’re a winning trader but you don’t have the discipline to validate this theory by spending 2-4 hours to beat ChartGame, then it’s likely that you’re deluding yourself. Good traders require patience and discipline to avoid tilting, and good traders enjoy examining themselves critically in order to identify and correct flaws in their game.
During the course of playing ChartGame you should learn about how to analyze price action – this is the fun part! I’m not talking about using lagging technical indicators such as RSI or MACD, those are a waste of time. I’m talking about learning about Candlestick Patterns, Opening Range Breakouts (ORB), Gap Fills, Trend Days vs. Range Days, Support and Resistance Lines (including EMA20), etc. Some of these are only applicable to day trading and not swing trading. I’ll write more about these concepts in a later blog post.
After beating Chartgame, you should learn some of the fundamentals of how markets work, especially if you plan on trading options, which you likely will if you don’t have a 7-figure account. If you want to go deep into this then read “Options, Futures, and Other Derivatives” by John C. Hull, and buy some exams to test yourself on the material. Even if you don’t read this book, you should still try to learn about the greeks, hedging, arbitrage, Black-Scholes, put-call parity, and multi-leg option strategies. This isn’t to say that you need to actually use all these things when you trade, but rather, it’s important to at least conceptually understand how everything works, because you never know when you might need a particular tool from the toolbox when encountering a new situation. I’ve found that understanding something deeply reduces the surface area of uncertainty, and thereby increases the accuracy of your decisions, reduces the time required to make decisions, and perhaps most importantly, reduces the mental toll trading. Trading, like Poker, requires stamina. I’ve heard about poker players eating nuts at the poker table because they’re good for the slow release of energy.
Once you learn all these things, you’re ready to start day trading. You’ll probably still lose money, at least in the beginning, but regardless of whether you make or lose money, you’ll begin to notice that price often drops the moment you go long and rises the moment you sell. You’ll start to feel like the market is rigged against you, and people will tease you for being a tinfoil hat conspiracy theorist. Like many conspiracy theories, this one is true, market makers generate tens of billions of dollars in profits every year by fleecing retail investors just like you. The mechanics by which market makers pay for order flow, intentionally trigger stop losses, and manipulate price action are complex and beyond the scope of this article. Luckily, BigShort can arm you with simplified insight into what the market makers are doing, so that you don’t have to get fucked!
