The trading checklist for beginners.
One year on from beginning my trading journey, I thought it would be useful to create a piece of content which includes all the things I have learned as a beginner myself. I often learned the hard way and hopefully this article can prevent you from doing the same. I have also included a bunch of tips that I believe helped me develop as a trader. Even if you are not a beginner, this article could still be useful for yourself as a recap of the basics which will definitely do no harm to skim over and refresh your memory once in a while.
- Establish whether you are going to be day trading, swing trading or perhaps both. There is no right or wrong, it is completely dependant on what works for you. I found that swing trading works for me as I have a full time job and cannot monitor charts all day.
- Find the technical analysis that works for you as an individual. An effective way to do this is to start paper trading whilst trialing new indicators and techniques. It can often be time consuming, but beneficial in the long run.
- There is nothing wrong with using testnet accounts and paper trading. Everybody has to start somewhere and it’s a good opportunity to familiarise yourself with trading set ups and different platforms.
- Gain a solid understanding of risk management. This may not be the pretty side of trading but it is 100% more important than technical analysis (in my opinion).
- As you begin to figure out what works for you, create a set of trading rules and always stick to them. Even if a trade results in a loss whilst sticking to your rules, it’s about disciplining yourself which will be crucial in the long term. Adjust these rules where necessary going forward. Adapting in this market is key.
- Always plan your trade set up before you enter a position. You should know exactly where your stop loss is and where you will be taking profits. Always stick to these predefined levels. Again, it’s about discipline. If you take profits and price runs another 20% it doesn’t matter, honestly.
- In a bullish market, keep a small amount of your position open (often 10% for myself) which is known as a ‘moon bag’. This allows you to combat the above bullet point and not be emotional if price does continue to move in the direction you anticipated.
- Always use a stop loss. Some people may disagree but look at alts over the last couple of months. Where would you be without a stop loss now? However, you should think carefully about your stop loss placement and take some time to research liquidity hunts.
- Place your stop loss at invalidation levels. Where does the trade no longer favour your biased? Many rookie traders place their stop at a level which simply favours a good Risk:Reward which is completely wrong.
- When taking your first trade with ‘real’ money, start small. There is no shame in starting with a small trading account. At this point, it isn’t about making money. It’s about learning and monitoring your win rate to best align yourself for a larger trading account in the future.
- Use your risk management knowledge to calculate an appropriate position size. If your trading account is 1BTC, you should never everplace 1BTC on a trade. Every position size should be calculated appropriately.
- Stay away from margin trading to begin with. There is absolutely no need for you to start using leverage until you are more experienced.
- Don’t let emotions prevent you from pulling the trigger on a trade. This was a huge one for me. “What if this trade results in a loss?” You cannot think like this. You have to accept that losses are inevitable in trading.
- To combat the above bullet, use the phrase ‘set and forget’. Set bids in advance, set stop losses in advance, set take profit levels in advance. Decreasing the amount of manual trading will decrease emotional influence.
- If your emotions are still preventing you from taking profit, entering a trade or setting a stop loss, go fully automated. Many traders I respect recommend services like 3commas (not a ref link) which can take away that emotion completely.
- Use alerts at key levels of interest. This prevents me from watching charts so intensely. Until the alert goes off, I know there is nothing that I need to do.
- Let the trade come to you and don’t FOMO into positions. Easier said than done but there will always be another trade if you don’t get filled. Don’t settle for a worse entry because of FOMO which may jeopardise your whole trade set up. Remember, the market isn’t going anywhere.
- Have a trading journal and note down every trade you take for better or worse. You will learn more from the losses as crazy as it may sound. Set some time once a week/once a month (depending on your trading style) and reflect on the trades, looking for similarities and patterns.
- Taking a break is absolutely fine. If you see a streak of losing trades in the journal, accept that the market isn’t favouring your strategy at this time. Or maybe you need to make some changes and adapt your strategy? Take some time to figure it out and prevent revenge trading.
- Don’t let your personal opinion of a coin influence your decision to take a trade. Whether you love or hate a particular shitcoin, it can still make you money or lose you money. These are the facts when you remove emotion.
- Don’t let CryptoTwitter(CT) influence your decisions. If your own analysis shows a bullish biased, looking at CT can easily sway you bearish. Trust your own analysis and learn from it. I personally don’t look at Twitter until I have evaluated the charts for myself.
- Be selective in who you follow and listen to on CT. Be skeptical of those who delete tweets or don’t own up to their losses. There is a massive difference in traders who understand a 100% strike rate isn’t realistic or necessary and straight up clout chasers.
- Don’t be afraid to post charts on CT yourself. Everybody starts somewhere and those who are willing to help and give you constructive feedback are the people you want to build relationships with. It’s a great place to develop and learn if you use the platform properly and interact with the right people.
- Keep learning. You are never the complete trader. Whether you enjoy reading books, watching YouTube videos, interacting with a mentor, you should always be looking to improve and expand your knowledge.
- Last but most definitely not least, make a strategy that works for you. There is no ‘one size fits all’ approach in trading. In my early days I tried to copy people like for like but this really isn’t the best way to go about it.
I personally check the charts out before I go to work, set alerts/bids and carry on with my day. This is what personally works for me!
Resources going forward
There are endless amounts of excellent resources out there nowadays but there is also a lot of shit so be careful who you take advice and learn from. Here are a few of the resources that I recommend to every beginner. They are resources that helped me in the past but I still use to this day.
- babypips.com — Very Forex driven but the principles of technical analysis still apply to crypto. Excellent resources for TA beginners.
- CryptoCred’s Study guide — Even if you do not watch them all, watch lessons 1–5. I cannot recommend highly enough. Find Cred on Twitter here.
- Chart Central Telegram Group — This is a Telegram group that myself and a few friends created earlier this year to network with like minded people. We talk crypto, share ideas and learn. Everyone is welcome and it is free to join.
- Trading in the Zone by Mark Douglas — This is a book I have recently read and was recommended by TraderEscobar on Twitter. It focuses on trading psychology which is something that doesn’t get mentioned enough IMO.
(not an Amazon affiliate/ref link)
I’m sure there will be many things that I have missed or things that some people don’t agree with but this is just a checklist that really stand out to me when reflecting on my journey thus far. Some of these lessons have cost me time and some of these lessons have cost me money. Ultimately I hope the article can help you save both of these.
Just because I have wrote this checklist and am aware doesn’t mean that I execute of all the above to a tee. You don’t read this once and execute these things perfectly. These are things that you perfect over time with consistency until your mind adapts and naturally thinks in certain ways. I’m sure I will make many more mistakes going forward which I am honestly fine with. Recognising these mistakes are the key.