• Define the question
• gather information and resources
• form hypothesis
• perform experiment and collect data
• analyze data
• interpret data and draw conclusions that serve as a starting point for a new hypothesis.

1. Define the question: What is it exactly that you are trying to achieve? Are you shooting for high returns with high risk, long term gains with minimal risk, day trading, swing trading, position trading? Are you trying to make enough money to buy a new car or enough to buy a yacht? First define what it is that you want out of your trading!

2. Gather information and resources: What will be the best route to achieve your trading goals? Are you going to be a stock trader, a futures trader, a forex trader? Maybe everything? Doing the necessary research and taking the time to really get to know your market/markets is absolutely key to successful trading. Some people make great futures traders but horrible stock traders and vice-versa, while others are able to dabble in a little bit of everything and be successful. One way to see what fits you best is to try trading a little bit of everything and see where you feel the most comfortable. Start with small accounts and see what fit is a good one for you.

3. Form hypothesis: This is the fun part and where you get to design your “system” or “rules” by which to trade. Does your trading hypothesis revolve around chart patterns, trendlines, support and resistance, or are you more of a numbers kind of person that trades strictly off price? Do you use indicators? Maybe you are a programmer that has developed an algorithm. Whatever it is I believe it is important to form a hypothesis and then…

4. Perform experiment and collect data: This is the live part of trading where you see just how good your hypothesis really works. Some people prefer to back-test a system and then put it to use in real time, while others like to put small amounts of capital to use in real time right from the start. Once you begin to see results you then begin to…

5. Analyze data: Pretty straightforward.  Simply recording your data so that you can easily…

6. Interpret data and draw conclusions that serve as a starting point for a new hypothesis: Is your trading hypothesis a valid one, or does it need some work? Depending on the kind of results you are looking for, this is going to be different for everyone. If you are not satisfied with the results then it’s time to start the process over again…