What makes a successful trader?

A successful trader is not just one who makes money from trading, but one who is able to consistently make money month after month, year after year.

There’s no secret formula to doing that.

Trading is akin to the Art of War, a successful trader needs:

1. Understand what he is trading. Before you go for battle, you need to know the terrain, the weather, the enemy etc, similarly you need to know how the markets work before you start trading. Many people try to find a quick-fix solution, a quick and easy way out without having to learn how to trade or even spend time trading. However, traders who do not know what they are doing often end up losing.
2. Get the right tools. Before going for battle, you need to train your army, feed your horses, sharpen your arrows etc, similarly in trading you need to know how to read the charts and signals, how to disect the economic data and how to interpret the news.
3. Have a strategy. In a war, every army has a strategy - how many men to bring to battle, how to deploy the troops, what type of weapons to use. In trading, a strategy is also the most important part. Many people trade without a plan, especially for shares where they buy and hold. However, in trading futures, due to the level of risk from the use of leverage, it is a must to have a plan on how to manage your account, how much to trade and how much risk to take.

Many traders seek to find a program to generate trade signals for them so as to eliminate their human emotions. However, trading is an art and not science, therefore it is impossible to trade based on mathematical formulas. The market itself, is afterall, made up of the emotions and expectations of all the other traders and its always changing. The most important element of a trade is YOU - the trader. You should seek not to exclude yourself from the trading process, but to condition your mind to that of a successful trader’s mindset.

1 Comment

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  By LordAlfa, March 20, 2009 @ 4:54 pm

  Read Mark Douglas books. The Disciplined Trader and Trading in The Zone.

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