ATMASphere Aug 2014

10 Things that will improve your trading
results quickly
The simple truth is that 90% of traders over the long term never
breakthrough to profitability. There are many reasons that keep new
traders unprofitable permanently. They make the mistakes of the
mind: letting their fear affect their ability to let a winning trade run,
they let their greed take over proper position sizing, and their ego
stops them from cutting a losing trade short and keep it small after
they have been proven wrong by price action. Also even you develop
a winning trading system it must be traded with discipline and focus
or it will not work.
Many new traders never really understand that the money
management system they are using to trade their method dooms
them to failure regardless of winning percentage or the size of their
wins if their position sizing is too big. If a trading method is not
traded with the right position size then the first losing streak will be
their last.
Many new traders are disappointed and even quit when a trading
environment suddenly changes. Markets change from volatile to
tight price ranges, from defined support and resistance to breaking
out to new all time highs and trending, from Bull Markets to Bear
Markets. What works in some markets does not work in all market
environments and multiple trading systems are needed.
New traders do not make it in the markets because they are unable
to put all the pieces together. They have to develop and trade a
methodology that fits their own personality and works in multiple
market environments. Once they have the system it must be traded
with discipline and focus. That motivation to trade must come from
the desire to make money not the urge to be right or prove anything.
Trading is a business like any other and when the new trader stops
treating it like a hobby, doing it for entertainment, or for the
emotional rush they can start making progress.
You can be a profitable trader if you are willing to do the work.
Here are ten insights that could help direct new traders in the right
direction.
1. The best money managers in the world return 15%-20% gains on
capital consistently. Targeting large annual capital gains of over 20%
only comes with greater risk exposure. The greater you reach for big
returns the greater the danger of a large drawdown. The best way to
avoid the risk of ruin is to stop trying to get rich quick, and begin to
develop a method that will produce consistent returns.
2. A trader must develop a plan for entries that give a good
risk/reward ratio. The stop placement must have a have a good
probability of success based on historical price action. The trader
must also have the ability to take decisive and immediate action
when their buy or sell signal is hit. It is not enough to have a trading
plan it must be followed with discipline.
3. Trading is not about quantity of trades it is about the quality of the
trading signals. Focus on taking only the best signals and begin to
eliminate the lower quality ideas. Profitability is about quality not the
quantity of trades.
4. Good traders make decisions based on facts, probabilities,
statistics, and with logic and reason. Emotions, greed, and ego have
no place in entries and exits, just the facts.
AUGUST 2014 ATMASPHERE | 13