What separates successful traders from the rest of the pack? Why is it that only a mere 5% really make it in trading? How did these traders do it? While all successful traders have their proven trading strategies and systems to call and manage their trades, they know there is one more important thing to do: focus on improving themselves.
Because the trader is the ultimate resource that can act to produce the desired trading results, he or she must ensure this resource is primed and efficient to perform its best at trading. As such, successful traders pay great attention to the points listed below which elucidate how they go about their trading business.
Treat Trading Like A Business
Top traders know that trading is a serious business and they accord it such importance by considering key factors that affect all businesses. From a trading perspective, these factors include: writing a detailed trading plan; starting out with an appropriate trading account size; knowing the various costs of trading; sustaining and growing the account; and acquiring the right trading knowledge, skills, software and equipment.
Keep The Ego In Check
Trading mistakes can arise from emotional responses directly linked to one’s ego. A trader that needs to be right will let the ego prevail and inflict ruin to his/her account, always trying to will the market which he/she denies cannot be controlled. Being egoistic also means not acknowledging one’s trading mistakes and therefore not learning from them. For example, the ego will egg the trader on to hold a losing trade instead of taking the correct action of cutting loss at the appropriate time.
Be Disciplined In Every Trade
The item that directly affects your bottom line is trading discipline. The serious trader follows his/her trading plan to the letter, and adheres to it as much as humanly possible (Note: even successful traders make mistakes). Trading discipline includes protecting trading capital and sensibly allocating risk per trade; only taking trades that satisfy risk/reward parameters and set up correctly; staying on the sidelines at all other times and not forcing a trade; cutting losses quickly via pre-determined stop loss levels; letting a good trade ride but protecting a winner from turning into a loser. In essence, being disciplined allows the successful trader to show profits consistently and rein in losses should any trading period turn out to be a rough ride.
Protect Trading Capital
The serious trader treats his/her trading money very seriously. It is what enables trading to be done. Additionally, it is also the objective of trading: make winning trades to grow the money. Thus, the successful trader will guard his/her capital zealously, ensuring that risk per trade is controlled so that losers only erode the account, not chew a hole in it. This assures the trader that his/her business can continue, today, tomorrow and into the future.
Don’t Marry Your Trades
The serious trader knows that a single trade does not determine his/her trading success. He/she is fully aware that any trade could result in a loss. Therefore a conscious act of removing any emotional attachment to every trade is essential. While staying disciplined entails waiting for the good trade entries, this wait and eventual trade entry do not compel the successful trader to think that he/she must be right in taking that trade. As such, should the market go against the trader and he/she sees prices approaching the stop loss level, the trader fully accepts that losing is a real possibility and does not rationalize further. The novice trader, in contrast, will often be tempted to move the stop loss further out so as to let the trade have “more room”. Such a trader feels the need to be right and doesn’t know how to walk away from a loser.
Be Realistic, Practical And Persevere
Being realistic is what separates the men from the boys when it comes to trading. The successful trader does not have a get-rich-quick mentality and knows it is hard work; thus he/she treats trading as a business and has the mental fortitude to stay in the game for as long as it takes. Perseverance is a key asset. The trading discipline imposed in the trading plan reinforces this. It results in a personal belief that it is possible to succeed in trading. The serious trader knows he/she is psychologically guided by his upbringing, attitudes and experiences regarding money and success. He is also practical by admitting these limitations and works to break free from such self-defeating barriers. Pursuing the right education from other successful traders are good solutions to the problem.
Know Yourself And Let Others Help You
The successful trader knows his/her strengths and weaknesses when it comes to trading. They are not shy to ask for help. While knowing there is no shortcut to success, the trader often pursues education from the best mentors to acquire the right knowledge and skills essential to becoming successful at trading. As part of the trading plan, the serious trader keeps a trading journal and reviews this daily to learn from past mistakes and internalize winning trade executions. Also, a mentor can use the trade journal to help the trader make specific and personal improvements.
You may need the help of a trading coach. Let Hawkeye Traders help you get back on the path to consistently profitable trading. Contact us today at [email protected] and ask about our Trader Coaching Program. You’ll be glad you did.
Learn more about volume and volume spread analysis. See more examples and live trade setups as well in the next free LIVE Hawkeye Demonstration Room. It is held every Wednesday and is open to all. Click this link for more information or to join us in class.
Learn to trade the Hawkeye way.
Hawkeye Traders, LLC