7 steps to turn your finances around in one year

With the summer silly season drawing to a close (and what a season it’s been!), it’s now time to get serious about your trading.

If you’ve been putting off getting started with your trading career … or if things have been put on hold … it’s time to ask yourself how much longer you can wait to make these changes.

Human beings aren’t great at dealing with change, so we naturally put things off. Whether it’s quiting your job, dealing with relationship issues or fixing a leaky tap … most of us are natural-born procrastinators.

In most areas of life, making those changes involves going through a rough transition period, before we reap the benefits. And the longer you leave it, the less time you’ll have to enjoy those benefits.

With financial changes, because of the power of compound investing, by making changes earlier rather than later, the difference 10 or 20 years down the line can be enormous.

So, how do we start?

1. Start with your goal.

This might be a one-year goal, or a ten-year goal. But this is not the part where you let the doubters hold you back. This is about your ambition, your inspiration and your dream – this is what you’re working towards. Let rip.

2. How do you build a wall?

You start laying bricks. Step two is about putting together your short-term strategy – these are the baby steps that will get you on your way. Your checklist should start something like this:

• Your trading fund (how much can you afford to trade with?)
• Your timetable (how much time can you realistically devote to this?)
• Your trading strategy (don’t worry, this doesn’t need to come with a huge price tag)
• Your education (again, this needn’t cost you anything) …

3. Breaking the mould.

We all have set ways we perceive ourselves, and are perceived by others – we’ve developed these over many, many years. And it can be tough to change these. Fear and self-doubt will inevitably crop up, and this is where we need both inspiration and support. Many traders turn to internet forums for support – these can be good, but I’m frequently horrified by the snarky remarks to newbie traders on some sites, so be warned. (I try to keep the www.tradersbulletin.co.uk site strictly friendly.)

4. Evaluate your risk vs reward.

I’m not just talking about the risk-reward on your trading … I’m also talking about not giving up your day job, and not trading with money you can’t afford to lose. Seriously consider how much you can afford to lose, and what impact it will have if you reach that limit. It’s very possible to start trading with a very small fund, so there’s no reason you need to overstretch yourself financially. And, until you’re seeing profits in a demo account, there’s no reason to be risking a penny of your real cash.

5. Stay with the program.

I often think that starting out in the markets is a bit like buying into a fitness regime – the type that promises you a picture-perfect six-pack in just a few months. We start out with great enthusiasm, but before long we’re sweaty, breathless, that knee injury is starting to niggle, and we just want to lie on the sofa with a pack of biscuits …

Sometimes you will feel like that when you’re trading. Sometimes you’ll lose money and doubt yourself. Sometimes you’ll just wonder if it’s worth the effort. These are exactly the moments when we need to push hardest. These are the lessons I’ve learned from the sports field:

• work towards consistent performances regardless of external factors.
• maintain a confident and positive outlook, even when things aren’t going well.
• deal with distractions without letting them interfere with your focus.
• tolerate pain and discomfort (in trading, this usually means a dent in our finances).
• remain persistent when the going gets tough.
• have resilience to bounce back from disappointments.

We say it again and again – discipline and consistency are the toughest jobs for traders.

6. Keep learning.

There is no such thing as ‘normal trading conditions’ – they are always changing and evolving, and as traders we need to evolve and adapt too. If you think you know everything, or have a trading strategy that’ll never fail … you’ll learn the truth soon enough.

7. This is the new you – no caving in to detractors or turning back.

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