Yes. As a new trader, there are a couple of important things for you to make money trading.

First, you have to have a set of profitable rules. If you don’t have profitable rules, you won’t make money.

Second, once you’ve got a set of profitable rules, you have to have the confidence to keep following them. But, unfortunately, a couple of things can shake your confidence; either you don’t trust the rules, or you’re not comfortable with the level of fluctuation, volatility, risk in dollar terms, or don’t understand how the rules work and what’s happening. So, if you don’t trust the rules, you can build confidence by testing them on the historical data so you would know the circumstances of what would happen to the system when you perform it. So the rules are better than the rules changed, or you can optimize and improve them and make the rules even better so they make more money. Build confidence in the rules by testing.

As a trader, the confidence in the volatility of your account is all about your risk profile or your risk tolerance. You have to ask yourself how much money are you willing to risk to still sleep well at night and don’t get stressed out? On day one, that might be a small amount, and in six months or a year, it might be a much bigger amount, but this is what’s right for you. So there are two parts to it: there are the dollar fluctuations and the percentage fluctuations.

If your account drops suddenly to 30%, are you comfortable? What’s your risk tolerance? It all depends on you.

author avatar
Adrian Reid Founder and CEO
Adrian is a full-time private trader based in Australia and also the Founder and Trading Coach at Enlightened Stock Trading, which focuses on educating and supporting traders on their journey to profitable systems trading. Following his successful adoption of systematic trading which generated him hundreds of thousands of dollars a year using just 30 minutes a day to manage his system trading workflow, Adrian made the easy decision to leave his professional work in the corporate world in 2012. Adrian trades long/short across US, Australian and international stock markets and the cryptocurrency markets. His trading systems are now fully automated and have consistently outperformed international share markets with dramatically reduced risk over the past 20+ years. Adrian focuses on building portfolios of profitable, stable and robust long term trading systems to beat market returns with high risk adjusted returns. Adrian teaches traders from all over the world how to get profitable, confident and consistent by trading systematically and backtesting their own trading systems. He helps profitable traders grow and smooth returns by implementing a portfolio of trading systems to make money from different markets and market conditions.