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Article “Trading in Your Thirties” here >>
There are more people coming to trading at a younger age these days then there ever have been in the past. Some come to forex trading because they are curious about the markets, some because they know someone who is a trader and others because they are attracted to the lifestyle. Although there are many different personal reasons for exploring trading, we can usually classify traders who are learning to trade by age group and address concerns unique to their age bracket.
Trading in your twenties is actually a lot fun because you are new to the working world and probably do not have the cares and worries of someone older. Let’s delve a little deeper into what it is like to trade in your twenties.
When you begin trading, the first question you usually get asked is “what are you hoping to achieve?” Although the ultimate goal of a trader at any age is to trade profitably and sustainably, the twenty-something trader is going to have very different idea of what they hope to get out of trading than someone who is coming to trading at a later stage in life.
Twenty-something traders can be idealistic and ambitious, unfortunately the flip side of this means that there is no other group that is more prone to rushing things than this group! Being really clear about what you are hoping to achieve, and then checking in with a trading mentor to make sure that your goals are realistic can prevent you from taking on too much risk. It happens very often, young traders trying to emulate legends like George Soros and Richard Dennis gloss over risk management and inevitably blow up their trading account. Don’t do that!
Risk management is a traders’ number one job, especially for twenty-something traders because at that age scraping together a decent amount as trading capital is almost always going to be challenging. If you are a twenty-something trader, you probably have just started your career and will not have had a lot of time to accumulate savings. You may still be paying off a student loan as well. It is not uncommon to experience a disconnect between wanting to trade full-time (and fire your boss) and not having enough capital to trade sustainably on 1% risk. Instead of increasing your risk arbitrarily, the key is to adjust your expectations. Rather than quitting your day job, perhaps change your focus to learning how to execute your trading strategy flawlessly.
If you can consistently make 1%, you will be able to achieve the edge your strategy gives you in the long run. That dollar amount may seem tiny at present and not worth the effort, but you are learning to trade instead of sitting on the sidelines while you save up. Someone who doesn’t learn while saving to trade will still have to learn to trade afterwards. If anything, the price of their mistakes will increase since they will be trading on their full capital. What would you rather do?
Twenty-something traders have the luxury of time over all other age groups. Coming to trading early also allows you to organize your life and give equal weight to other commitments. Doing this is harder when you already have a partner, a mortgage, dependents, bills etc. When you are being pulled in different directions, it is difficult to focus on growing and improving in one area i.e. in trading. As a twenty-something trader, there aren’t that many other areas of your life that you need to direct your focus and energy towards.
Everything is still relatively new and fresh, so you can afford to spend a decent amount of time working on becoming a competent trader. Trading is not a magic formula that will yield results and riches instantly. Rather it is a skill that you need to cultivate and practice in order to get results. There is no other way, time is your most precious commodity so use it wisely.