There are 3 Keys To Get Trading Success in trading that you must follow if you want to be a long-term winner in trading. You can’t lose in the long run if you do these three things. If you don’t do one of them, you won’t last long as an active trader. These three simple steps will help you stay profitable in the markets. These Keys To getting Trading Success are as follows:
A Stable Strategy
You must use a SUCCESSFUL trading strategy: Your trading system must have proven to be reliable and profitable in previous markets. The best way to win in the markets is to have a method that recognizes potential trends and provides you with entries and exits that increase your chances of winning trades.
Many times, these systems will produce large winners that will cover all of your small losses and turn a profit for you. Regardless of the time frame, trend capture is the primary goal of all traders looking for profit. The key is to look at historical price data and see how your method would have performed in various market conditions, including bull, bear, and sideways markets.
A winning system must either have a few large wins that cover all of the small losses or a high winning percentage that prevents the few losses from spiraling out of control. Find your competitive advantage and learn how to capitalize on it. Your trading account will be eaten away bit by bit if you don’t have an edge or a winning system.
Management of Risk
You must manage RISK, Even if you have a winning system, betting too much on a single trade can quickly ruin you if it fails. Even putting 10% or more of your capital on a single trade can wipe out your account if you lose 5 trades in a row. To truly succeed, you must limit your risk to no more than 1% of your total trading capital.
This does not mean that you should trade with 1% of your capital or risk a 1% drop in your asset; that would be foolish; rather, it means that you should carefully set stop losses and position sizes so that if you are wrong, you will only lose 1% of your account. Even if a complete disaster occurs and your stops are gapped through, you may only lose 2% of your investment. This is how traders make it through losing streaks in the long run.
A $50,000 account entails a maximum loss of $500 per trade. Many traders risk 2% of their trading capital per trade, but they require higher win percentages or face larger drawdowns. The importance of risk management stems from the fact that with a high enough risk of capital per trade, you will eventually end up with a 100% chance of ruin due to an unexpected low probability event that causes an outsized move or a string of losses in a highly volatile trading environment. The key is for the trader to safely progress from their first trade to the desired returns without going to zero capital in the process. This is a lesson that many professional money managers, firms, and traders have learned the hard way. Traders who do not use proper risk management end up with a $0 account or worse, owe money to their brokers.
You must have the correct MINDSET. To be successful in trading, you must believe in yourself, your system, and your strategy. If you are a trend follower, you must believe that trend following is the most profitable way to trade, and that your system is a winner as a result of your backtesting on price history or charts based on your rules.
You must believe in yourself and remain disciplined in order to do the right things. If you lose money, you must accept that it is an inevitable part of the game and that you will eventually recover it. Only stress management, perseverance, faith, hope, passion, and a goal-oriented mindset can truly propel a trader from the starting line to success. Trading for the sake of profit does not work because, in almost all cases, the money is not worth it in the first five years, and the new trader quits.
Nothing can stop you if you have these Keys To Get Trading Success; if you lack any of these three things, nothing can help you.