After talking to hundreds of traders over the years, there are really only three things that separate the successful traders from the unsuccessful ones. Like most things that work well in trading, these three things are very simple.
Note that I said simple, not easy.
So if you are still searching for consistently profitable trading, then it is likely that you need to improve in one of these key areas.
The Right Trading System
I’m not talking about a trading system that makes the most money.
All successful traders have found a trading system or systems that match their unique personality.
That could mean a high win rate (but low R multiple) trend following system, or it could be low win rate (but high R multiple) countertrend system.
…or whatever. There are so many ways to trade successfully.
But the key is to find trading systems that work for you.
How do you do that? Well, it boils down to figuring out the following:
- Are you more of a fundamental trader, technical trader, or a little of both?
- If you are a technical trader, are you a breakout, trend or countertrend trader?
- What is your ideal trading timeframe? Is it day, swing or position trading?
- What is your overall risk tolerance?
As soon as you can confidently answer at least three of those questions, then the number of trading systems that would match your personality drops significantly. This makes it much easier to find a trading system match.
It will give you more details on how to figure out the best trading system for you.
An Upgraded Mindset
I have not heard of any successful traders, who were successful from day one.
Successful traders are made, not born.
We have to work on our mindsets in order to withstand the unique challenges of trading.
The right trading mindset consists of several different components:
- Ability to put in regular work
- Being able to withstand drawdowns
- Not getting too excited when a trade goes your way
- Following your trading plan
…to name a few.
You probably need to work on one or more of these traits (like all traders), so here's how to get started…
In order to upgrade your mindset, you need to understand your current weaknesses. This might take a little longer than you may think because your weaknesses may be hard to figure out.
As I have worked on my own weaknesses and watched others do the same, one thing is very apparent. A majority of our bad habits, neuroses and insecurities, come from events in our childhoods.
We may think that we have all grown up to be well adjusted adults. But from what I have seen, nothing is further from the truth.
Most of us still have mental weaknesses that trading will expose in a second.
So try to figure out where your trading mistakes are coming from.
- Is it from bad habits that you picked up as a kid?
- Is it from a traumatic experience that happened in middle school?
Many of these events lurk in our subconscious, locked away from our daily awareness. The easiest way to start exposing these subconscious thoughts is to start a daily journal.
You could write it in Evernote, but studies show that you engage more of your brain when you put pen to paper. Whichever you prefer, just start doing it.
Every day, write down your feelings about events during the day. Also write down your dreams. As you review your journal at the end of the week, you will start to see some patterns emerge.
This will help you understand why you do some of the things that you do.
…or maybe you already know what you are doing wrong, but feel helpless to fix it.
Once you identify the behavior that you want to correct, then seek out people, tools and courses that can help you fix your behavior. Here is a short list of resources I recommend.
- The Advanced Traders Mindset Course
- The You Get What You Trade For Course (inside the Naked Forex Forum)
- Inner Talk subliminal recordings
- The Power of Habit book
Talking to a friend about your challenges or seeking help from a professional can also provide another perspective. Keep working at it until you figure it out.
It's not easy, but the rewards are tremendous!
A Community of Like-Minded Individuals
Finally, many successful traders have joined a community that helped them achieve their success. Sometimes, that community was just one other person.
I know a few traders who have figured it out totally on their own.
Finding the right trading group or buddy can help you with:
- Education: A good community can help you learn faster because there are more knowledgable people in the group. It's like when elite athletes train with other elite athletes to get better at their sport. You are the average of the 5 people you surround yourself with, so surround carefully.
- Identifying signals: If you are in a group that trades the same systems, then you can help each other spot trading opportunities. This can prevent you from missing those big trades. A group can also help you stay away from bad trades.
- Moral support: When you aren't trading well, a good community can keep you positive and prevent you from revenge trading.
If you don't find a compatible trading buddy or group on the first try, don't get discouraged. Keep working at it.
Here’s how I would recommend getting started…
If you would like to reap the benefits of a trading community, there are a couple of ways that you can go about it. Some people prefer to work with one or two people, while others like the social interaction of a larger group.
There is no right or wrong answer. If you aren't sure what is the best for you, try both and see how you like them.
Find a Trading Buddy
I have personally found a trading buddy to be a HUGE help. This person helps keep you accountable and you can bounce trading ideas off each other.
It can be tough to find the right person however, and you may need to try out several different people before you find a good match. To find a trading buddy, you can go to a conference or talk to other traders in the trading courses you have purchased.
Based on my experience, here are some things that you should look for in a trading buddy:
- In a similar timezone: It can work if you are in very different timezones, but it is much easier to schedule conversations if you are in a similar timezone and have similar work schedules.
- Mutual respect: You must respect each other or your arrangement will fail. You must respect the other person's time and stay accountable. Be the person you want to work with and you will attract similar types of people.
- Similar trading knowledge level: If you know a lot about trading and the other person doesn’t, then you will always be waiting for them to catch up. It works best when you have a similar level of knowledge.
- Different strengths and weaknesses: It helps a lot when your strengths are their weaknesses and vice versa. This allows one person to be the “expert” and coach the other.
- Dedication: Is this person committed to learning how to trade or are they just “trying it out?” You want to make sure that your trading buddy is dedicated to learning how to trade. There are no guarantees of course, but the more dedicated the person is, the better.
Find a Trading Community
I would recommend seeking out private online communities where there is a specific focus and it is moderated by a team that you trust.
That means that you should stay off any of the big Forex forums out there like BabyPips or Forex Factory. There are always a few idiots on those forums that bring the level of the forum down to third grade name calling.
There are many private communities out there, so do some searching and find something that appeals to you.
If you need some help getting started, here are a few resources that might work.
Another one of the best paid forums out there is the Naked Forex Now Community. The reason I always recommend it is because you get access to so many resources, for one low monthly price.
Walter also does a great job of highlighting other successful strategies from people in the group, not only his own. Everyone in the group is cool and they try to help each other out.
You can also join a Meetup group in your area.
Again, there are many others out there.
So do your research and find the one that you like.
Although these three keys to trading success may seem simple enough to take advantage of, they can be quite hard to get right. But now that you understand their importance, it's time to get to get to work.
Follow the action steps in each of the sections above and you will be on your way to following in the footsteps of successful traders before you. It takes hard work and dedication to succeed at trading.
But so does anything worthwhile in life.
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