6 Critical Factors For Successful Trading

Success in any profession can be broken down into a number of critical factors. Trading is no different. Does your trading tick all 6 boxes or are there any areas you need to work on:

1. Do you have an edge? Trading futures is a zero sum game - you must have an identifiable edge over the other market participants. Have you identified a high probability pattern that can be exploited time after time? Remember though, the only constant in trading is change - you will have to constantly evolve your trading edge to stay ahead of the crowd.

2. Disciplined Execution. There is no point in identifying an edge if you can't execute the trade. Measure your trading success against your trading plan not the actual outcome of the trade. If you make a loss but you executed your trade exactly according to your plan than pat yourself on the back, don't beat yourself up over it.

3. Money Management. If your risk per trade is too aggressive then you run too high a risk of blowing your account, too conservative and you will not optimize returns from your system. It is essential to establish the maximum expected draw down of any system and set money management rules accordingly.

4. Have a Trading Plan. A trading plan will dictate what you will do in any given situation during the trading day. When the market is open you do not want to have to think - just concentrate on executing your plan. When the market is closed you need to be preparing for the next session to ensure you have a clear plan prepared.

5. Accountability. You are responsible for every trade. Ultimately the decision to put on a trade is yours. If your stop is hit and the market immediately reverses then you are responsible, not the 'big boys' gunning for stops - it happens, move on. If you get huge slippage on your trades then does your trading plan account for it or is your plan unrealistic for the market you are trading?

6. Commitment. Trading is not like a regular job, you don't pick up a pay check at the end of the month even though you did no work and spent the whole month surfing the web and emailing your friends. You must be committed to placing every trade according to your plan, even through the losing periods where every trade seems to end up a loser. Trading seems to throw up extremes of good times and bad times, you must not get over confident during the good times and you must not give up in the bad times - remember it is all part of the plan. You must set aside adequate time every day to compare your actual performance against your trading plan. You must be committed to continuous testing of new ideas and regular monitoring of your existing plan. Research into future ideas is essential - remember the only constant in trading is change.

Tim Wreford runs Online Futures Trading, a website that provides information and resources for traders. Tim also provides a free day trading system, the results of which are updated daily on the site.

More Resources

Unable to open RSS Feed $XMLfilename with error HTTP ERROR: 404, exiting

More Currency Trading Information:

Related Articles

What I Learnt Losing £60,000 My First Year as a Full-time Trader
During my first year as a local (independent trader) on the floor of LIFFE, I bought and sold 8804 FTSE futures contracts, about 40 contracts per day on average. The result was a loss of £61,620 or -£267 per trading day.
How Currencies are Traded in the FOREX Market
Currencies are traded in dollar amounts called "lots". At 100:1 leverage, one lot is equal to $1000 which controls $100,000 of a given currency.
Reality of Online Forex Trading
Foreign exchange trading is the trading of currencies. Most currencies can be traded.
Risk and Stock Trading Fees: The Two Barriers To Overcome If You Want A Successful Trading Career.
You know the old joke:"How do you make a million in the stock market? Start with two million?"There is no way around it, risk and stock market fees are a part of trading that you can`t avoid. But, you can manage your risk.
Hedging Foreign Exchange Risks
The exchange rate of the Macedonian Denar against the major hard currencies of the world has remained stable in the last few years. Because of the IMF restrictions, the local Narodna (Central) Bank does not print money and there are no physical Denars in the economy and in the local banks.
Psychology Of Trading
The psychological aspect of trading is usually underestimated by those new to trading. The psychological problem for most traders is the fear of losing - ironically it is this fear that causes most traders to lose money in the long run.
Adaptation to the Realities of the Market
Do you think adaptation to the realities of the market is the most important thing?Many times in the past I've written about the need to adapt, the need to be able to change your behavior relative to the market because the markets are ever changing. I've stated that mechanical systems may be workable, but for only a short time relative to the life of markets.
A Fools Game
I received an email this week with a question (below) which caused me to think about the wisdom of pursuing trading as a career. Regardless of your trading time span, the skills and concerns of active short-term trading are relevant to all market particpipants.
6 Critical Factors For Successful Trading
Success in any profession can be broken down into a number of critical factors. Trading is no different.
Forex Trading
Foreign exchange market, or better known as FOREX, is the world's largest and most prolific financial exchange market originated on 1973. Bearing the status of largest and most prolific currency exchange market, FOREX is the center stage where a vast majority of the currency trading or FOREX trading takes place, with a total daily turnover of currency worth more than $1.
Internet and Computer Systems in the FOREX Business
With every passing year the interest in electronic trading is bigger, more especially trading shares and currency through Internet. A new profession came forward - this of the currency dealer.
Forex2u Forex Strategy On Successful Forex Trading
The essence of the FX2u Forex strategy is that it does not have any Forex trading system but could forecast the market trend accurately.Every set of Forex trading system available has its disadvantages.
Chinas New Currency Regime
The base unit for the renminbi is the yuan, which is how the Chinese currency is most commonly referred to. The official ISO abbreviation for the yuan is CNY, but it is also commonly abbreviated in the forex industry as RMB.
Types of Foreign Currency Hedging Vehicles
The following are some of the most common types of foreign currency hedging vehicles used in today's markets as a foreign currency hedge. While retail forex traders typically use foreign currency options as a hedging vehicle.
Forex Trading Online - 7 Reasons Why You Should!
Forex trading online is a fast way to use your investmentcapital to it's fullest. The Forex markets offer distinctadvantages to the small and large traders alike, makingForex currency trading in many ways preferable to othermarkets such as stocks, options or traditional futures.
Online Futures Trading - Advantages and Disadvantages
What Is Online Futures Trading?A futures contract is an agreement to buy or sell a commodity at a date in the future. Everything about a futures contract is standardized except its price.
Forex Training: Follow Your Gut or Your Broker
Which way will the forex market move? Do you just follow your gut feeling? Or do you have Neo's sixth sense that would let you be one with the market and feel the underlying currents.Trading forex is a non stop action movie but a good one, where you really don't know who will win at the end.
Trading Tips No 1: Learn How to Trade The Moment of Truth
So you have learned how to trade the markets by mastering a few trading tools like Moving Averages, Channels, Stochastics, MACD, or RSI - that is a great accomplishment achieved by only a few. However, having the tools and rules to trade markets successfully, year in and year out, is only half of the challenge.
How To Choose Wisely A FOREX Broker
Most traders use a FOREX broker to handle their transactions. What exactly are brokers? Strictly speaking, brokers are individuals or companies that buy and sell orders according the investor's decisions.
Ways to Acquire Discipline in Trading
One way to acquire discipline in trading..