The First Rule for Profitable Traders

When you’re starting out, trading is overwhelming.

You have so many different markets to trade and so much information to process. If you’re not careful, you can easily get lost.

And if a couple of trades go against you, you might wish you had never started trading at all.

But just remember this: You can’t know everything about every market. It’s impossible.

Believe me – it’s hard enough trying to know all you can about just a couple of them!

So you need to find one or two things and stick to them.

Choose One Thing

Once you’ve chosen your “one or two things,” study everything you can about them… from the price chart to earnings data and beyond. Collect every piece of information you can find.

You might focus on a single stock, like Apple (AAPL) or Microsoft (MSFT). Or you could choose an index like the S&P 500 or Nasdaq.

Whatever you choose, you need to see how they react to important market news and events.

Here’s why it’s so important…

If one person spends all week trading a single stock or index but you spread your attention over a dozen things, who do you think will have better success?

Sure, you might get lucky once or twice.

But forget about relying on luck over the long term.

That’s why when I started out on the trading floor, I traded just one product. Then, when I joined a trading firm, I stuck to just one sector.

There’s just no way I could do my job and know as much about another market sector as well.

So where do you start? And how do you know which suits you best?

How to Get Started

Some recommend starting with an area you already know. For example, if you work in healthcare, then you could start with health-related stocks.

That works for some people. But for me, the most important thing is to find something that you’re interested in.

After all, if you work in an industry all week, the last thing you might feel like doing is reading about it in your spare time.

So if your passion is technology, tech stocks might be a good place to start. Or if you have an interest in energy, there are plenty of stocks to pick from that sector too.

The next step is to narrow the list to just one or two stocks you’ll trade. The challenge can be the sheer number of stocks to work through.

When starting out, sometimes the best option is to stick to a sector exchange-traded fund (ETF). You can trade a sector that you’re interested in without having to pick the best-performing stocks as well.

For example, if you’re interested in oil and gas stocks, you can trade a single ETF like the Energy Select Sector SPDR Fund (XLE). It gives you exposure to all the biggest stocks in that sector.

Or if you’re interested in gold, an ETF like the VanEck Gold Miners ETF (GDX) will allow you to trade the biggest gold mining stocks in one holding.

That way, instead of trying to analyze hundreds of stocks, you can focus your attention on just the sector itself.

And that can give you a big advantage.

By narrowing your focus to just a couple of stocks, you will vastly increase your chances of becoming a profitable trader.

And it’ll save you a ton of headaches from always trying to work out what “hot topic” to trade next.

Regards,

Larry Benedict
Editor, Trading With Larry Benedict

P.S. This idea is at the core of what we do at One Ticker Trader. Each month, we choose just one idea to trade.

That allows us to focus and has helped us achieve an 82% win rate since the service launched last August.

So if you’re looking to put this concept into practice, I invite you to check it out. You can discover all the details right here.