subject: Essential Elements of a Successful Trader [print this page] Essential Elements of a Successful Trader
Education
Creating a trading plan is all about finding your edge and applying it to the markets. It is about knowing what trade setups to look for and how to determine your entry and exit strategy before any trade is ever taken.
A Worthy Mentor
It is not impossible to become a successful trader without a mentor, but it will take lot longer and cost more in opportunity costs. Mentoring by a persistently profitable trader is an invaluable asset and worth every penny. Beware of anyone seeking to mentor you who is unwilling to share his/ her account statements, and provide you with approvals from prior students to promote their claims to expertise.
Discipline.
"Plan your trade and trade your plan," is the advice of all good mentors. Trading involves entry, exit and trade management. Of these the easiest is the entry and the exit is probably most difficult part of trading. It is trade management that is best learned from a successful mentor
Technology
The right technology means everything to today's professional trader. Access to special ECN's, live charts and the ability to enter and exit trades instantly is crucial. No trader should be without a professional trading platform.
Analyze Losers
New traders should take time to analyze losing trades in order to determine exactly why a trade was a loss. This information is invaluable. If done properly, a trader may begin to notice certain market conditions that consistently lead to losing trades; then, he can adjust his approach and not take those entry signals in the forex market.
Cut Losses
This is strictly a matter of trading psychology, and it is up to the trader to make the conscious choice to never let a loss get out of control. This is easier said than done for many new traders, but it must be seen as an act of the will.
Access To Trading Capital
This is the most important element of all because without capital, having the above four elements means nothing and with this final element, we will show you how you can trade using the capital and leverage of others.
Employ Conservative Risk Management
Along with cutting losses, new traders should employ very conservative risk management. It is best to risk very little of account equity on each trade, perhaps even less than 0.5%. This will allow a trader to keep his account intact while undergoing the initial challenging stages of loss that all traders will face. Employing very conservative risk parameters will also help a trader remain emotionally detached from each position, which is absolutely essential. Forex trading is risky and keeping leverage low and cutting losses is an important measure to decrease the likelihood of being wiped out by a string of losing trades.
To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.
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