Trading Secrets of Successful traders

By | January 9, 2013

During my training sessions i would like to ask my students what do you mean by trading?

Most of the students will answer trading is all about mathematics and probabilities. Some will say its all about charts, other will say its all about earnings and future prospects of earnings about the particular stocks or Sensex. From my perceptive trading is a mind game. Its individual trader belief will determine his success in stock market.Putting it all together, it is more than just numbers.

“Successful trading depends on the 3M`s – Mind, Method and Money. Beginners focus on analysis, but professionals operate in a three dimensional space. They are aware of trading psychology their own feelings and the mass psychology of the markets. Each trader needs to have a method for choosing specific stocks, options or futures as well as firm rules for pulling the trigger – deciding when to buy and sell. Money refers to how you manage your trading capital.” – Alexander Elder

 

 

 

 

Every traders will enter market believing its easy to make money in market as you just need to buy and sell profit will flow in. Some traders have firm belief that earning their living out of day trading, But how many succeed at the end of year. Hardly few What could be the reason.

It is all about perseverance,mental determination, ability to evolve as per market trends will determine who wins and who quits. From the starting most of us are hard wired to do things which give us least discomfort eg holding on to losing position because taking  loss  will give us pain and will make us think we have lost against the market and eventually we kept on holding the positions. Surprisingly the majority of millionaire traders lost most of their accounts when they started or they experienced huge draw downs while learning lessons the hard way.

Here are few points traders should keep in mind to be successful in trading

  • Have faith in yourself : You must believe that you can trade as well as anyone else.This belief arises from doing your homework and staying disciplined in your system. Understanding that it is not you, that it is your system that wins and loses based on market action will keep the negative self talk at bay.

 

  • You must have faith in your method. You must study the historical performance of your trading method so you can see how it works on charts. Also it is possible to quantify and back test mechanical trading systems for specific historical  performance in different kinds of markets.

 

  • You must have faith in your risk management. You must manage your risk per trade so it brings you to a 0% mathematical probability of ruin. A 1% to 2% of total capital at risk per trade will give almost any system a 0% risk of ruin.

 

  • You must have faith that you will win in the long term if you stay on course. Reading the stories of successful traders and how they did it will give you a sense that if they can do it you can to. If trading is something you are passionate about all that separates you from success is time.

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