How to choose a broker and how to get started as a trader in the U.S.

In the United States, federal and state securities laws require brokers, investment advisers and their firms to be licensed and registered. They are also required to publish important information about their work online. Every violation of the law is recorded in the SEC (Securities Exchange Commission) register, and this information is publicly available. However, not all U.S. brokers are registered or licensed. U.S. law does not protect citizens who have invested in an unregistered brokerage firm.

The CRD (Central Registration Depository) is an electronic database that contains information about most brokers, their representatives and the firms they work for. For example, you can find out if brokers in a particular state are properly licensed and if they have had disciplinary problems with regulators or if they have received serious complaints from investors. You can also find information about the brokers’ education and where they worked before their current company.

Specifics of trading in the U.S.

U.S. citizens can contact their state securities regulator or the Financial Industry Regulatory Authority (FINRA) to request this information from the CRD. Since each state’s securities regulator can provide more detailed information from the CRD than FINRA, investors contact their state’s securities regulator first. Those brokers who are leading the market right now are trying to protect their investors. Now it is customary to publish data for convenience. Many brokers provide access to special indicators and tools, develop applications and publish analytics.

How to choose a broker in the USA?

You need to choose a broker by the speed of execution of orders and the amount of commission. It is also very important that the service should be of the highest level. You can tell the customer service policy by how willing they are to make concessions to you. In today’s world, people have stopped trading with a broker. Remember, you can always call your broker and ask for a lower commission. A good reason is that the commission is interfering with your intraday strategy’s earning power. Be prepared to provide proof and then your request may be honored.

How to survive as a trader during the first year and not to give up

It’s really hard to trade well and profitably. Not surprisingly, analysis of client data from most brokers has confirmed that 40% of traders quit within a month of starting trading, and only 7% are still actively trading 5 years after starting. So what makes traders give up and quit trading so quickly? The reason traders give up too soon and don’t get the results they expect comes down to a few underlying issues. Recognizing them will help you understand what you need to do to survive your first year as a trader or investor, as well as how to pave the way to your stable future.

Problem #1. Excessive expectations

The first question traders always ask when starting out is, “How long does it take to turn $1,000 into $1,000,000.” However, this is a very wrong question at the start. Yes, you can make a lot of money by trading, but it is much more likely that you will lose several trading accounts before you learn how to do it. Accordingly, it is better to ask yourself at the beginning of your journey: “How can I not lose my money?”

While this may not sound very positive, and it may disappoint some of you, it’s important to evaluate your options objectively – you’re unlikely to make much money in your first year as a trader. If you learn how to trade break-even and not lose money, then you will already be better than 99% of all traders, and that will be a great start. Initially wrong expectations often cause traders to quit trading, because when your high expectations are not met, there is frustration and anger. Realize that you can’t make a living just by trading for the next few months and focus on the process itself. And the money will come.

Problem #2. Inability to sustain losses

A huge problem that many traders face on a daily basis is that they misinterpret their losing trades. First, you must learn to understand that losses are just as normal as wins, and no matter how good you are, losing trades will never disappear from your life. Second, try to distinguish between “normal” losing trades and “bad” losing trades. “Normal” losses are those where you did everything right, followed a plan and stuck to your trading system. In this case, you have nothing to worry about, just luck was not on your side today. You need to move on, don’t deviate from your strategy, and you’ll be in the plus side in the long run.

A “bad” losing trade is a trade where you screwed up, made mistakes, etc. A trader who thinks he is on a losing streak, but all his losses are “bad” is not actually experiencing a losing streak – he is just a bad trader. Many traders think that their system “doesn’t work”, but a closer look often reveals that their system is perfectly fine, but they themselves are screwed up. In order not to make mistakes and trade correctly, you need to gain experience gained over the years. Or ask a specialist and learn to trade with him, saving yourself a lot of time, nerves and money.

Problem #3. Not understanding what to focus on

So you’ve realized that in the first year you are unlikely to make any serious money. Then what to do? A trader’s first priority is to become familiar with the market and its dynamics. You must find a decent mentor and keep learning new things as much as you can. Then you must choose one particular method or approach and focus on learning that approach. Over the course of your trading career, you will likely go through many trading systems and strategies, and that’s fine, but you should avoid frequent “jumps” from one system to another and changing your approach every month. After all, often a trading system only shows itself over a distance of a few months.

Psychoanalysis of trader’s actions and the psychology of stock trading

The main purpose of psychoanalysis of the trader is to identify psychological flaws and errors that can lead to negative results in trading. There are two different options for the trader:

  • In the first case, he can win $85,000 with a 100% chance.
  • In the second case, the trader can win $100,000 with an 85% chance and 15% chance of not winning anything.

In both cases, the trader can win $85,000, an objective return. But most traders would prefer to choose the first option. From this we can conclude – when a person wins, he will not take any risk.

How to set yourself up for successful trading?

Remember: everyone has an equal chance before opening a trade. There are several kinds of traders, some of them will prove their case to the end, the others are “quiet” traders, who silently listen to other opinions, but do things their own way. The third type of traders are ready to discuss anything and can spend 24 hours a day in conversations. Each of the represented traders is dangerous when dealing with “live money”. After a while – usually up to an hour – it becomes clear if a trade was opened in the right direction. After a short period of time it is possible to determine how the trader reacts when making a profit or loss.

The Psychology of Trading

Losing on the financial market is like alcohol to an alcoholic. A losing trader shuffles from one guru to another in search of profitable trading strategy, his capital decreases more and more, but he keeps trading in hope to feel again pleasant but long-forgotten taste of victory.

Trading System

The key to success in this case – the right framework, which will help to systematize your actions and decisions, as well as lead your trading to a certain sequence of causes and effects. The trading system is this basis. What is a trading system? A trading system is a number of ordered rules, a set of technical indicators or elements, which together give a signal to buy or sell a financial instrument. In simple words, it is a mathematical model of decision-making on the financial market.

Peculiarities of the trading system

  • The analysis is carried out on time ranges – timeframes.
  • The trading strategy can be based on technical tools, i.e. indicators that provide additional information concerning the current market situation.
  • The trading system provides information on the opening and closing of transactions.
  • The rules of setting stop loss and take profit are described.

Trading systems varieties

  • Trading systems are available for various purposes and are oriented on different market situations.
  • Trend Trading Systems.
  • Systems, which are built on the basis of strong support and resistance levels.
  • Channel trading systems mean the work in a narrow price range.

If you want to become a successful trader, you should first study the different guides and find the best version of your trading strategy. As a result, you should try it out in practice and learn how to use basic trading signals.