How to be a successful trader
Let’s talk about how to be a successful trader. what does it take to be a highly successful trader? You see, most people want to trade. And then again, they are fearful and say, OK. What do I need? And often, they are focused on the wrong things.
How to be a successful trader: 3 Things you need
The first thing that you need is money.
DUH! Yes, but when trading, it takes money to make money. You need to have at least $10,000 in your account.
But the good news is that many people already have $10,000 somewhere in a 401k, in an IRA, that right now is not doing anything. And there are ways how you can use that money to start trading.
However, if you don’t have any money, trading is not magically putting money into your account.
So, the first thing is, make sure that you have at least $10,000.
One of the biggest mistakes that I see traders make is…
They start trading with too little money. They hope that they can make a living with trading starting with only $1,000.And you see, this is not realistic.
You need at least $10,000 to get started because you want to apply the 2% rule. What does this mean? The 2% rule means: always limit your risk to 2% of your account.
Now, with a $10,000 account, this means that you can risk $200 and honestly, that’s what you need to trade in the markets because if you risk less than $200, there’s not much money to be made.
The second thing you need is a proven trading system.
What does this mean? Well, first of all, here’s what a trading system is. A trading system tells you three things.
- It tells you what to trade. So here, specifically what stocks to trade.
- It tells you exactly when to buy or sell a stock, so, when to enter.
- And it tells you when to exit. I like to distinguish the exits between a stop loss. When the trade goes against you and a profit target.
So you need to have a trading system with very clear rules so that you know exactly what to do in any given moment. You have seen my charts. You see that right now; I already know when to exit.
So, I entered and now I have my trade on autopilot. I do not use any discretion in my trading, right? I have my rules, and I have my trading system, and I follow this system.
Now, why do I say a “proven” trading system?
Well, you want to make sure that the trading system that you’re using actually works and what’s the easiest way to find a trading system that works? Talk to somebody who is actually using it already and has success with it, right?
Don’t try to develop your own system. I made this mistake in the beginning. I remember back in 1996, I started programming my own trading systems because I thought: I have a programming degree, right? I’m smart enough to program my own system.
You know what? That didn’t go well. I wasted three years chasing the Holy Grail. Just look for somebody who has a proven trading system and follow this.
If you’re interested in the trading system that I personally use, go to:
http://www.mytradingroutine.com. That’s where you’ll see a video that shows you exactly how I find the best stocks to trade, when to enter, and when I exit.
The third is: You have to have the discipline to follow their system.
Let’s talk about the example that I had today.
I entered a stock, SLCA, and I had my profit target in the market, and it was at $16.96. And today, it went up to$16.90 – just shy of my profit target, then it stopped and reversed.
So did I panic or tinker with this? No, not at all right. I mean, I have my system. I know that in the long run, it will work out when I follow the system.
Recap: How to be a successful trader: 3 things you need
- Number one, you’ve got to have some money.
- Number two, you need a proven trading system.
- And number three, and this on you, you need to have the discipline to follow this system.
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