How To Create A Winning Trading System (Steps To Becoming A Successful Trader)

The trading process begins way before you
place a buy or sell order on the market. Every piece of your trading methodology and
trading plan must be shaped by who you are and your trading style often correlates with
your personality. Today, we’ll talk about 5 extremely important
details and aspects you need to discover about yourself, things which will help you to become
a more consistent trader and will help you to trade more efficient in the future, based
on your own personality. Before we continue, if you are new to the
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your support. Develop an approach that fits your personality
So, who are you? If you don’t know the answer to this question,
well the markets will become an expensive place to find out. Millions of dollars and years of people’s
lives have been wasted because they were trying to trade methods or markets that were a poor
fit for their personalities. One of the secrets to managing yourself psychologically
is to pick a trading style that plays to your strengths. Some people make decisions based on intuition
and quickly, while others tend to prefer long and careful analysis of all relevant factors. I’m in the second group myself, but where
are you? Some traders are naturally inclined to be
more aggressive and active, while others prefer a slower pace. Again, I belong to the second group. Some developing traders have serious constraints
on their time and are not able to monitor markets intraday, whereas others can sit at
the screen every minute the market is open. Some traders may have backgrounds and experiences
that make certain markets more interesting or attractive to them. For instance, a trader who grew up on a farm
will probably have natural inclinations toward trading futures on soybeans or other commodities
markets for example. Other traders with a strong background in
accounting and corporate finance, like me, and prefer to engage on other markets. It is important to reflect internally on personality
and lifestyle before choosing a trading strategy and creating a trading plan. This is because using a trading style contrary
to your personality will lead to difficulties down the road in sticking to your trading
plan. When a trader finds the trading style that
suits them best; the style generally endures long term. A trader who isn’t comfortable with a trading
style or has not found a home in a specific trading style is the one who most often makes
the most common trading mistakes. Choose a market
The choice of which markets to study and trade is an important one. The style of trading employed, financial resources,
location and what time of day a person trades (or wants to trade), can all play a role in
which markets will be best suited to the individual. It is important to be aware that alternatives
are out there. This doesn’t mean every alternative will
be good for every individual, but using a combination of markets or fine tuning how
we interact with those markets can have an impact on results. For some traders this may mean they need to
switch markets when they are unsuccessful. For example, many retail traders are drawn
to foreign exchange, but this is probably because of the extremely low account balances
required to open a forex account. This is also unfortunate because the forex
markets tend to be the most random and least predictable of all the major markets in many
time frames. If you have a hard time trading currencies,
switch markets, try stocks or ETFs, or commodities, or whatever fits your personality. Choose a time frame
Another primary question is: do you want to day trade, swing trade, or invest for the
long term? There are advantages to day trading, especially
for the new trader. A swing trader might see a few hundred patterns
in a year, but a day trader will see hundreds in a single week. The immersion and focus on pattern assimilation
can result in a greatly accelerated learning curve, provided the trader can enter into
the right psychological state to take advantage of the opportunity. On the other hand, a major issue with day
trading is that the psychological demands are extreme. Day traders ride the complete emotional roller
coaster from euphoria to despair, usually several times in a single trading day. Day trading will play on every psychological
weakness you have, and you will frequently find yourself under a degree of stress that
challenges the learning curve. I am not saying that no one should day trade,
but you need to be aware of the costs and challenges of this type of trading. Again, it all depends on your personality. Or maybe you’re a swing trader, like me. Swing trading doesn’t define a specific
time frame, but rather a specific style of trading—looking to target and to profit
from one specific swing in the market, while tolerating as little pain as possible. A swing trader will attempt to position long
as the market turns into an uptrend, and will usually not be interested in sitting through
retracements in that trend. Some swing traders may aim for holding periods
of two days to two weeks, while others may look to hold for two weeks to three months,
and others may focus on swing trading hourly charts with holding periods ranging from a
few hours to two days. For many traders, the swing trading approach
in an intermediate time frame of several days to several weeks offers an excellent balance:
trading is frequent enough that learning takes place quickly, and most analysis can be done
outside of market hours, minimizing the decisions that must be made under pressure. This has the dual advantage of allowing the
trader to enter into an open, receptive state, while also allowing time for deep reflection
and analysis of the patterns being considered. Choose a style
Though there are a thousand subtleties to a trading style, and every successful trader
creates a style that fits some key elements of his personality, there are another key
question to consider: are you a trend follower or countertrend trader, and do you want to
be a scalper or hold for bigger moves? It is impossible for a new trader to answer
these questions without some exposure to markets and to the actual trading process; the answer
may change for a trader at different points in a career, but finding the answers to these
questions is a key part of knowing who you are as a trader. There are advantages to trend following: with-trend
trades tend to be less transactionally oriented, and it is possible for a single successful
trend trade to make many multiples of the amount risked on that trade. However, trend traders will accumulate many
small losses while they work to find the one market that will trend. It certainly is a viable strategy, but it
is not the answer for all traders. Maybe you have a contrarian mindset and you
prefer to fade the market, meaning going against. The most effective fade traders wait until
markets reach ridiculous emotional extremes on the time frame they are trading, and then
they pounce. This requires extreme patience, discipline,
and maturity. If you go into the market constantly looking
for opportunities to fade, you will find them, but be prepared to be stopped out much more
often. The choice between discretionary trading and
systematic trading is also important. Some traders adopt a discretionary style,
while other traders may discover they are more suited for a systematic approach. They may find that they are not good at handling
the stress of making decisions under pressure and that they function better in an analytical
context. Discretionary trading is probably the hardest
trading out there; it takes more work, more time, more analysis, more self-reflection,
and more self-control to achieve success in this area than in any other type of trading. In addition, if you are a discretionary trader,
you are the most important element of your system. Good discretionary traders who find success
over the long haul develop a system to monitor themselves and their emotional state, and
usually reduce their risk at times when they are not at their peak performance level. Some traders also find success with a hybrid
approach, utilizing a trading system and making intuitive interventions in that system’s
decisions at critical points. Again, discover which one suits you, are you
a discretionary trader or a systematic one. That’s why it’s important to reflect on
all these 5 aspects in this video because trading isn’t just opening a platform and
press the buy or sell button. One important mindset you should adopt is
to always think of your trading as a business and treat it as such. No one would try to start a business with
insufficient capital, with no plan for how to expand the business, and with no vision
of where the business could be in one or five years, but this is exactly how most people
start trading, and that’s the main reason why 90% of them are unsuccessful. Commit to the process, trade small until you
discover your trading style and constantly evaluate yourself and your trading performance. If you enjoyed this type of content, give
it a thump up to show your support, also, make sure you subscribe and hit the bell icon
to get notified each time we upload. Until next time.

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