The Sucessful Trader

The successful trader is a highly individualistic creature. You don't trade in a group but as an individual. Your personality, methods, time frames, needs —all are unique to you and cannot be shared by anyone else.

The successful trader absorbs market activity and information by participating fully in the markets. He perceives opportunities as they arise and makes distinctions among them, discerning which are more valuable, which less. The good trade doesn't escape him. He can turn his ideas into market opportunities because he has worked to learn, not learned to work.

Trading is being young, imperfect and human; not old, exacting and scientific. It is not a set of techniques, but a commitment. You are to be an information processor. Your trading skills can be developed only by participating in the markets. You need to become a part of the markets, to know the state of the markets at any given time and, most importantly to know yourself. You need to be patient, confident and mentally tough.

The good trader offers no excuses, makes no complaints. He lives willingly with the vagaries of life and the markets.

Start by becoming capital safe so that you can participate in the markets on an ongoing basis. Position yourself so that you can't be knocked out of a market by a few setbacks. Continuous involvement prepares you to take advantage of any good opportunity that arises. It also contributes to
your self-confidence. It creates a safe environment in which you can experiment and learn, knowing that no experience will be a career-ending one.

As your trading experience grows, you will begin to gain a feel for the market that enables you to sense changes as they occur, not after. You will develop the ability to recognize opportunities rather than going after dreamt-up trades. You will learn to recognize when you are wrong even before your dollar position teils you so. And you will begin to see, time after time, that when you have exited a trade it was usually the right move to make. In other words, you will begin to experience trading.

Now it is time to further sharpen and refine your skills — to work to learn. Try to develop a sense of the price/value relationship underlying the trades you make. You'll find that there are only three possible price/value relationships: price may be at value, above value or below value. If your trades are not buying a price above value or selling a price below value, your trading circumstances will be favorable; the effects of your mistakes will be muted, and it will be relatively easy to recover from them. Mistakes outside these parameters can be disastrous and career ending.

In the early stages of your trading career, don't worry too much about whether you should buy or sell, but rather about how you've executed whatever trade you've made. You'll learn more from your trades this way. Never assume that the unreasonable or the unexpected cannot happen. It can and it will.

Remember that you can learn a lot about trading from your mistakes. When you make a mistake —and you will —don't dwell on the negative. Take your lesson and keep going.Never forget that markets are made up of people. Think constantly about what others are doing, what they might do in the current circumstances, or what they might do when those circumstances change. Remember that whenever you buy and hope to sell higher, the person you sell to will have to see some opportunity at that higher price in order to be induced to buy.

You will need a sound approach —one that allows you to win at trading. It's best to try to win on the grind: Plan on taking a small profit from a large number of trades, as well as a large profit from a small number of trades. Don't think of yourself as a take-off artist; rather, think of yourself as marketing an idea whenever you enter a trade.

Traders who lose follow one of several typical patterns. Some repeatedly suffer individual large losses that wipe out earlier gains or greatly increase a small loss. Others experience brief periods during which their trading wheels fall off; they lose discipline and control and make a series of bad trades as a result.

The wise trader makes many small trades, remains involved and constantly maintains and sharpens his feel for the market. For all of this work, he hopes to receive some profit, even if it is small in dollar terms. In addition, continual participation allows him to sense and recognize the few real opportunities when they arise. These generate the large rewards that make the effort of trading truly worthwhile.

The program you follow must allow you to have reasonable positive expectations; it must make trading fun and exciting for you. If it does, you will find that the common complaints you hear about the anxiety of trading and the fear of pulling the trigger will not affect you. As your experience
grows, your patience and confidence will also grow.

You will learn to stand alone and to make the tough trades — but not the tough stupid ones.

Discover what you do well consistently as well as what you do poorly. Find a base and build on it. This is how the successful trader is made.