There is a high failure rate amongst traders of 95%, you don’t want to be part of the large majority. Here are some tips on how you can distinguish yourself and become a successful trader.
1. Keep a trading journal.
In order to be a successful trader it is important to keep records of not only trades but the conditions that influenced you to take certain positions. Some of things that you should keep track of in your trading journal could be the following:
You state of mind when you entered the trades.
Prints or drawings of the chart patterns when you entered your trade.
The market sentiment when you entered your trade.
The date you placed the trade as well as the time.
The reason in which you entered the trade
2. Have a good risk management plan.
It is important that before you place a trade you have a good risk management plan in place. This means know where you are going to place your stops before you have entered a trade, as well as knowing what targets you wish to hit. Setting a take profit and stop loss before entering a trade will prevent you from being greedy when the market is moving in your favor and from prematurely closing a trade when the market is moving against you.
3. Manage losses.
For some odd reason a lot of beginner traders start trading with the idea that they are going to have a 100% success rate and every trade they enter is going to be a winning trade. This is impossible, even the best traders have loosing trades. The trick is to be able to manage your losses. There is no point in having an winning trades that are outweighed by loosing trades, in order to be a successful trader your winning trades need to outweigh the loosing trades.
Dr. Alexander Elder says that a traders prioties are as following:
Long term survival
Steady capital growth
Making huge profits.
4. Keep learning.
Learning should never stop, especially if you are a trader. It is important as a trader to constantly build on your knowledge of the market so that you can continuously develop and advance your skills.
5. Trade what you know.
The biggest mistake of retail traders is to trade of a hot tip. They see something rallying and they start trading it, in spite of whether or not they understand the asset they are trading. As a trader it is important to be an independent thinker and trade what is in your circle of competence.
These are just some of the things that successful traders do and you can incorporate in your trading process to enhance your chances of success.