Last updated on June 18th, 2020
Fundamentally, trading really is a simple game, but it requires a great deal of thought, effort and persistence to succeed.
In poker, the saying from Poker Hall of Fame member Mike Sexton goes that it “takes five minutes to learn and a lifetime to master”.
Trading is similar in many respects and yet if it’s approached in the right way, competence can be achieved much more quickly than most people realize.
There’s nothing complicated.
There’s no magic formula, no holy grail and no silver bullet.
Just simple, well thought out and carefully ordered common sense.
Simple Common Sense Keys To Trading Success
You will find these 6 keys to trading success appear simple and be amazed of how important they are for you to reach your trading goals.
Technique and Market Knowledge
This is the one which most new traders spend the majority of their time on and yet it only equates to a small part of trading success.
Still, it’s important to have a good knowledge of the various sides of the market, your chosen trading strategy and the products you trade. Get good at understanding how these things work.
Preparation for the trading day comes in two parts rather than just the obvious one.
- Looking for what you might expect to see from the market, if there are any key releases that day and so on.
- Routine and almost ritualistic mental rehearsal which goes with standard preparation. So don’t rush and make sure to get yourself into the right frame of mind before you start trading each day.
Risk and Mental approach
Risk is what traders live and die by. If you don’t risk anything you can’t make money, but if you don’t control your risk then you might find your trading account running dry faster than you think.
Knowing that part of trading is losing on any one trade (or string of trades) is vital.
You select your trade and then you risk $x. You must control your risk on each single trade to give yourself a fighting chance of success in the long run.
You have to be able accept this.
Trade Selection and Execution
If you’re a discretionary trader, you’ll realize that when it comes to taking a trade there’s a little more to it than just clicking buy or sell at a certain price or trading setup.
Some seemingly good trades you take which you know you shouldn’t have and they lose money.
Then there are trades which you pass on and you end up kicking yourself when they make money because you had no real reason to not to trade.
To increase your chances of selecting good trades, it’s important to have a methodology which incorporates criteria for selecting to trade or pass on specific opportunities. Otherwise it’s more than possible that you’ll be deciding based on your fear or greed at that moment.
The key which many traders tend to overlook is trade management.
If you focus all your efforts on getting the perfect entry, you can miss the point that it doesn’t matter how great an entry you get unless you can hold the position and make that cash register ring!
If you don’t have a method for holding your position or exiting, you’ll find it much more difficult to maximize a positive trade or even take a profit when you should.
Just as controlling your risk is important, making the most out of your winners can really make a big difference to your bottom line. This is one reason using a trailing stop is part of my trading approach.
Hitting the trading “sweet spot” on any one day, week or even month is great, but as much as we’d all love it to, it’s not going to last forever.
When you trade you must expect to go through better patches and worse patches. It’s the name of the game.
But what you can do is ensure you’re in the best possible place to trade mentally, physically and emotionally.
We all know the things which help us and things which don’t, so we just do what we have to. No excuses. Write them down and make them part of your plan.
Expand On These Success Keys
Clearly these keys are written in a broad sense, but that’s because I believe they apply to every trader. Your job is to flesh these ideas out fully for your own trading and create a clear trading plan or directive.
There many articles on this trading tips blog or Youtube channel to help you understand each of these success key.