While getting into the world of trading is easy, becoming a successful trader is not. The reality is, most people who set out on this path fail miserably. This is because very few understand the hard work and discipline that is required to succeed in the markets. If you are serious about becoming a good trader, here are 3 rules you should follow:
Rule #1 – Become A Student Of The Markets
Constantly educating yourself on how the markets work is a key step in becoming a good trader. The best traders are students first. They understand the importance of knowledge. The market is an extremely dynamic and volatile environment. Things can change from one second to the next. The more you understand about the past and current markets, the better off you will be when it’s time to make a trade.
Every day you should take time to research and study the markets. Doing so will give you a significant competitive advantage.
Rule #2 – Always Follow A Trading Plan
A trading plan is basically a set of rules you will follow when making trades. Your trading plan should clearly state your entry, exit and money management guidelines. Though writing out a trading plan can be very time consuming, it is by far one of the most important things you can ever do. Especially if you are serious about becoming a better trader.
Thanks to today's technology, you can quickly and easily test your trading plan without risking any money. Once you have tested your plan and it shows good results, then and only then should you use it in real trading.
Rule #3 – Approach Trading As A Real Business
You will never become a good trader if you treat it like a hobby. Hobbies are for fun. When you treat something as a hobby there is no real commitment. It’s something you only do when you feel like doing it. Trading on the other hand is something that requires a real commitment. When you trade you incur expenses just like you would if you were running a business. You will have to pay taxes, you will lose money, and you will be forced to deal with a lot of uncertainty.
That's why it is vital you approach it with a business mindset. You must be willing to do research and come up with strategies to maximize your earning potential.
And there you have it, 3 rules for successful trading. Follow these 3 rules and you will increase your odds of becoming a great trader.