People always ask me what the most important prerequisites are for firstly learning to trade profitably and then going on to become a very successful forex trader.
Certainly all of the standard answers you have heard for reasons why traders fail such as , no self discipline, trading too big, looking for a Holy Grail system, not sticking to a plan, not having a plan,holding on to losers, over trading (too frequently), etc etc are all absolutely true but what else is it that successful traders are doing or have done that differentiates them from the also rans ?
Well here are a couple of things novice traders need to be aware of in order to first learn to trade successfully followed by a couple of trading concepts that very successful traders are aware of and tend to follow that most ordinary traders do not do.
1. You must first enjoy trading
The people that succeed in the long term are those that have a genuine interest and fascination for trading for its own sake. I often say that I would trade even if there was no money to be earned as the business itself fascinates me. Success comes from expertise and expertise is a process driven by the individuals desire to learn and to do better. Traders that succeed have a curiosity and interest in the subject that drives them on and motivates them to keep improving their game – for the sake of the game not just for the money. It has been said many times but success in trading really is not rocket science and even the computerised systems that I trade would not tax the mathematical abilities of the average 15 year old. Success does however require perseverance. Great and consistent success will not come instantly . If you do not have this underlying interest in trading for its own sake then pretty soon trading becomes just another chore. Couple this with a few losers in a row and that is often enough for those “weak hands” to give it up and pursue some other dream. If you enjoy trading enough to persevere then there is absolutely every reason to expect that you will succeed.
2. Have a mentor.
Yes you can become a successful trader without ever purchasing or attending a course or having access to a mentor or coach. But it is a long and painful process as there are many unseen potholes in this road and without somebody giving you directions you will fall into most of them. Each time wasting both time and money.
Using a mentor is like buying a franchise. You are buying into a proven successful business methodology and saving yourself thousands of hours of often misdirected study having to learn everything from scratch the hard way. Why not just shortcut the process and use your mentors already proven business plan. If he can prove that it works – copy it – you don’t earn any extra money in this business from re-inventing the wheel. As my dear old Granny (?? ! !) used to say “find a successful man and copy what he does …… there is always room for one more doing the same thing”
3. Hold those winning positions as a few will become HUGE winners
If you analyse the results of most trading systems over time you will find that performance is heavily reliant on the profits contributed from say the largest 5% of winning trades. It is essential to have a method of holding yourself in on those winning positions and allowing a few of them to become mega winners. These can transform your finances in just a few days or weeks and without them you may very well find yourself treading water making less progress than you had hoped for. So if you are a day trader avoid the temptation to try and quickly “scalp” for small profits and also look to try and hold winning positions right up into the close rather than rushing to exit them intra-day.
4. Don’t follow the position sizing crowd
In my experience whilst you can make very consistent profits from trading (and you are shown exactly how to do this on the course) you also need those sudden “step changes” which dramatically rocket your trading account into the stratosphere to new much higher levels. Certainly following (3) above can help you do just that but also using very aggressive position sizing models at certain times can do an even better job. From my experience of 30 years and talking with other successful traders this aspect plays a very important part in just how successful you ultimately become . Very very little is written about it in books or on the internet although many great traders such as George Soros have confirmed and validated this point when referring to their own occasional application of such aggressive methods. Surprisingly these methods can involve no greater risk to own capital than the much more mundane % risk models. Needless to say this very important aspect is well covered on the 1-2-1 training course.