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A guy in our office wrote this piece and thought it might be informative
for the list. I have seen all different types of methods and it all seems
atleast to me to boil down to ... trading is truly a psycological game. For
example last week I had a trader vasillating whether to take a signal on
his system dealing with crude.. (As luck would have it ..Friday before the
supposed war with Iraq). He tested his system going back I am not sure how
far ( I never try to influence but just try to offer ideas..like I asked
him with all his backtesting on his charts did his charts ever show him any
fundamental news).. and to make a long story short he overuled his system &
didn't take the trade. The markets didn't beat him..he beat himself..We
seem to be our own worst enemy some of the time.. Psycology and a corrrect
mindset are a good part of the answer for success. This is just my opinion
and I am always open to learn (I also can be easily wrong)... but I have
seen more traders mistrade good systems. Anyway here is the article
..hopefully it will help shed some light on the subject..
WHAT IT REALLY TAKES TO BE A SUCCESSFUL TRADER
It seems that many are searching for that infallible indicator or that
Holy grail system.. Well I am very sorry to tell you it really just doesn't
exist. I can't tell you things you want to hear but ONLY THE TRUTH!!!.
The SUCCESS of trading really isn't that far out of hand..Successful trading
is both more and less what people think. However winners obviously know
something
that losers don't .. What is this elusive thing??? What guidelines are
truly needed to
be met in order to trade markets successfully ??
Hopefully in this report we will be able to shed some light on the subject
and help
you develop into that trader you desire.
Firstly one must know why he is trading and be responsible for all his
actions.Your
psychology is the MOST IMPORTANT factor determining your trading
results..It is
stated 95% of success is determined by psycology and ONLY 5% by your analysis
or trading system.. Ironically most spend most time in trying to perfect
that ultimate
system when the TRUTH is within all of us.
This TRUTH we are talking about is simply DISCIPLINE..The ability to
properly execute
trades ..most traders find it much easier to identify something in the
market as an opportunity
rather than act on it..
It really doesn't matter the general premise for trading..Either being
discretionary or utilizing
a mechanical system.( However we believe much more in non discretionary
mechanical)
The key is developing experience and confidence. But the next question is
how does one
develop this level of confidence. Some say paper trading is a learning tool
for utilizing a
methodology but it is hard for us to agree. Real money is not on the line
nor are those
emoitions we all must deal with.. An analogy is a place kicker of a
football ..he can practice
all the time but when the stadium lights are on he misses the goal posts ..
The pressure
overwhelmed him..Unfortunatly the same happens in trading..Fear ..Greed
take over our
perfect thought out trading plan.
We must overcome ourselves and really TRUST ourselves and our methodologies
..systems
We must not be too hard on ourselves.. we are learning and really learning
about ourselves.
Would you be angry at a child learning to ride a bicycle?? Hopefully not..
Trading takes time ..energy and emotional fortitude..In short
Discipline..There are no easy
shortcuts. If one is fortunate he will find a mentor.. He will learn from
that mentor many things.
One will probably learn from a successful trader that he isn't afraid to
take losses(almost cherishes
them)..that he knows what he has to do and actually pulls the trigger and
does it.
A successful trader knows why he is in the trade and also where the trade
doesn't work.
He doesn't attach any sense of personal worth on a trade ..He is no lesss a
person if the
trade doesn't work..Interesting we are saying the trade doesn't work ..not
that we made a
mistake.. the only mistake is not following your trading plan. Please note
it doesn't take
very many trades that you don't follow a plan to end your career as a trader.
There are many trading systems that consistently take money out of the
market. Ironically
many are very simple in nature. HOWEVER THERE IS A TREMENDOUS DISCREPANCY
BETWEEN SUCCESSFUL SYSTEMS AND SUCCESSFUL TRADERS. Unfortunately many
people who trade systems try to outguess their systems. But guess what this
doesn't lead to
success but frustration and confusion. As Mark Douglas has so profoundly
stated " MOST
PEOPLE WANT A GUARANTEED OUTCOME WITH SOME MOMENTARY SUSPENSE".
What we are trying to say is that there are many methodologies and ways to
make money
in the market .. THERE IS ONLY 1 WAY TO LOOSE IN THE MARKETS AND THAT IS
NOT TO FOLLOW YOUR SYSTEM. One must think in probabilities and that anyone 1
trade doesn't mean anything. One also must bear in mind that as in any
business(this is a business)
ample capitalization is in order..Without this success is doubtful. Once
one is believing in
his methodology discipline will be formed. Overtime commitment to trade
your system becomes
second nature. You will take all signals ..not second guess them and then
you have a
VERY GOOD CHANCE OF SUCCESS.
In the past paragraphs we discussed 95% worth of psycology .. The last 5%
is the systems themselves
As said there are numerous ..One can be a daytader .. less capital
intensive but more time
consuming and emotionally draining.. trendfollower .or even be
countertrend. The trader
can be discretionary or a mechanical system follower. We feel to be
ultimately successful
one must be well capitalized and trade various non correlated markets. The
trader must be
on guard at all times.. ANYTHING CAN HAPPEN AND THE TRADER MUST BE PREPARED.
Our stated goal in the beginning of this report was to explain what it
takes to be a successful
trader.. Now it is up to one and be introspective and really decide what
they want from the markets..
Andy Abraham
Angus Jackson Trade Center
www.angusjackson.com
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