What differentiate a successful trader from a non successful one? The technical and mental aspects of their trading activities.
You see, trading in itself is a relatively easy to learn. After all, trading is a mechanical activity and if you can read a chart you should be able to trade. Letís take an example.
Two traders look at the same trading chart and according to what they see or to what their system is telling them, they take the decision to place the same trade. A week later, one of them is making over a $1000 and is still in the market while the other one is losing $575 and is out of the market. Why is that? What went wrong?
Nothing went wrong; they both place their trade according to their trading system. However, one had a good plan in place so he felt good placing his trade and his stop loss while the other places his stop loss to feel good emotionally and got stop out. So one feel good before placing his trade while the other one try to feel good by placing his stop loss at a comfortable level.
Youíve seen this before or youíve been through this before? I, for sure, when through this deception more than once and I can tell you: it hurts. Particularly when you see the market takes off on you and youíre not in and you donít have the guts to get back in because youíre not so sure anymore. Sound familiar?
That is the difference between the successful trader and the non successful one. One is in charge of his emotion at all time and places his order with confidence and competence. The other one is driven by his emotion so does not take a decision on rationality but on fear of losing. He has a signal to enter the market but his stop loss is too close and he is out of the market with a loss. But both had a good system to start with.
You see, trading is not as easy as it look on paper. Many promoters of trading systems are trying to convince us that trading will be easy with their system because it is all automated or because their signals are 86% accurate, so if you follow these signals you cannot lose. What these people donít say though is that it is not where you enter the market that count but how you protect yourself and where you exit that is most important. They donít say it and few weeks later you wake up and youíve just lost thousands of dollars and you are still questioning yourself on how could this happen? You have a good system.
If trading was easy, everyone would use an automated system of some sort and be successful. The reality is very much different. It is said that as much as 90% of traders are unsuccessful or have very limited success while 10% rake what the 90% leave on the table. Why is that?
Because trading successfully is not easy. It is not easy because you need to train yourself and to develop your own system. Any system on the market right now is not made for you; it is made for the market. It does not have you in it. It is you that have to develop the strategies that will make it a winning system.
Anyone that is telling you the contrary is lying to you. No matter what system, what signal this system generates, if you are not prepared (technically and mentally) to trading, the market will get at you sooner than later and the money you work so hard to save will be gone before you realise what happens to you. And because I donít want this to happen to you, I want to share my experience with you so you can learn the easy way what I learn the hard way.
Although I have a good system in place to teach you the mechanic of trading, I cannot teach you the mental aspect of trading. This you will need to learn by yourself and only practices and experience will teach you that. There is good news to this though: trading is the only financial activity that you can practice (with real data and in real market situation) without risking any of your hard earned cash.
However and that is a big however, I can shorten you learning curve a lot by preparing you to become a successful trader. This I will do by sharing with you my experience as a trader. That in itself is invaluable.
Until then, take care and please donít pay to much attention to those who are telling you that they have the best trading system to make you successful. They donít, you do.