Success may be replicated by doing what other successful people have done before you. Let’s look at the keys to success from 10 successful traders.
Success Key 1: Be fearful when others are greedy, and be greedy when others are fearful.
This famous saying by Warren Buffett is still as relevant today as when he made this comment in 2008 when markets were crashing all over the world. A quote from the full article further explains his success key:
“fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.”
The bolded statement was proven right as nearly all the stocks of the companies which were nationalized by the US government have all recovered and exceeded their pre-market levels. The US markets have been on a stellar bull run since 2013. The success key here is to look at the fundamentals, and have a long term view of the market.
Success Key 2: Be a Day Trader and not a Daily Trader
Many retail traders confuse the two. A day trader is not necessarily a daily trader. The right market conditions are not present every day. Some days are just not right for trading. You should know how to get in and out within a trading day, but not every day.
Success Key 3: Never Allow Profits to Turn to Losses
It may be a sound idea to move your trailing stop to chase your unrealized profits so that you may preserve some of it if the market turns against you. But just waiting for more profits to be added to the position without protecting what you already have is foolhardy. Many have been burned doing this.
Success Key 4: Consider not staking more than 3% of Your Account in a Trade
The reason is obvious. If you lose what you invested, you have 97% left. If you lose 50%, you have to make 100% of what is left to recover, which is a lot harder than if you only lost 3%.
Success Key 5: Choose a Broker that Offers a Guaranteed Stop Loss
You do not have to worry about calamitous slippage in the proportions that occurred on January 15, 2015 as a result of the SNB action. Things like that occur suddenly and without warning. You get an umbrella before it starts to rain, not when the rain is already falling heavily.
Success Key 6: Try to Develop Your Own System
There is a lot about the market that everyone does not know. All those great traders who discovered systems and indicators did so through study. Study the markets for yourself and create your own system; one which works for you and gives you the best outcomes.
Success Key 7: Trade Consistently
Do not take extended breaks from trading. You will be like an injured football star who comes back to action match rusty. The more you trade, the sharper your mental focus will be. However, do take necessary short breaks to get a fresh perspective.
Success Key 8: Discipline
Your trading style should be a function of your personality. Do not try to be another person. Develop a trading style which reflects you and stick to it. If you do not have the patience to set trades for three weeks, it might be wiser to stick to shorter term trading.
Success Key 9: Only Trade When Psychologically Calm
Most market behaviourists are of the opinion that trading results are at their best when the trader is calm and emotionally stable. Jumping into a trade soon after an annoying episode may not work out well most of the time.
Success Key 10: Invest in Added Knowledge
This is one of the keys to the success of Bill Lipschutz. You must continue to read and study the market for optimum results.
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