The Four Principles of Successful Trading

by Steve Crooks

I hear so many people say ‘I can’t trade, it doesn’t work for me. I’ve tried every system going’. Let me tell you right now, anyone can trade.

It’s just a matter of having the discipline to learn how to do it. Some people pick it up quicker than others. Another key point lies in the previous comment; ‘I’ve tried every system going’, heres why:

There’s a huge difference between jumping from one trading technique to another like a kid in a candy store and developing a strategy that will make you a good trader and therefore a rich trader.

That’s what we are going to talk a bit about today. Creating a strategy that will have your trading bank bulging at the seams each and every week.

Not system hopping. Not jumping on the bandwagon of the latest killer system to hit your mailbox. Not running haphazardly through the streets of the markets with no plan or purpose. Clear, strategic actions with one goal in mind …

… to bring in more and more significant winning trades to your trading bank and therefore your bank account.

Now, first off. I’m not a motivational speaker. I’m not going to pump you up and get you excited with an unrealistic set of dreams. Unfortunately for most people life isn’t ideal. However, if you’ll just follow these simple principles I am going to share with you today, you CAN see a tremendous amount of profit in your trading activities. That’s a fact.

Principle #1:

Don’t Give Up Without a Good Reason. The first thing you need to understand is that Rome wasn’t built in a day. Translation: Your trading success isn’t going to happen overnight. Too many people think that buying a manual and opening a trading account is some kind of magic potion that turns anyone into a six-figure income trader within days. It doesn’t happen that way – and dont listen to anyone who tells you it does!

What tends to happen in terms of online trading is this: A new trader buys a manual either online or from a mail shot and plows into it like it’s the Holy Grail of trading success. They have unrealistic expectations of earning a massive amount of money in the first month and they get discouraged when that first trade nets them £10.00 or worse still loses them £100. They dump the system and move on to the next one, again looking for the Holy Grail. Or they quit altogether. Either way, they lose.

The first thing you need to understand is that anything worth obtaining is worth investing in. You’ve got to stick with it. The most successful traders are typically those who put in the most time, effort, committment, discipline and who understand that it takes time to learn any skill, and thats exactly what this is – a skill. So stick with it.

Principle #2:

Set Reasonable, Reachable Goals. Having now realised it take some time to build a profitable trading business… don’t despair. Don’t be discouraged, just be realistic. Think of all the successful traders you know or have heard of – none of them became successes in the first few weeks. And yet, each of them RIGHT NOW are pulling in full-time incomes from their trading. They key is to simply take your time.

Set small goals that you can reach each day and week. Arm yourself with a plan and take small achievable steps until you reach that goal. ‘A journey of a 1000 miles begins with one small step’ a well known proverb but so very applicable to this business. I assure you, with proper planning and discipline, you WILL be successful.

You’ve got to make that first £25.00 before you can make that first million. Set reasonable, reachable goals so you don’t get discouraged along the way.

How much do you really NEED to be financially free? How much do you WANT to be earning each month? what will that figure be in 6 months? How about a year? Ok, you have the numbers, now what will it take to get there? Don’t guess, get your calculator and tap it all out. If you are 60% accurate on your trades and you get X amount per trade, how many trades will it take?

So, you need X number of trades. How will you get them? Will you focus on intraday trading across the indices? Good, thats a start.

What else? Are you only able to trade end of day? How many markets do you need to trade to achieve your goal?

You have to have a plan. Set action steps to reach each of your goals.

Principle #3:

Take one step at a time. Now, the ultimate goal is to have a trading bank big enough to allow you to make one or two trades per week or month and earn enough from that to achieve your goals. That would be incredible wouldn’t it?

But, to get there, you’ve got to get your trading strategy nailed down. Find a market that will provide you with consistent trades each day whether it be intraday or end of day trading that suits you. I would recommend the FTSE, CAC, and DAX for the UK markets, and the DOW, S&P, and NASDAQ for the US markets. This will allow a total of 6 trades per day for end of day trading and potentially any number of trades for the intraday approach. Not all markets will yield a trade each and every day. So, when taking stock of your performance, make sure you take an overall view over, say, a week.

But, having said that, don’t try and run before you can walk. Learn the nuances of one market at a time and get comfortable with your strategy before moving onto the next one. Thats step one.

Don’t try to juggle six balls until you can juggle the first one.

After you are happy with the results you are getting from your first market, it’s time to branch out and add more to your lineup.

Principle #4:

Remember to Grow While You Go. It’s a never-ending process. Keep practicing and learning. The more trades you can make, the better. Even the most successful of traders will admit they are always learning and they still make mistakes. The difference is they are skilled enough to minimise the effects of those mistakes.

Commitment, discipline and PRACTICE are your keywords for this business. Don’t be afraid to lose. it’s a cost of running your business. Each time you make a losing trade, analyse it and find out honestly if it was the fault of your system, one of the times when the patterns just didn’t pan out, or if it really comes down to a lack of discipline on your part. Be honest with yourself. If it was your fault – no one cares except you. If you lie to yourself the only loser is you. Learn by your mistakes and keep a note of every trade you ever make and why you made it. Be brutally honest with it. After all, it’s your dreams that depend on it.

Never chase a trade. If your losing, take a step back and wait until your triggers show again. Trade what you see, not what you think you see.

I hope these thoughts and principles help you, in some way, to become a better trader.


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