The Secret to Making Successful Trades
Trading, in stocks, forex, crypto, or commodities has attracted millions of people with the promise of financial independence. But while many are dreaming of making quick profits, hardly any of them do, while a very small percentage of traders are able to consistently make money trading. The difference between the winners and the losers is not a secret formula to make money or a magic trading strategy. The difference is discipline, mindset, and execution.
1. Control Your Mindset
The biggest battles in trading happen in our heads. Fear, greed, arrogance, and impatience can destroy the best trading plans and systems. Successful traders learn to harness their emotions. They can stay calm through the losing trades and not become too excited with the winning trades. Often, trading psychology is much more important than trading strategy.
Advice:
• Do not ever trade out of revenge if you lose.
• Be emotionally neutral. Trade like a robot not a gambler.
2. Have a Good Trading Plan
Winners don't leave it to chance -- they work off a plan that has been proven and is consistent. A trading plan will include:
• Entry points and exit points
• Rules for risk management
• Timeframes
• Target levels for profit/loss
If you don't have a plan, you are simply guessing. If you have a plan, you will be in control.
Tip:
• Back-test your strategy before you risk real money.
• Follow your plan even if you feel the need to improvise.
3. Manage Your Risk Like a Pro
If you ask any successful trader, they will tell you that risk management is everything. They never risk too much on one trade. Most traders live by the rule of risking only 1-2% of their trading capital per trade. This will help protect your account and allow you to recoup losses.
Tip:
• Always utilize a stop-loss.
• Never “go all in" when you think you know.
4. Lifelong learning and flexibility.
Markets change, and strategies that accrue trust (value) now will have no trust tomorrow. Professional traders are dedicated to continuous learning (researching, analyzing, and acclimating)
Recommendations:
• Stay up-to-date with market news and economic indicators, as they all shape a narrative - simply follow the narrative!
• Consider keeping a trading journal to record your journey (big and small), and use your faults to better yourself.
5. Consistency and patience pays off.
The #1 secret that traders become blind to is time. Trading does not happen in an instant, it takes months and years of practice and development. The traders who will stick around and last in the industry are the ones who can develop a consistent approach, be patient, and view trading as a business not a game of chance.
Guidelines:
- Do not over trade.
- Do not pre-suppose that you will make a short term profit every time - think longer term capital growth.
Final Thoughts
There is no "secret sauce" to trading. The key is to get into the right mental space, discipline yourself to follow a documented trading plan (including judicious risk management), and then continuously educate yourself. Trading is not a one off big trade, it is about consistently making educated and smart trades, over time.
Remember , it is not about being right every trade, it is about being wealthy in the long run!
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