Trading in Stock, Commodity or Forex there is lots of opportunities to learn and earn, despite this opportunity most of the traders fail to learn how to become a successful trader. And don’t achieve good results in this market. In fact, 90% of a trader losing money in this market. That’s why I created this article for those people who want to be a professional profitable trader.
This article will teach you how to become a successful profitable trader in any market, and how to trade in a live market without losing money. In fact, I will show you why 90% of people losing money in this market.
‘The Biggest Enemy To Your Trading Success Is Not The Market It’s You Only’
What Criteria Should Have To Become A Successful Trader?
A trading system make you a profitable trader. All profitable traders are disciplined trader, That is why they have some rules where they follow consistently. Now the big question…
How to become a disciplined trader?
To become a disciplined trader you must have a trading system. Without a trading system can’t be a disciplined trader, if you are not a disciplined trader then you will be not a profitable trader.
What is the trading system?
The trading system means specific rules of entry and exits consistently based on methodology (Technical or Fundamental) so that gives a statistical edge. Which is 90% of traders don’t have a trading system.
In a trading system, there are three criteria, therefore, we must develop to become a profitable trader
- Trading Strategy
- Position Sizing
1. Trading Strategy
A trading strategy only impact 10% in your trading system. Most of the trader thing trading systems and trading strategies are the same. Remember trading strategy is a part of the trading system only, which helps only 10% to become a profitable trader.
Various trading strategy using by traders but there is no trading strategy in the world which gives you 100% accurate. Therefore we must focus on some factors before we trade.
a) Trend: Trend is showing us the direction of price movement. There are many indicators where we can identify a trend. The rule is that when the trend is up never taking sell and when the trend is down don’t buy.
b) Support and Resistance: It is showing us a key level of previous market behavior, once price bounce from one level it is a high probability to re bounce again from that level. The rules are don’t buy below resistance and don’t sell above support.
c) Candlestick Pattern: Most of the traders use to trade candlestick patterns to find out entry and exit points. Candlestick pattern tells us the behavior of the market or buyer and sellers. There are various types of candlestick patterns that we explained on another page.
d) Technical Indicators: There are different types of indicators for fine out the trend, momentum, volume, etc.
2. Position Sizing
Position sizing is the part of the trading system that tells you how many share buy/sell per trade. Above the picture we notice that 30% success comes from position sizing, now you can see how important position sizing is. Most of the traders have the best trading strategy but they not able to make money consistently only because of the lack of knowledge about position sizing.
What Position Sizing Tell Us?
Position sizing help us to determine
- How many share to go long / short for a particular trade
- Total risk per trade and overall risk entire portfolio
- And expected returns to the portfolio
If you have the best trading strategy and you know how to do position sizing then do you think that you will be a successful trader, the answer is no. Because 60% of success comes from the psychological factors if you are not able to control psychology like emotion, fear, greed you are not a successful trader. 90% of trade loss money only because of their psychology.
How can we control our psychology?
If you have good trading strategy and if you know how to do position sizing or money management then you will able to control your psychology.
For more details about psychology, read my other article “How To Control Trading Psychology’