You Need The Right Attitude & The Hunger To Want To Succeed.
Every single time you place a trade you are risking money to make money.
Many people find that concept intimidating/uncomfortable and that is the reason why so many people will never get into trading in the first place and that is why so many people will give up after a few losing trades.
It takes courage, strength, discipline and a lot of practice to get past that initial uncomfortable feeling to the point where you can follow your trading method exactly the way you developed it and you can enter/exit without hesitation.
But of course getting to that point is not an easy journey. Learning the basics can take many many months, method development can take many years and being able to fight the battle of the mind can take many years on top of that.
The right attitude involves believing you can succeed, even when others think you can’t. It involves not being too hard on yourself when something doesn’t work and giving it another go. It also involves putting your ego and jealously to the side, identifying your weaknesses and coming up with a plan to improve.
Preparation Is Essential.
Understanding the basics is essential. Completely understanding the instruments you are trading is crucial.
What many people seem to forget is that while leverage amplifies gains, it amplifies losses as well. That is why it is so important to completely understand the risks associated with trading and completely understand the instruments you are trading (margin, lot size value, value per pip, etc).
Using stops is also so important. Even if your stop level is a million miles away, always put one in!!! Welcome to a world where absolutely anything can happen at any time and you must always be prepared for that anything.
You Will Need To Work On Your Mental Toughness – Building Confidence, Dealing With Self Doubt & Moving Past Setbacks.
Every trader has or will experience setbacks and the key to success is how you move forward after those setbacks.
What’s that saying? ‘Fall down 7 times, get up 8’.
My worst setback last year was not a losing trade, but spending hundreds of hours working on a method component that in the end proved to be nothing. It hurt, I had a bit of a meltdown – but I eventually picked myself up, learned from it and moved on.
We as humans are naturally programmed to get a rush out of winning and it hurts our ego when we lose. Then when you add money into that equation, those levels seem to amplify. Consecutive losses can easily manifest fear, hesitation and self doubt, and good runs can lead to over confidence and taking stupid risks.
So many beginner traders think all losing trades are setbacks and failure – but losing trades are a completely normal part of trading. Trades that are losers because you were an idiot and entered based on no analysis are setbacks. Trades that are losers during method development are setbacks, but they are setbacks that you can learn and improve from. Losing trades that are a normal part of drawdown are not setbacks – but the emotional aspect that is involved with getting use to drawdown can be a challenging thing to get use to.
You Will Need To Be Calm Under Pressure & Learn How To Make Decisions Effectively.
Trading requires a lot of focus and you will need to learn how to block out all distractions and go into ‘laser beam focus mode’.
And sometimes you do what you have to do in order to make decisions effectively.
Some technical traders completely cut out news and data so that it won’t impact their decision making. Some traders like to put their trading calls out on Twitter or in a blog because they believe the pressure makes them perform better, and some traders find they perform their best if they just keep to themselves.
My trading kryptonite, which I learned pretty early on, is that I can be influenced by other people’s trade ideas very easily. So in order to improve, I had to take the necessary measures in order to get that under control – that meant stop going on forums, shutting down Twitter when too many trade ideas came across my feed and only reading the analysis reports from the traders I respect.
You Need To Be Dedicated & Commit to Goals.
This whole trading thing takes effort and if you really want to be good you have to take it seriously. That means putting the time and money into the learning process/method development and not be lazy when it comes to testing and documenting.
And Of Course You Will Need A Profitable System.
You will need to develop a system that will work with your lifestyle, account and personality. You will need to have clearly defined entries/exits and you will need to manage your risk so that the account you spent years building up won’t get wiped out in 3 weeks.
The components that make up a good system is another post in itself and I will have a crack at writing that at a later time.