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20 Principles used by Professional Traders.

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Introduction.

It's hard to be a profitable trader in the Financial markets and to consistently make profits. An approximate number suggests that more than 85% of would-be traders eventually fail, give up, and turn to safer hobbies as they cannot tolerate the high risk of the financial markets anymore. But the brokerage industry rarely publishes client failure rates because they're likely concerned the truth will scare off new accounts. In reality, the failure rate could be much higher than 85%.

We all know that success in trading is difficult. But the few consistently profitable traders share specific rare characteristics. Trading profitability in the long term requires two related skill sets. The first skill is to identify a set of strategies that make more money than losing, and then to use these strategies as part of a trading plan. The second skill is that the strategies must perform well in different market conditions, like an uptrend or a downtrend. In fact many traders fail in the long run because their strategies don't adapt to inevitable changes in market conditions.

So let's think about what can help you amplify your success. You might have heard about the phrase,”Every successful person leaves a blueprint behind”. To increase your chance of being successful, you can follow the golden rules that a few professional traders used. So in this blog we will discuss the 20 principles that are used by long time Professional Traders to stay in the winner’s circle.

1. Be Disciplined.

Discipline is one of the most important things. In every field you need discipline. It cannot be taught in a trading course or found in expensive trading software. Discipline is the practice of making yourself obey a certain set of rules or standards of behaviour. You have to stick to your code (which I am gonna explain later on the 6th point) no matter what emotions you have at any moment, which will create your Discipline towards your code.

Traders spend thousands of dollars trying to compensate for their lack of self-control but few realize what they really lack. The important lesson is that, once a trader has confidence in their trading plan, they must have the discipline to stay the course, even when there are the inevitable losing streaks.

2. Ditch the Crowd.

Trading profitability in the long term requires positioning ahead of or behind the crowd, but never in the crowd because that’s where predatory strategies target. Stay away from stock boards and chat rooms, where people are less than serious and many of them have ulterior motives. There's no shortcut here, you have to put in the work and gain experience, because it's the only thing that's gonna help you in the long term.

3. Updating Trading Plan.

Update your trading plan weekly or monthly to include new ideas and eliminate bad ones. Look at your trading journal after the end of the week, find your strengths and weaknesses. Go back and read the plan whenever you fall in a hole and are looking for a way to get out.

4. No Shortcuts.

Your competition spends hundreds of hours perfecting strategies and you’re in for a rude awakening if you expect to throw a few darts and walk away with a profit. The only way to achieve long-term success is with hard work and discipline. Remember only about 90% of retail traders are profitable, so imagine the work you have to put in yourself, in order to be in the 10%.

5. Avoid the Obvious.

Profits rarely come from following the majority or the crowd. When you see a perfect trade setup, it’s likely that everyone else sees it as well, planting you in the crowd, and setting you up for failure. When the trade is obvious there might be stop hunts, and if you're good you can take advantage of stop hunts too.

6. Don’t Break Your Code.

You can create your own trading Code to get you out of trouble when positions go badly. See we humans are prone to our emotions. Your codes will help you execute the results you are targeting to get. Your code is a set of rules which you follow and is bound to it no matter what kind of emotions you feel. It could be greed like you want to hold on to a trade longer, or you want to get out of a trade early, etc. When these emotions come to place you have to have a code to save you, from your emotions influencing your decisions. If you don’t allow your codes to do their job, you’ve lost your discipline and opened the door to even greater losses.

7. Avoid fake Mentors.

It’s your money at stake, not theirs. Keep in mind that the guru might be talking up their own positions, hoping the excited chatter will increase their profits, not yours. Always do your research and look at their history, their past track records. Again these numbers can be fake too. If you want to know more about avoiding scammers, check out our blog.

8. Use Your Intuition.

Trading uses the mathematical and artistic sides of your brain so you need to cultivate both to succeed in the long run. Once you're comfortable with math, you might want to try to enhance results with meditation, a few yoga postures, or a quiet walk in the park. You need to find peace inside yourself. Work peacefully so that you can increase your performance.

9. Don’t Fall in Love.

If you're too in love with your trading vehicle or investment, you give way to flawed decision-making. It’s your job to capitalize on inefficiency, making money while everyone else is leaning the wrong way.

10. Organize Your Personal Life.

Whatever is wrong in your life will eventually carry over into your trading performance. Like if you're having stress from family problems, it will affect your trading. This is especially dangerous if you haven’t made peace with money, wealth, and the magnetic polarity of abundance and scarcity. Keep your trading needs separate from your personal needs, and take care of both.

11. Don’t Try to Get Even.

Drawdowns are a natural part of the trader’s life cycle. Accept them and stick to the time-tested strategies you know will eventually get your performance back on track. Don't let emotions get in-between. Don't try to make up for a losing trade by trading more. Revenge trading is the worst a trader can do.

11. Don’t Try to Get Even.

Drawdowns are a natural part of the trader’s life cycle. Accept them and stick to the time-tested strategies you know will eventually get your performance back on track. Don't let emotions get in-between. Don't try to make up for a losing trade by trading more. Revenge trading is the worst a trader can do.

12. Look for Warning Signs.

Big losses rarely occur without multiple technical warnings. Traders routinely ignore those signals and allow hope to replace thoughtful discipline, setting themselves up for pain. In short, keep an eye out for early signs that market conditions are changing and creating risks to your positions. You will have a good amount of time to get out of a trade before it turns to a losing one.

13. Tools Don't Think.

Some traders try to make up for insufficient skills with expensive software, prepackaged with all sorts of proprietary buy and sell signals. These tools can interfere with valuable experience when you think the software is smarter than you are. Use tools that fit well with your trading plan, but remember that, ultimately, you are the one calling the shots.

14. Individual Creativity.

It’s natural for traders to emulate their financial heroes, but it’s also a perfect way to lose money. Everyone is different in their own. Learn what you can from others, then back off and establish your own market identity, based on your unique skills and risk tolerance.

15. Forget the Holy Grail.

Losing traders fantasize about the secret formula that will magically improve their results. In reality, there are no secrets because the road to success always passes through careful choice, effective risk management, and skilled profit-taking.

16. Ditch the Paycheck Mentality.

We’re taught to grind through the work week for a paycheck. This pay-for-effort reward mentality is at odds with the natural flow of trading wins and losses during the course of a year. In fact, statistics indicate that most annual profits are booked on just a handful of trading days.

17. Strict Risk Management.

It is okay to feel good about a trade that’s going your way, but the money isn’t yours until you close out or cover the position. Lock in what you can as early as you can, with trailing stops or partial profits, so the hidden hands of the market can't pickpocket your gains at the last minute.

18. Keep it simple.

Focus on price action, understanding that everything else is secondary. Go ahead and build complex technical indicators, while keeping in mind that their primary function is to confirm or refute what your eye already sees.

19. Losses are a part of the game.

Trading is one of the few professions where losing money every day is a natural path to success. Every trading loss comes with an important market lesson if you’re open to the message. Also, know when to quit and take a break from trading. Accept the losses, take time to regroup, and then come back to the market with a new perspective.

20. Don't rush.

Active trading releases adrenaline and endorphins. These chemicals can produce feelings of euphoria even when you’re losing money. In turn, this encourages addictive personalities to take bad positions, just to get the rush. If you're trading to achieve a rush and excitement, you are probably trading for the wrong reasons.

Conclusion

Most traders fail to tap their full potential, eventually giving up and finding more traditional ways to make money. They ignore the small and simple principles like these. But if you follow the aboves principles with simplicity you can be included among the few professionals designed to keep a razor-sharp focus on profitability.
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