ZxPortal Academy


How to Become a Successful Trader

Trading is not a get-rich-quick scheme. If you are looking for something that will make you rich
quickly, then you should NOT even think about trading.

To become a consistently successful trader, you need to master fundamental analysis, technical
analysis, and risk management. It usually takes years.

Also, you need to learn how to handle the psychological aspects of having painful losses... regularly.

Paul Tudor Jones, one of the most successful traders, put it simply:

“You have to be able to handle getting your butt kicked. No matter how you cut it, there are
enormous emotional ups and downs involved."

Paul Tudor Jones

But here's the good news.

You don't need to be right 100% of the time when trading.

Do the best traders win 80% of their trades?

Not even close. Even a professional trading strategy may, in fact, suffer a 5-trade losing streak, or
worse, at some point.

The difference between successful and unsuccessful traders is that successful ones win more on
their winning trades than they lose on their losing trades.

Trading success does NOT depend on just being right more than 50% of the time. Success depends
on controlling and cutting the losses quickly AND letting the profitable trades run their course.

If you follow smart money management rules, you can set up your target profits and stop-loss orders
on every trade so that your potential profit is higher than the risk.

Here's an illustrative example of how experienced traders often set up their trades and risk
management:

Smart traders always place a stop-loss order when opening a trade. That way, they don't risk more
than they can afford to lose.
Notice that the potential reward is 2 times bigger than the maximum potential risk if the trade goes
against them.

Many traders think that an ideal risk/reward ratio is 1:3. A risk/reward ratio of 1:3 means that a
trader is ready to risk with $1 for the prospect of earning $3.

Seasoned traders mostly decide on and set their target profits and emergency stops before they
enter a trade.

As our old friend Paul Tudor Jones (trader & hedge fund manager worth ~$7 billion) said:

"The most important rule in trading is: Play great defense, not great offense."

Some traders win on less than half their trades, but because they make much more money on their
winners, they end up ahead.

How much money do you need to start trading?



There are 4 recommended steps before starting to trade with serious money:

1. Learning from books, courses, and apps like Forex Hero.

2. Practicing trading with a simulator game.
3. Trading in a demo account.
4. Opening a real account and trading with small amounts.

Let's take a closer look at some of these steps.

Trading simulator games

In the beginning, after reading books and learning with our app, you should try trading in a safe and
friendly environment without putting real money on the line.

A good trading simulator game allows you to dip your toes in trading without risking a penny.

Unlike regular paper trading accounts, the best trading simulator games are beginner friendly and let
you learn and compete together with other traders.

In a simulator game, you'll receive $100,000 of virtual game money, and you can buy and sell forex,
stocks, crypto, oil, and other assets at real-time prices.

✅ Pros: the best part about such a simulator game is that you can learn the ropes without any risk,
and you are not doing it alone. Instead, you can compete against other traders in weekly
leaderboards and occasionally win Amazon gift cards as a motivation booster.

❌ Cons: trading simulator games offer a simplified functionality so that it's easier to learn the basics
of trading. As a result, they don't have all the advanced features like trailing stops, limit orders, etc.
You'll need to eventually practice with a demo account to get used to a full-fledged trading platform.
Demo accounts
The next step after a trading simulator game is a demo account, where you can learn how to use an
advanced trading platform without depositing real money.

All the brokers in our TOP broker's section also provide demo accounts.

Compared with a simulator game, demo accounts are usually slightly more complicated as they have
a wider set of features to suit more experienced traders.

✅ Pros: demo accounts are great for getting used to a real trading platform and testing various
strategies without any risk.

❌ Cons: if you are doing great in a trading simulator, don't expect to get identical results immediately
when you open a real trading account. Trading with real money involves different psychology, so
your performance and actions will differ. Also, order execution in a real account is different, as demo
accounts get instantaneous execution, while in real life, there can often be delays, which also
influence profitability.

Main takeaway
Trading with a simulator game and/or a demo account is a crucial part of the learning process. Even
professional trading firms train their traders using simulators.

The prominent trader Richard Bargh confirms this in his interview for the "Unknown Market
Wizards" book, where he told about his learning experience:

Richard Bargh is one of the most successful traders of our time, and he managed to achieve a return
of an astounding 280% per year for more than six years in a row.

Here's what he says about his learning process at a big trading firm at the beginning of his career:

"Typically, trainees spent the first six months on a simulator. The trading firm monitored your
profit/loss. They wanted to see that you were consistent before they let you trade with real money.
The first two weeks were an intensive training course. They taught us how to use the trading
software. They also taught us about fundamentals, such as understanding how critical central banks
were to moving the markets."

Trading with small amounts

Simulators are great, but trading with virtual money can give you a false sense of your skills.

Thus, after getting consistent results in a simulator, it is recommended to open a real account and
start trading with small amounts that you can afford to lose.

Most brokers allow opening real accounts with $100 - $250.

As you progress, you can gradually increase your account and trade sizes.
But keep in mind that the average daily movements in currency pairs are around 1%-3%, so
obviously, you won't make very significant gains with $100 in your account.

The optimal deposit amount depends on how much you are willing to risk. An optimal starting
capital is usually around $500 - $1,000.

The account size threshold that separates beginner traders from more advanced ones is $25,000.
The $25,000 limit is the average industry minimum for active day traders.

Most brokers don't allow more than three trades in a five-day period for accounts with less than this
limit.

Reaching this $25k limit also enables traders to use higher leverages.

How much money can you make from trading?



First, you should understand a popular mistake that most beginners make. Many beginner traders
try to get rich from one grand trade or a few lucky trades.

But that's not how trading works. And that's one of the reasons why ~80% of beginner traders lose
their money.

A more realistic daily gain goal is around 1% of your account size.

So, if you put $1,000 in your account, you could aim to gain around $10 per day.

If you have a $10,000 account, then you could try to aim for a profit of $100 per day.

... and so on.

Remember that these are realistic numbers only for traders who know what they're doing.

Also, remember that if you make multiple trades per day, a big part of your profits might get eaten
by the spread commissions.

Thus it's very important to choose a broker with low spreads. According to the latest comparisons,
one of the regulated brokers with the lowest spreads in the USA and other countries is IG trading.
They offer up to 20% lower spreads on EUR/USD vs other top USA brokers like Forex.com, Oanda, or
TDAmeritrade.

Hmm.... $10 profit per day with a $1,000 investment?

You might be thinking that it's not much.

Actually, it's a LOT if you understand the power of COMPOUND INTEREST.

The secret formula to trading success



If there is a secret formula to trading (besides learning and practicing hard), it's this:
SUCCESS = COMPOUND INTEREST + DISCIPLINE.

1% daily earnings might sound small at first, but it adds up over time if you keep compounding the
profits and growing your account.

For example, let's imagine that you deposit $1,000 in your account.

As you can see in the visualization below, 1% daily compound interest from $1,000 would result in
total earnings of $12,290.99 in one year.

Of course, this is just to illustrate the idea of compound interest. You would have to trade
consistently every working day to achieve such a result, which is not very realistic for most people.

But you can always increase your account size if you're doing good and also go full-time into trading,
so it's not impossible to reach and even beat this hypothetical target.

Theoretically, if you'd start with $30k, then the 1% daily compound interest could result in total
earnings of more than $368k in a year. However, if you are expecting much bigger and faster gains,
you will put too much in a single trade and most likely quickly blow your account.

Even if you traded every day, aiming for 1% daily will never go smoothly, of course. You’ll have +3%
days and -2% days, etc.

But! This approach provides a more structured and sustainable perspective to trading.

It also gives you a target to strive for.

"Compound interest is the eighth wonder of the world. He who understands it - earns it.
He who doesn't - pays it."

Albert Einstein

Intermediate traders often make bigger gains at the beginning of a trading session when the markets
are more active and then lose a big part or all their profits later in the day due to lower trading
volume or overtrading.

Best traders try to hit their daily goal and then shut down their computers and go outside to clear
their minds and reset for the next day.