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11 Steps for Successful Trading

  
  Education
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  1. You must have a Mission Statement.  What’s your real motivation behind your trading?
  2. You must spell out your trading/investing Goals and Objectives.  You cannot get from A to Bvery easily unless you truly know where B is.
  3.  You must spell out your Trading/Investing Beliefs and Market Beliefs.  Please remember this very important statement, “You cannot trade the market.  You can only trade your beliefs about the market.”  Therefore, it’s a very good idea to identify your beliefs about the market first. 
  4.  Spell out your exact Trading Strategies.  How do you go about analyzing the market and what are the key things you look at in your market analysis?  What trade set-ups do you use before entry? What are your timing signals for market entry?  What is your catastrophe stop loss?  Where and when will you take profits?  Will you use a trailing stop?  Will you scale into the market?  What exactly is your trade management system once you’re into the trade?    
  5.  What are your Position Sizing Strategies?  This is part of money management and is very important in reaching your trading goals and objectives in terms of profitability. 
  6. What are your typical Psychological Problems in following your trading plan?  What is your plan for psychological management for dealing with these problems?
  7. What are your Daily Trading Procedures?  What should you be doing on a daily basis, not only to become organized, but to become methodical in everything you do as a trader, on a day-to-day basis.
  8. Do you have an Education Plan to Help Improve Yourself on a continuing basis?  If not, you should have one.  Like anything else in life, you need to be continually working on yourself to become better and better.
  9. What is your Disaster Plan?  What can go wrong, and how will you deal with each item?
  10. What is your Planned Income and Budget for Trading Expenses?  This is pretty simple and straightforward; write down everything you can think of and try to be as realistic as possible.
  11.  How do you Prevent Trading Mistakes and Avoid Repeating Them… if they occur?  Really sit back and think about this and write down any and all mistakes that you might make during your trading.  Once you do that, come up with a solution to each potential mistake that you might make so you don’t allow that to happen.

5 Lessons From Legendary Traders: Michael Marcus

  
  Education
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Lesson #1: Each Trader has A Distinct Style
“You also have to follow your own light. Because I have so many friends who are talented traders, I often have to remind myself that if I try to trade their way, or on their ideas, I am going to lose. Every trader has strengths and weaknesses. Some are good holders of winners, but may hold their losers a little too long. Others may cut their winners a little short, but are quick to take their losses. As long as you stick to your own style, you get the good and the bad in your own approach. When you try to incorporate someone else’s style, you often wind up with the worst of both styles. I’ve done that a lot.”
This is a very important point: You have to find out your strength and weaknesses and develop a trading style that suits your personality best. If you are good at holding winners – trade trend-following systems. If you are comfortable with several consecutive small losses and several big wins – trade chart patterns. If you are highly disciplined and not too aggressive – you could focus only on high-quality trades which come rarely. Let your personality choose your trading style.

Lesson #2: Always Use Stops
“Always use stops. I mean actually put them in, because that commits you to get out at a certain point”
This one’s a no-brainer, but worth mentioning. Many beginners tend to discard stop losses after seeing several trades touching their stop loss and then continuing in their direction. Very wrong approach. Putting stop loss is crucial for your trading success and performance. If you stop loss is placed in logical place (A.K.A: Support or Resistance level), you should have no reason not to respect it – if price touched it, the basis for your position has voided and staying in the position is highly risky. Also, always have an emergency stop in case of sudden news or catastrophe. (more…)

Winston Churchill for Traders and Analysts

  
  Education
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Twenty five quotes from Winston Churchill for traders and financial analysts:

1. I love this war. I know it’s smashing and shattering the lives of thousands every moment — and yet — I can’t help it — I enjoy every second of it. (A letter to a friend, 1916)

2. I pass with relief from the tossing sea of Cause and Theory to the firm ground of Result and Fact. (The Story of the Malakand Field Force, 1898)

3. True genius resides in the capacity for evaluation of uncertain, hazardous, and conflicting information.

4. The truth is incontrovertible. Panic may resent it, ignorance may deride it, malice may distort it, but there it is. (Speech in the House of Commons, May 17, 1916)

5. Success is not final, failure is not fatal: it is the courage to continue that counts. (The Prodigal Project : Book I)

6. It is a mistake to look too far ahead. Only one link in the chain of destiny can be handled at a time. (Speech in the House of Commons, February 27, 1945) (more…)

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