What do I need to become a successful trader? Is a prevalent among beginner traders and a lot of them try to find “the shortcut” to become rich overnight. Well, I have a bad news: there is no shortcut. Trading is just like any other domain from the real life. You will succeed only if you work hard and if you’re dedicated.
First Things First
At the very beginning, the first thing you need to know as a trader is that it is your responsibility to continually develop your skills and discipline to become a successful trader. This means that in trading, like in any other business you first need to learn the basics, and then you can move on to more advanced techniques. You need to make sure that today you’re better than yesterday and less good than tomorrow.
There is no holy grail in trading or an easy method. There’s an old principle which said that it’s easy what you know and hard what you don’t know, so, the more you learn and practice, the easier will be for you to find a method that suits you perfectly. There is no professional in this world, in trading or in any other domain, who become professional in an easy way, without hard work and much experience. In any area, the failures can be the greatest teachers, with the condition to study them and learn something from each one.
What do I need to Become a Successful Trader?
Remember: patience and the perseverance are the keys to success.
One of the essential things in trading is that you need to learn (get used) to think regarding of probabilities and most important is to be aware that the losses are part of the trading as much as are the wins. This means you can’t win every single time you trade. You just need to make sure that you win more than you lose, consistently.
Whenever you have a winning trade (using a trading method) ask yourself: can I repeat what I just did over and over again? How often can I repeat this process? How usually often I win and how often I lose when I repeat this process? Are my wins higher than my losses? And so on.
Your success is these circles of competence:
Know Your Method
In order to answer the previous question, you need to find a trading method, your own or an existing one, and:
- Make some backtest on your chart for a relevant period in the past for each instrument you want to trade (I usually do it for at least 9 to 12 months so I can check the entire last year);
- Note in a trading journal or a simple sheet your conclusions (what rules you use to open a trade, entry level, SL (stop loss) level, TP (take profit) level, when you scale in, when you scale out, when you trade, when you don’t trade and so on);
- Test your method on a demo account for at least 3 to 6 months to be sure that your method works and to understand how price will behave any market conditions;
- This period will also help you to see if there are significant differences between your backtest and real market conditions;
- In this stage, you can make some fine adjustments to your method. You can also check it directly on a live account with a small amount of money that you can afford to lose.
Keep in mind, it’s imperative: use only money that you can afford to lose. After you are sure that your method works you can go to a live account and start using your method with confidence, because at in this moment you know very well your method.
You also know that for example, you will have a 70% winning rate which means you know that you will win seven trades out of ten. What you don’t know is which trades you will win and which trades you’ll lose and, this is why is important to open your trade with confidence every single time you get a signal from your method.
“If you fail to plan, you are planning to fail!”
Trading Become Habit
After a while your trading method and style will become part of what you do each day from reflex and those things will help you to develop your mental side first (which is one of the most important components from trading) and your trading method and plan.
Of course, “What do I need to become a successful trader?”, is a vast subject and, so far, those are some basic principles which I think that you should be aware of as a beginner trader or even if you are an experienced trader but, you didn’t get the desired results.
In the second part, you’ll find a series of reasons why traders become successful and why traders fail.
Mihai Marginean and
Team of Elite CurrenSea