As a rookie stock market trader, I visited a place called Loss Vegas on a regular basis. It was teeming with would be investors and traders with aspirations of becoming the next stock market millionaire. Some were fully aware of the chances of success being less than ideal but pressed on regardless. I could be counted among the ignorant masses.
Why is it that 9 out 10 stock traders will fail? The reason is simple. 9 out of 10 people who enter the market are gamblers masquerading as traders. I, in fact, was a gambler and didn't even know it until I nearly faced financial ruin in the stock market.
In order to become a successful trader, you must have a winning strategy. In contrast, most beginning traders systematically make the same mistake over and over again. A flawed trading strategy will eventually wipe you out of the markets. This article will help you formulate a winning strategy.
Many principles of running a successful business can be applied to stock trading. Having a trading plan is essential to the success of your new venture. Consider this trading plan to be your road map that guides you to stock trading mastery. Skipping this step will ensure your permanent residency in Loss Vegas.
The trading plan must outline why you are trading the markets. Here's a heads up. It's not to make money, initially! The number one objective of a stock trader is to trade well. Profits are a by-product of trading well. Counting profits while practicing your trade is counter-productive to your success. You certainly wouldn't want a firefighter thinking about how much his paycheck will be while your house is on fire, would you? Focus on your trade. The money will come.
The next step in the process is execution of the plan. This includes:
1. Performing Market Research-weighing the risk/reward ratio
2. Pinpointing Entry Points
3. Money Management- where to place protective stops
4. Exit Points
5. Plan Execution Review- Did you trade your plan?
Above is the exact process I use when trading stocks and options. Deviating from your trading plan can be detrimental to your progress in two ways. First, the effectiveness of a trading strategy cannot be accurately measured when a trader is inconsistent in the execution of a trading plan. And secondly, changing your strategy in the middle of a trade is hazardous to your wealth. An example of this is moving your protective stop in the opposite direction of your trade. This allows for a wider, potentially costly stop loss cushion.
Implementing and executing a proper trade plan will certainly tip the scales in your favor of becoming a successful trader. Fewer, less frequent visits to Loss Vegas are a very good thing. Happy trading.
Why is it that 9 out 10 stock traders will fail? The reason is simple. 9 out of 10 people who enter the market are gamblers masquerading as traders. I, in fact, was a gambler and didn't even know it until I nearly faced financial ruin in the stock market.
In order to become a successful trader, you must have a winning strategy. In contrast, most beginning traders systematically make the same mistake over and over again. A flawed trading strategy will eventually wipe you out of the markets. This article will help you formulate a winning strategy.
Many principles of running a successful business can be applied to stock trading. Having a trading plan is essential to the success of your new venture. Consider this trading plan to be your road map that guides you to stock trading mastery. Skipping this step will ensure your permanent residency in Loss Vegas.
The trading plan must outline why you are trading the markets. Here's a heads up. It's not to make money, initially! The number one objective of a stock trader is to trade well. Profits are a by-product of trading well. Counting profits while practicing your trade is counter-productive to your success. You certainly wouldn't want a firefighter thinking about how much his paycheck will be while your house is on fire, would you? Focus on your trade. The money will come.
The next step in the process is execution of the plan. This includes:
1. Performing Market Research-weighing the risk/reward ratio
2. Pinpointing Entry Points
3. Money Management- where to place protective stops
4. Exit Points
5. Plan Execution Review- Did you trade your plan?
Above is the exact process I use when trading stocks and options. Deviating from your trading plan can be detrimental to your progress in two ways. First, the effectiveness of a trading strategy cannot be accurately measured when a trader is inconsistent in the execution of a trading plan. And secondly, changing your strategy in the middle of a trade is hazardous to your wealth. An example of this is moving your protective stop in the opposite direction of your trade. This allows for a wider, potentially costly stop loss cushion.
Implementing and executing a proper trade plan will certainly tip the scales in your favor of becoming a successful trader. Fewer, less frequent visits to Loss Vegas are a very good thing. Happy trading.
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