Basic Requirements to be Successful as a Trader

Trade Successfully

We go to school, gain an education, become employed or start our own business. We learn what we need to know to be successful, but nothing in our education or work experience provides the comprehensive knowledge or psychological control necessary for success as a trader. Unfortunately, it's human nature to assume that, if we succeed in one area, we will automatically succeed in another. Most people who enter the market with the idea of becoming traders have a feeling of invincibility, superiority and no clue of what they are about to experience. The dream of quick money and financial success can very quickly become a living nightmare.

A consistently successful trader, however, knows his or her success is found in coupling the best in professional training and education with the best in technology.

What Successful Traders Know

Most new traders have the wrong focus. When they fail to meet the goal, they begin to push their trading beyond their true ability and skill. The result is a series of losing trades that could have been avoided if they had maintained the correct focus.

Your focus and the measure of your success should be based on following the trading plan, not on the money. If you follow the plan each day, you are a winner. Focusing on the money, on the other hand, leads to emotional decisions, and emotional decisions lead to uncontrolled losses.

Successful traders make decisions based on fact and analysis. They only make trades that have a high probability of working out. This means that successful traders make fewer trades and do not trade everyday. They look for strong trending market days and trade stocks that trend with that market.

Many traders are addicted to action. Success has little to do with their true reason for trading. These individuals are not traders, they are gamblers. Action addicts will lose as many times as necessary just for the adrenaline rush to win once while most successful traders make no more than 3 to 5 high probability trades per day.

Here are a few pointers which I believe you need to follow to be successful as a trader.

They are not necessarily in the order of importance, however I believe that they are all important.

The most important, in my opinion, is:

You must trade in line with your personality. Your own psychological set-up is so important. Don't stray away from it.

Further points are:

• It is almost impossible to make consistent money with a system that you buy off the shelf.
• You must have a method.
• You need a great deal of expertise and training. Read, study, select a mentor.
• Trading should be effortless. The hard work goes into the preparation and education. Did you ever watch one of the Kenyans run a marathon? They seem to do without effort and with elegance. But do you know how much preparation and training they put in beforehand? Heaps.
• If trading is stressful and causes you head aches, causes you sleepless nights, it is wrong.
• Money management is more important than the right trading plan itself. Risk control is essential.
• You must have discipline.
• You must have confidence in your plan.
• You must realise that losing is part of trading. You will start to win when you realise when you are wrong and act on it.
• You must be patient. Jessie Livermore says in his book, there is a wall street fool who thinks he must trade all the time.
• Realise that the following cliche is wrong: people say that you can not go broke taking a profit. Wrong, wrong, wrong.

Try and incorporate these points in your trading make-up and you will become a better trader.

Last, but not least: When you have the capital and begin to trade, never forget that, once you enter a trade, you are no longer a day trader. Instead, you are a risk manager. Remember two things: Trade only high probability trades. Every day is not a high probability trading day.