The three pillars of successful trading.

  1. Analyze the balance of power between Bulls and Bears.
  2. Practice good money management.
  3. Personal discipline to follow your trading plan and avoid getting high in the markets.

 

1. Analyze the balance of power between Bulls and Bears.

Are we in an uptrend or downtrend? How does price react to major support and resistance lines? Is the price respecting the current trendline?

If you know who is in control (bulls or bears) of the market you are trading, then you have a better chance of making a profit. If bulls are in control, buy into the market when there's a slight dip. If bears are in control, sell the rallies. The hard part is identifying who is in control. 

2. Practice good money management.

This is always drilled and repeated for new and veteran traders. There is a reason why proper money management is very important. It's a matter of life and death. If you run out of money the game is over. Many new traders do not know proper risk management and blow their accounts up and therefore give up too soon. Give yourself a chance in the markets and start out small before you start sizing up too fast.

3. Personal discipline to follow your trading plan and avoid getting high in the markets.

You must be disciplined to be successful in anything in life. You must put in the work to see results. It's like trying to be fit and in good condition -you have to workout a certain number of days and eat healthy to see results. But more importantly be disciplined enough to do these things when you don't feel like it. Being disciplined enough to stay consistent is the key to success. 

You also must avoid getting "high" in the markets. What this means is, believing you are smarter than the market. You are not smarter than the market. The market does not care what you do. It does what it wants. Over trading, revenge trading, getting "back" at the market are all parts of getting "high" in the market. It is very difficult to keep your emotions in check in this environment. This probably one of the reasons why so many traders fail because they cannot avoid getting "high" in the markets. 

These are the pillars of successful trading. If you can master these three, then you might have a chance of making profits. 

 This is not financial advice. 

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