subject: Things you need to know to be a Successful Trader [print this page] Things you need to know to be a Successful Trader
THINGS YOU NEED TO KNOW
#1 You have to have a exact trading plan.
#2 You have to believe in your trading plan.
#3 When you start trading your plan, you have to follow it exactly.
#4 If you don't have a plan and follow it, you will not be successful trading.
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#1 THE TRADING PLAN
If I had to make a guess I would say most trader's probably trade their entire career without a trading plan.
Does that sound hard to believe?
Well if you don't mind, let's take a little test here .
Write down your trading plan.
A) How to enter a trade.
B) Where does the stop go.
C) Where do you take profits.
And to me each of the above needs to be clear cut, no questions asked.
In other words anyone who followed your plan, would know exactly where to enter, where to get out, and where to take profits, at all times.
If your plan reads, I trade double bottoms, triangles, bull flags, or I use Stochastics, Moving Averages, etc. etc, I'm sorry but to me that isn't a plan, that is a hodge podge of chart patterns and technical indicators.
So let me give you an example of what I consider a trading plan, and this is just an example and is not an actual trading plan.
EXAMPLE PLAN - BUY
#1 If the market trades above the 10 day high go long.
#2 The stop if wrong is the most recent 10 day low.
#3 If the trade moves your way, use the low of the last 10 days to take profits.
A sell example would be just the opposite.
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Anybody that decided to follow the example plan above would know exactly what they were going to do before they even entered the trade, and they would know exactly what to do while in the trade.
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#2 BELIEVE IN YOUR PLAN
This is where paper trading and testing, will come in.
If you see the plan works before you start to trade it, you will be able to stick to the rules.
If you don't have an exact plan, you will never be able to follow it, quite simply because you really have nothing to follow.
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#3 FOLLOW THE RULES
This is where the going get tough, because most trader's can't follow a plan.
And quit simply that is why most traders lose.
If you have a trading plan you believe in through, paper trading and testing, you will be able to follow the rules, because you will know overall you are going to come out ahead.
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#4 YOU CAN DO IT !
If you develop a clear cut trading plan that works, and have the will power to follow it, you will be a successful trader.
Really the big secrets to a successful system are
#1 Trade with the trend
#2 Cut your losses short
#3 Let your profits run.
Not much of a secret, right, everybody knows that.
Here's where I believe most fail even though we all know to trade with the trend, cut losses short, and let profits run.
Trading with the trend, cutting losses short, and letting profits run, can mean almost anything to anybody and that brings us right back to what we are talking about we have to have a plan.
#1 We have to know how to define the trend.
#2 We have to have a specific rule for cutting losses.
#3 We have to have a specific rule for taking profits.
Well I could go on and on from here, but I am also one of those people who believes in keeping it simple, so I think this is plenty for one lesson.
So please before you ever trade have an exact plan, and then when you start to trade - follow it.
