Learning How to be a Winning Trader

There’s learning how to trade…

…there’s learning a trading strategy

…there’s learning how to trade with that strategy

…and then there’s learning how to be a ‘winning trader.

Each step along the way is necessary to finally put it all together for consistent success.

The quicker one can get to the final learning step, the better.


Trader Optimism

When ‘would-be’ new traders first set out to learn how to trade, it reminds me of a new puppy learning how much fun it is to play with a rubber ball.  Bright eyed with their tail-a-waggin’, full of enthusiasm and enough energy to take over the world, they see it as the answer to everything they’ve ever dreamed about.

Finally, the easy pathway to riches and a way to achieve ultimate freedom has arrived.

Their minds are like sponges, soaking up every piece of information they can get:

  • Taking trading classes
  • Buying expensive trading courses
  • Reading every forum and blog post they can find

Going long, getting short, being able to take advantage of the fluctuation between the values of one currency to another, margin, discount brokers, the miracle of being able to control hundreds of thousands of dollars for a fraction of said value, etc.


Finally, after jumping through all sorts of hoops, and much effort in getting set up to trade, they are faced with the reality of having to make an actual trade, looking at the current price bar, in real time, at the far right edge of the chart, trying to figure out what to do next.



It sure looked a lot easier when perusing those charts where the obvious trades jumped off the screen.

Stop loss?

Naahhh!  Who can stop me from winning?  I don’t intend to lose!

Perhaps the new trader gets lucky and wins his first trade.  Maybe even several.  Ironically, that would be the worst possible thing that could happen as trading confidence soars and the feeling of invincibility abounds.

“If only I could have discovered this sooner, I could have fired my boss and could be living on my yacht by now, sailing around the Greek Islands.”


Trading Losses Helps Expectations

Probably the best thing that could have happen to our new trader is to have experienced a few quick small losses.  There’s nothing like a quick slap to the face to learn respect for the dangers of the market.

Everyone has heard the cliche that “if trading were so easy, it would be illegal.”

No one ever really reflects too much as to just how true that statement is.  Do you really think governments are just going to let someone ‘mint’ money?  There has to be risk and when there’s risk, there are inevitable losses.

The sooner a new trader learns this lesson, the better off they are and the faster they will get to the next step, discovering strategies for trading.

It’s funny how the above scenario actually plays out again, once the ‘would-be’ trader discovers his/her first strategy.  It looks so easy.  “I just have to place my trade where the strategy says.”

Here’s the thing about strategies though.  They still have to be traded by a good trader.

The greatest strategy in the world is going to do serious damage in the hands of an ill prepared trader.  Over enthusiasm as I just described, typically leads to someone jumping into trades without taking the time, to not only learn the strategy, but to actually understand it; how and why it is supposed to work the way it does.

That leads to continued losses and confusion because our would-be trader already went through that step, found a good trading strategy and yet, is still losing money.


Good Trading Strategies Are Not 100% Winners

What most inexperienced would-be traders don’t realize is that good strategies are not promises that every trade is going to win.  Remember the cliché mentioned above?

Good strategies, and believe me when I tell you that you are lucky when you find one (and even luckier if and when you actually realize it) because they are far and few between and most strategies are either half-baked or only work under very specific market conditions.

Remember the right edge of the chart and that very real price bar that is forming in real time?

Again, the would-be trader is still faced with that hard reality and those charts sure were SO easy to see the trades on – after they happened.

Of course this process filters out a lot of people.  Many don’t make it this far.  Especially those unlucky ones that had fast success, felt invincible and then proceeded to blow up their accounts.

Ever try to regain losses from a trading account?  That part of the trading lessons never really seemed to be taught in any meaningful way and yet the lesson IS going to be learned, costing way more than the price of the education in the first place.

Those that do survive though, are now ready to embark upon the next step,  learning how to trade with a strategy.

It wasn’t enough to just learn the strategy.

It’s time now to actually learn how and why the strategy works and more importantly, how it fits within one’s own personality.  Remember, the strategy still needs to be traded.

There still will be risk.

Trades are still going to lose.

If a trader is lucky, they will realize that a good strategy, even one that fits within a trader’s personality, still will produce losing trades.  It’s now up to the would-be trader to learn how to use the strategy to be profitable.

It winds up being a numbers game, just like any other money making business.


The Only Promise A Good Strategy Makes

A good strategy can only promise one thing. A good strategy can only promise to put the odds in the trader’s favor IF it is traded in the manner in which it was intended to be traded.

I believe that a good strategy has to be able to make that claim.  Now, it is incumbent upon the actual trader to be a good trader, learn the strategy through and through and then use it as it is intended to be used.  It should have money management principals and clear rules to follow from start to finish.

Remember that right edge of the chart. That part of trading is not going away.

Trades will win and trades will lose.  A good strategy that puts the odds in your favor will grow your equity, winning more than it loses on a consistent basis.

That leads us to the final chapter of learning which is, learning how to be winning trader.


What Is A Winning Trader?

What exactly does that mean though?  I won a trade today.  Does that make me a winning trader?  It’s amazing how many definitions of ‘winning trader’ exist.

Ask 10 traders that question and you’ll probably get several different answers.

To me though, a winning trader is someone who can consistently grow their equity over time.

After all, if you’re a trader, then you trade.  It’s not some place you magically appear at one day.

  • There is always the next trade to take.
  • There is always that right edge of the chart.
  • There is always the fact that there is risk to trading and that means losing trades are inevitable.

Trading is a never ending journey that one never really arrives at, because as I said, as traders, we have to take the next trade.  That’s what traders do.

What is the next trade though?

Hopefully, if you have arrived at this point in your learning, then that question is answered objectively by your strategy rules.  It’s a numbers game and so long as your strategy puts the odds in your favor, the would-be winning trader has to trade to the odds with smart risk and unwavering execution.

The winning trader is the trader who realizes that every trade is just another transaction in the business of trading.  Some trades will lose but MORE trades will win.

So long as that trader can limit his losses and continue executing his winning strategy, the one that grows equity over time, then he will continue to be a winning trader.

It makes so much sense but for whatever reason, it is the hardest lesson to learn.

Author: CoachShane
Shane his trading journey in 2005, became a Netpicks customer in 2008 needing structure in his trading approach. His focus is on the technical side of trading filtering in a macro overview and credits a handful of traders that have heavily influenced his relaxed approach to trading. Shane started day trading Forex but has since transitioned to a swing/position focus in most markets including commodities and futures. This has allowed less time in front of the computer without an adverse affect on returns.