| What makes the best traders successful? Are they | | | | do is execute the plan. So what is it that prevents you |
| "lucky"? Have they discovered some "secret" | | | | from being successful? You. |
| indicator? No. They've learned the truth about trading. | | | | Or rather, the emotional you. |
| Trading success is a simple as 1-2-3. | | | | You need to work on developing the mindset of a |
| Step 1 - Understand what trading is really about; | | | | professional trader. Try this routine for 30 days and |
| Step 2 - Learn what a winning day trader does; | | | | see how you go: |
| Step 3 - Then do it. Continually. | | | | BEFORE: (At the start of trading day) |
| 1. The Essence Of Successful Trading | | | | Step 1 - close your eyes, and remind yourself of the |
| Trading is all about percentages. You enter a trade | | | | truths of trading: "Trading is all about probabilities". Write |
| because you believe that it's more likely to succeed | | | | this on a yellow Post-It note and stick it to your |
| than fail. The job of finding favourable trades goes to | | | | monitor. Permanently. |
| your trading system. There are numerous books and | | | | Step 2 - Mentally see yourself following your trading |
| courses about trading systems. The actual trading | | | | plan. Entering a trade on signal. Exiting at the right time. |
| system you use is beyond the scope of this article, but | | | | Trading the right size for your account. |
| please, please, understand this: If you're searching for | | | | Step 3 - Visualize each trade as a tiny part of a big |
| the perfect trading system - you know, the one that | | | | picture. You might want to visualize it as a matrix, with |
| delivers profits on demand - you'll be searching until the | | | | 100 boxes. Each trade is unimportant compared to the |
| end of time. | | | | overall scheme. Create your own image for this. (Your |
| Successful trading is simply a game of probabilities. | | | | own is best.) Trading is a visual process. The point is |
| Does that disappoint you? Were you hoping for | | | | you need a visual metaphor to distance yourself from |
| something a little more intellectual? Do you know how | | | | the immediacy of real-time trading. Anything. |
| many academics - doctors and lawyers particularly - | | | | DURING: (When in a trade) |
| lose fortunes in the market each year? The positive | | | | Step 1 - Physically relax. Remember the definition of |
| bias comes from your trading system. Our advice is | | | | emotion? "A physical disturbance." You need to reduce |
| keep it simple. Find a system you're comfortable with. | | | | emotional power as much as possible. Prevent it from |
| Know the setups. Understand why and when you | | | | creeping up on you, and doing something silly. So you |
| enter and exit. Then stick to it. | | | | don't feed it. Relax. Be aware of your whole body. |
| Sure, some trading systems offer a higher profitability | | | | Remember the last time you got stressed. What did it |
| than others. But don't get hung up on it. Just don't get | | | | feel like? Tense shoulders? Stomach muscles |
| too caught up on it. The real determining factor is your | | | | tightening? Relax those areas now. Know thyself. |
| ability to follow it. | | | | Note - none of this suggests that you should be slow |
| 2. What Makes A Successful Day Trader | | | | about entering or executing trades. Quite the opposite! |
| A successful day trader is someone who follows a | | | | In real-time trading you must be fast. But you are |
| trading plan. Your trading plan tells you when to enter a | | | | operating from your rational, thinking mind... and not the |
| trade, and when to exit. An entry point. An exit point - | | | | panic-induced animal mind fighting for survival! |
| either a target or just to get stopped out. Parabolic | | | | Step 2 - Breathe! Some traders stop breathing |
| SAR, lower bollinger, natural support and resistance, | | | | completely in a trade! Breathe in slowly for a count of |
| volatility stop. Whatever. | | | | four, hold it for four, and breathe out for four. |
| Any trader must understand the timeless law of | | | | Step 3 - Focus on yourself. Following a trading plan is |
| probability. That with a positive bias and a sensible | | | | a "no brainer". You enter. You trail a stop. You exit. |
| approach to money-management (cutting your losses | | | | Self-talk helps stay in the state. Remember that when |
| and letting your profits run), eventually you'll come out | | | | you're watching the price in real-time, there's a |
| ahead. | | | | tremendous danger of adding emotional fuel to a |
| What makes day trading so challenging is the speed. | | | | simple situation. Watch how you're feeling. Observe |
| You simply execute trades faster, and compound your | | | | any tension and let it go. |
| profits faster - which is why we do it. | | | | Step 4 - Watch your language! Words affect us |
| That's why a day trader is NOT a stressed-out, | | | | profoundly. Ever had someone scream at you? Stirred |
| valium-swallowing, adrenaline junkie who lives from one | | | | up lots of emotion, didn't it? So don't scream at the |
| minute to the next. | | | | market. Speak calmly. Commentate on what the |
| A good (i.e. profitable) day trader knows that it's just | | | | market's doing. Speak out loud. "The current trade |
| another trade. It's all just statistics in action. | | | | began at hh:mm, the system gave a buy signal at price |
| The important point here is consistency. Like the heads | | | | level, the target is with a stop at.. Stop loss was |
| tails example, the one time you don't take a trade is | | | | moved to break even at as per the plan... The market |
| when the market takes off and never looks back. Day | | | | is currently in trading range between x and y..." |
| trading is boring. Keep it that way. | | | | All this helps you to stay objective. Also, avoid "what if" |
| 3. How To Develop The Day Trading Mind | | | | thinking. Creativity has no place in trading! Be |
| Every time you sit down at your trading screen, remind | | | | mechanical. Beobjective. |
| yourself that "trading is statistics in action". Nobody | | | | Step 5 - Continually remind yourself of what |
| knows what the market is going to do next. It's a law | | | | successful trading is. See the current trade as just |
| unto itself. You follow what works "most of the time". | | | | another trade. on just another day. Your job is to |
| When you understand that trading is about probabilities, | | | | follow the system -- professionally and without |
| that any trading system is designed to provide a | | | | emotion. With practice, you truly won't care whether |
| positive bias over the long term, then all you have to | | | | the current trade turns a profit or a loss. |