Successful Trading is dependent on three Ingredients:
Successful trading relies on the perfect mix of three key ingredients for each unique individual. With so many permutations and combinations, the number of possibilities is as varied as there are people thinking about trading
Through a process of continually refining and exploring these three key elements, it is possible to increase your profit potential in trading.
Acclaimed and successful traders, Ray Barros, Daryl Guppy and Ray Kelly all say that the most important aspect of trading is understanding the psychology of both yourself and the market. The Trading Plan Review can introduce you to these and other successful trading philosophies and attitudes.
When people look at a chart of prices or market action, novices often think they are only looking at a graph or record of prices that were traded. The reality is that behind every sale, every price move, there are the emotions which drove people to decide to buy, sell or stay out of the market.
Trading is all about understanding crowd dynamics. Speculating on what crowds will do next. Some feel that market movements are random, displaying no pattern or predictable behavior. Others feel that crowds of traders behave in very predictable ways. Predictable to the point of being profitable.
Another aspect of Trading Psychology is learning about your own motives for trading. If it is pure to make money, then you will find this profession stressful and devoid of pleasure. With this mindset, your chance of trading success will be very low
In the same way that a tip is a reward for good service in a restaurant, in trading, profits are the reward for trading success. Focusing on making money alone will often see novice traders closing out winning trades too early and allowing losing ones to become poor ‘long-term investments.’ You have to learn to enjoy the analysis and the challenge.
Successful Trader, learn to know thyself…!!
Sound Money Management
With good money management, profits can be increased by a factor of ten, or so the super and successful traders say. If we could help you turn every dollar you earn into 10 more, then do you think it would be worth giving us a call?
It has been demonstrated in numerous studies that it doesn’t matter where you get into the market. Profits from successful trading come from, firstly, wise money management in deciding how much to invest in each trade, and secondly, managing your profits as they build.
There is no such thing as playing with the market’s money. Once you are in profit, it is your profit!
The Trading Plan
Often viewed as the most important aspect of successful trading, the trading plan is actually the least important of the three keys.
Don’t get me wrong. A trading plan, with an edge, as an essential key element in any successful approach to trading. With us, you can learn the five keys to developing a successful trading plan. Consider the trading process similar to a bike chain where the trading plan represents 10 of the hundred links in the chain. It doesn’t matter how good or bad the other links are, a faulty link anywhere in the chain will stop all of it from working. A strong link cannot cover for a poor one elsewhere in the chain.
With this thought in mind, at least in the short term, any plan is better than no plan at all.
Plans with consistent profit returns and small drawdowns are possible. BUT you will find that you cannot simply take, borrow or buy another person’s plan and trade it. Every trader will add variations because they feel that those refinements give them an edge or add to their existing edge. The variations may also be added due to personal preferences or money management considerations.
Therefore, your Trading Plan becomes a reflection of your own personality and attitudes towards risk, fair profits and your ability to do the required research, whether it is fundamental or technical.Being aware of this trading plan design characteristic is a further key aspect of developing a sound trading plan. And this takes us all back to the arena of Trading Psychology.
Additional Tools required for successful trading are:
Whether you are a day trader or a long-term investor, you need to have a few things in your tool-kit that will help to choose winning trades. A reliable broker is an important factor. You can find online brokers that let you do all of your decision-making yourself and pay very low commissions, or, if you need a little more professional support, you can sign up with a full-service broker that charges a lot more but gives you personal service. But, obtaining a reliable broker is not the primary tool in your trading toolkit.
The first tool you need in order to trade profitably is your own personal investment education. It’s a good investment in your trading future to pay now for some good investment and trading education courses so you can establish a workable approach to trading in your particular market.
You will also require an excellent source of market information in order to invest or trade effectively. If you are day trading, you need real-time charts with price data and accompanying indicators so you can monitor the markets throughout the day and use them to make your trading decisions. If you are a longer term investor, you will probably still want a source of charts, but they do not necessarily have to update in real time since you will most likely be making your investment decisions outside normal market hours.
A good source of market fundamentals research is crucial for both fundamental and technical traders. It is a good idea to find an independent researcher to supply you with information who is not financially tied to promoting any particular company or industry.
With the right trading tools in your kit, you will be well on your way to trading profitably. Always be aware that trading involves the chance of loss and there are no assurances that any trading approach will always be a winner. Manage your risk wisely, trade judiciously, and you can reach your goals.
Your best investment is education. It is wiser and cheaper to spend a few hundred, or better, a few thousand dollars on good books and seminars than lose the same dollars on a bad trade. Allow us with the Trading Plan Review to help you get your library of knowledge started.
Remember, knowledge with action is power!
Massive action is even more powerful!