Every trader is on the road from ignorance to expertise, hopefully improving along the way. This article helps to determine where you are on this road, and includes a link to a free trading maturity test.

Read more…

This is the second part of a two part series on errors in thinking that can keep you from becoming a successful trader.

The difference between winning and losing traders is usually not market information, inside knowledge, exotic trading techniques or better brokers.  It is all about mindset.  This article lists some more mindset errors and concludes with a brief discussion on overcoming errors.

Read more…

No matter whether you are into forex trading, stock trading, futures trading or options trading, trading is a tough but potentially lucrative profession.  With online trading and the wealth of information and computer based tools, it should be easier than ever to win, but it is not – there are formidable obstacles to success for the beginning trader.  The trader’s biggest enemies are not other traders but mental baggage and limitations of thinking carried over from normal life.

This article is the first part of a two part series and discusses the mental obstacles to success as an independent trader, and how to overcome them.  The concluding part finishes listing the obstacles.

Read more…

This posting is about the mental attitude and knowledge that you need to become a winning trader.  Successful traders have come from all walks of life.  Currently small traders can have access to virtually the same data as professional traders.  There are a number of excellent books that outline the methodologies that have been successful with others.  This posting summarises the mental attitudes of those who have become winning traders.

So why then has the percentage of winning traders not increased over time based on government studies of stock and futures traders?  The answer is that trading success is primarily due to mental attitude and outlook.  In ordinary life, people can survive without fine tuning their thinking and can maintain illusions.  Trading will brutally and expensively expose any personal shortcomings.

Here are some mental characteristics of the winning traders that you will need to adopt in order to succeed:

• You are ultimately responsible for yourself.  No-one else can take responsibility for your success.  Don’t rely on a broker, don’t ask for tips or blindly follow recommendations.
• The market sets its own direction.  Ultimately the market can’t be controlled or coerced.  If you fight it, it will wipe you out.  You can predict it.  So focus on what you can control, your entry and exit points, how much risk you will take on.
• Manage risk.  Winning traders carefully manage risk.  They will set stop loss points at the time of entering a trade.  They will immediately exit a losing trade rather than waiting for it to turn around.
• Have a winning methodology and stick to it.  Successful traders have carefully backtested an approach across a range of market conditions.  Once they are confident, they stick with the system, even if there are a few losing trades.  A winning methodology will have positive expectancy – on average, each trade will make a profit after costs.
• Know thyself.  Winning traders understand their risk tolerance and mental strengths and weaknesses.  They adopt a trading style that reflects their own nature.  A winning trader is at peace with himself or herself with no serious unresolved personality issues or conflicts.
• Don’t do it for the money.  The best traders see trading as a challenge.  They transcend greed or fear by letting go of money.  The money they earn becomes only an input into their success equation, it is not acquired for its own sake

The best traders have done a lot of work on themselves by looking inside and making changes.  If you want to become a top trader, you will need to do the same.