TO BE IN THE SAME LEGUE AS THE BEST TRADERS IN THE WORLD

TO BE IN THE SAME LEGUE AS THE BEST TRADERS IN THE WORLD

“We are what we repeatedly do. Excellence therefore is not an act but a habit.” Aristotle

How does one become a great successful trader? How does one be in the same league as the great traders?

When I started my trading career, I wanted to become the best trader in the world. While learning trading, both technical and fundamental analysis, one of my broker friends told me that about 95% of traders who start trading lose money in the end, blow their account.

This really got me thinking about how I should go about learning the art of trading. Think about it, most people will say that you need to become a 'guru' in technical analysis and or most people will say that you need to become a 'guru' at fundamental analysis to become successful at trading, but here's the kicker, most people fail.

What is needed then to become successful in a place where so many great men have failed. I then turned my attention and my learning efforts to learn from the remaining 5% of the traders. Just as I focused my attention to learn from the greats, the 5%, I was waiting for a flight to Australia, I went into a book store looking for something read and came across a great book, “Winning Investment Habits of Warren Buffett & George Soros” by Mark Tier. This book propelled my mind to search what the pros did to become better than the rest of the other mortals to achieve godlike status.

No doubt the pros know what is needed to trade (eg. Technical and Fundamental analysis), then what makes them different from the rest? The answer, in my humble opinion, is in the quote and book title above, it's in their habits. The definition of habit in the dictionary is “an acquired behavior pattern regularly followed until it has become almost involuntary ”. To me this boils down to the following of the trading plan.

A trading plan is more than a trading system, is a lifestyle, a trading lifestyle. I take trading very seriously and I will do whatever it take to get ahead. A trading plan is more than just telling you when to buy or sell or where to place your stop loss (risk). It will tell you when to wake up, sleep, watch tv, eat, exercise, got to and from the office, when and what to trade, just to name a few example.

I have traded with good traders and learned from the best and all of them have something in common, a trading plan. Whether we realize it or not, we have all have systems / plans for everything in our lives; from bathing to tying your shoe lace to wearing your clothes. If you observe / realize how you take a shower you will know what I am talking about. Some people start with the head first then move down. Others start with the legs then arms then body; the list of different ways goes on, everyone has a different way.

Think about it, our life is full of systems, trading is also like that. After years of trading, I realize that it's all about following the trading plan to the letter and executing the plan is more important that the outcome of the trade. Thinking about where the market is going to go is what most newbies do when they start the trading journey, but they don't realize that this is a futile exercise and the pros don't really care where the market is going, they only care about following the trading plan to the letter.

I will be starting a series about creating a trading plan as time will permit. To build a trading plan is much harder that most people think; it's more than a system, it has several key components.