2. It takes absolutely no skill at all to place a winning trade. It does to consistently do it.
3. Be unoriginal. Save the innovative strategies and custom indicators for when you have learned how to trade.
4. Do not judge a trade on its result. A good trade can turn out a loser. A bad trade can turn out a winner.
5. Don’t focus too much on making money in the beginning. As you are still improving, it should not be your goal to make money. It should be your goal to make good trades.
6. In trading, there is no supervisor or manager reviewing every decision before it’s made. Success, for better or worse, is totally self-dependent. This is not for everybody. Find out if it’s for you.
7. Though this site has many of its members emphasizing on , don’t underestimate the impact of fundamentals on price action. Understanding them will increase your edge in trading.
8. Don’t overemphasize the importance of finding the best trading system. Equally important are psychology and money management.
9. Online chat rooms can be good learning tools and from time to time very entertaining, but beware of entering trades that are not part of your trading plan or trade setups that you have not studied for yourself.
10. Eliminate your mistakes. Do this on a daily basis, mistake per mistake. Eventually you will run out of mistakes to make.
But, I do not accept the second half the 6th point valid if you are trying to say someone is not cut out for this.
Why? Brain is a very flexible organ. There are things that it can do already and there are things it can learn to do. Unless someone is born special with inherent traits that make it challenging for them to learn something (which is biological), otherwise absolutely anyone can trade and learn to do well. The only difference is whether someone is ready to go through the psychological challenges that come their way....
From the day we are born, we start learning new things and with time, we start comprehending. Everything we do is absolutely new and with time, we tend to lean towards certain things which we choose as a part of our life. Like playing a Guitar or Boxing or Football or Math or Darts or an Actor. Everything we do has one thing in common. Constant practice and persistent attacking of our choices that improves our skill daily.
Trading is the same, but a lot of us do certain things that requires this and we only need to find a way to incorporate this aspect into trading while learning. A Guitarist practices day in day out for 10 to 15 hrs a day. A boxer gets up every morning even when he's not boxing, and goes through the same vigorous routine so that he's ready when it's time for a match. Same with Footballers or someone who plays chess or even me as an Actor practicing random lines or trying to invent new scenarios testing skills and improving upon it. It's just constant tackling of the skill and learning new scenarios and reinventing ourselves daily... This is how brain keeps working with what we are doing and when we apply the same discipline while learning how to trade, then there will come a time that our brain is used to this discipline and with consistency, the efficiency only goes up...
P.S. I am a lot less experienced in trading and very much amateur when compared to you but this is my thought on that....
I learned this the hard way, the problem is not the situation you might be in, is how you react to it what makes the difference. I know its much easier said than done, but that's what changed trading from very stressful to decently successful for me.
Handle your mind and your emotions or nothing else will work. At least nothing did for me until then.
Good luck people!!
One other point that I heard in one of the very many webinars I attended really caught my attention, and it is that when you're starting to trade FOREX, learn first how to make PIPs, money will follow after you learn to make PIPs, which translates to start trading micro-lots, the smallest possible unit your broker allows, once you get the PIPs consistently positive, then move to mini and regular lots. This will make learning to trade a whole lot cheaper... :-)
Especially nr 5. and 8.
Did also like mr Technicians list.
Adding to Nr 5: Focus on percentages, pips or points and the money follows automatically.
Following this rule makes it possible to trade with small amounts without taking too much risk, but also makes it easier when there is a lot of money at stake.
Staring constantly at a floating P/L in money kills you. Turn it into points or hide it on your screen.
Adding to Nr 8: Money management is top 1 priority.
1st level: exposure of your total trading amount. You need at least 3 times of your active exposure on the side line to start again if everything goes wrong (as example the Swiss debacle, brokers going insolvent or a simple blow up)
2nd level: divide your active exposure over multiple brokers/accounts. If one broker has technical problems, you can switch to another. It happens more often than you think.
3rd level: risk per trade.
And be careful with overnight/weekend exposure in today's volatile environment with a lot of geo political and fundamental things going on.
Psychology shouldn't be underestimated, it can ruin a good system.
Trading systems are overestimated and most of times overcomplicated.
A system should be robust and fully parameterized (when trading with algo's). Market behavior is constantly changing and you must adapt.
There are lot's of plain and simple systems/strategies that work, but they only work if you have the discipline to follow it through (Psychology)
This is my experience after two years of trading, also a little bit novice too and a (calculated) risk taker by nature ;-)
I would add to this slightly by addressing that you need to find the best trading system for you, there are fantastic systems out there but if you try and trade something that does not fit with your personality then you will have problems being successful, so this really links into psychology as well,
Money management is usually a function of your overall risk tolerance and your strategy, and understanding how your strategy performs over time, i.e. max draw downs in R:R terms and your position sizing strategy - usually the win% of the strategy gives an indication of the maximum R:R drawdown which you can mitigate using good position sizing strategies (i.e. smaller risk per trade)
If trend following and win% of 30% and using 3% risk per trade opens the door to significant drawdowns i.e. you would have 50% chance of having 13x losses in a row which would be ~39% drawdown and 30% chance of having 15x losses in a row which would nearly halve your account
So the real questions are:
a) How much pain can you tolerate? (usually halve the number you initially think)
b) Does the strategy fit the way I think? am I in sync with it and does it make sense to me?
I think you can tell from my comments above that I am against blind % risk per trade recommendations... i.e. 1% or 2% or 3% etc, As usually these numbers are not validated