The #1 Most Important Thing To Do Before You Start Trading
What do you think you must prioritize before you ever place your first trade in the markets?
Is it…
Finding a mentor and community support?
Studying charts for hours?
Learning the information necessary to avoid costly mistakes?
Developing a trading plan and strategy?
All of the questions listed above are important pieces of the puzzle to trading success.
But, we need to dive one step deeper…
Unfortunately, there is a big reason why many traders do not achieve financial independence, even if they are actually good at trading.
That reason is simply this:
POOR MONEY MANAGEMENT. PERIOD!
You have to be smart with your money before it ever even funnels into your brokerage account. There is no way around this.
Harsh truth: You aren’t going to become financially independent by only using a couple hundred to a couple thousand dollars to trade. It is essential to save as much money as possible from your job to transfer to your brokerage account. No “ifs or buts” about it.
Too many traders think that they grow a $300 account into a six-figure account within a few years. Unrealistic.
On a positive note, you are in complete control of how your money is allocated.
When you get your paycheck, where is your money going? Is it being spent at the nearest shopping mall to buy your fourth new pair of shoes this month? Is it being spent on clothes, jewelry, an expensive car, or a mortgage you can’t afford?
Here is the simple way to become financially independent fairly quickly through trading or investing (assuming you have a profitable strategy that you stick to):
LIVE BELOW YOUR MEANS! SAVE MORE THAN YOU EARN! BE STRICT AND HAVE A PLAN OF ATTACK!
There are plenty of people who make $50,000 a year and save 20% of their income. On the other end, there are people who make $150,000 and are drowning in $80,000 of credit card debt because they are playing the “keeping up with the Jonses” game.
There is no excuse to not being able to save at least 10% of your income. I recommend trying to save at least 40%, but that is just my personal plan. You have to find what works for you.
If you don’t save your money and make it work for you, you will work for money your whole life. Do you want to do that?
Imagine working for 50 years and having zero savings, zero retirement, and zero hope for your future. That doesn’t sound fun does it?
There is a difference between enjoying the fruits of your labor and being irresponsible with your money.
The takeaway message here is simple:
Live below your means, save as much as possible, learn how to trade, and continue this until you can comfortably live solely off of your trading account.
It isn’t going to happen in a day or a year, but if you start being financially responsible today you will be in a much better place 10 years from now.
Everyday is a bank account, and time is our currency. No one is rich, no one is poor, we’ve got 24 hours each.
— Christopher Rice
Time is on your side if you keep money in your hands. If not, your time will be spent running in a circle until you realize that it is too late to make a change.
You don’t need the new car. The newest iPhone. The most expensive clothes. Five star dining every night…
You can have all that when you prove to the world that you’re first capable of being financially smart.
Earn the right to have the nice things in life.
Acting rich when you’re broke will only keep you broke!
I know this article isn’t a very uplifting one by any means, but I hope you needed to see this and take action to save as much money as you can.
A short-term sacrifice now will give you the world 10 years down the road.
You can do it. Stay focused. Stay consistent. Set financial goals. Get to work.
Happy saving and happy trading.
-Brennen
