How to Become a Profitable Trader ?

By | September 14, 2019 11:47 am

In this Post I will share my Journey  how I made the turn from unprofitable to profitable trader. It took years of practices lot of mentoring from my trading guru and sheer grit and determination.

I have to change in my psychology and thought process how I approached trading changed allowed me to make profitable trader in long term. Let me share few points with you which can be helpful to lot of budding traders who want to make a career in trading. It more difficult than a Start up to be a successful trader.

Most of the readers must be struggling a lot as few trades you make money but eventually lose out everything gained in 1-2 trades and it have become a viscous cycle. I was there and it is – at least it was for me – a slow and painful journey to learn the things that need to be learned and to get all the necessary experience that is required to profit from the market. Having a Mentor helped me to travel through this journey in a more smother way as he was able to guide me better and “speed up” the process of becoming a profitable trader.   I am now going to tell you the five things I think everyone should realize before they become profitable traders.

1. 10000 hours of Screen time. In trading one of the hardest things to do is to realize that short term results have no meaning. In the market ANY short term result has an inherent component of randomness which makes the distinction between a true profitable edge and a streak of luck impossible. If you take 15 trades and you won 10 does this mean you have an edge? No, there is a strong chance that just by pure luck you achieved a small temporal advantage over break-even. You should always back test your strategies over a period of 5-10 years to see whether they are profitable in long run. Lot of Students i have interacted made good money during the fall in Jul- till mid of August but lost out all the profits in the side way move came in market in last 2-3 weeks. Knowing when to stop trading when to increase/decrease position size is very vital for your survival in market in long run.

2. Be Prepared for Worst case Scenarios. In trading absolutely all scenarios will eventually happen and realizing that this is a reality is something that will allow you to evolve and get closer to being a profitable trader. Trading a system or strategy with the hope that X or Y scenario will never happen is a big NONO. This is Specifically for Option Writers when we think we cannot see 1000 point fall or 15% fall in Stock in few days. Market can & will do anything, unimaginable. All possible scenarios will eventually happen, X consecutive losses, a 100% move on a pair above or below historical highs. A Trade any system assuming something will not happen and it will happen and you’ll get wiped out.

3. There is Difference between Paper Trading and Real Trading. A very important thing every trader must know before becoming profitable is that paper trading have their own limitations. So just getting overconfident on paper trading result can lead to a big loss in your trading account. So I always advise do small trading on the system as confidence is gained on system with mental strength scale out !!

4.  It’s All About psychology. Many traders believe that the reason why they aren’t profitable is because of my trading system. My Guru told me Strategies will never make money what will make money is disciple and thought process of a trader on the trading system. For example you’re too greedy and risk too much or you cancel your trades or stop your systems too soon because you fear your account will get wiped.  Once you realize that your problem is a problem related to your mindset you need to work on that with proper mindfulness technique to master this aspect of trading.

5. It’s better to be profitable than to be right. A huge reason why failure is so predominant amongst aspiring traders is the huge marriage many traders get into with their own systems. Most of trader have a view of the market and when system say opposite to there view they tend to follow there emotion and abandon the trading system and this lead to bigger loss. Do not have EGO just surrender yourself to the system once you have back tested it with all the scenarios and its profitable over long run.

The above items I have pointed out are what I believe to be important key aspects of the profitable trader mindset. All profitable traders I know have them and I would imagine that it would be extremely hard to achieve long term success without realizing the importance of all the above mentioned ideas. Can you just believe them? No, most traders will need to learn them by experience and by the “beating up” of the market each time one of the above is neglected. Its a hard Journey but rewards are equally good.

Wishing you all the best on the journey of being a profitable trader.

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