Wednesday, October 18, 2006

Success As A Trader

17 Key Steps That will Ensure Consistent Success as a Trader - Dr. Van Tharp

First, you need to assess your beliefs about trading and about yourself.

Although its difficult to grasp, did you know that nobody actually trades the market? Instead, you always trade your beliefs about the market.

Second, you will need to determine your objectives for trading. System experts know that understanding your objectives thoroughly is half the battle in developing a system but most people have never taken the time to even consider what their objectives might be. Thus, in this workshop you will get to work through questions to help you determine exactly what you want out of your trading system.

Third, you will need to understand the big picture. Whats the market doing overall and how can I measure it for myself?

Fourth, your business plan will need to include three strategies that are compatible with the big picture. Although there are thousands of systems out there, there are not many types of strategies. Learn the essence of ten key strategies that you could use, the general picture of how they work and how you can adapt them for yourself.

Fifth, learn what your personal edges might be and how they set you off from the crowd. Having an edge in the markets isnt just a slight advantage; it could be the pivotal difference in your success. So its very important to list your edges in your business plan and be able to capitalize on them.

Sixth, understand the key systems that almost every business must understand and start to think about developing structures for those systems. From marketing to cash flow, to back office and clients, trading is a business and should be regarded as such.

Seventh, develop a worst-case contingency plan. Most people dont even consider this crucial component until its too late, but the key to a successful business plan is to be able to overcome disaster.

The eighth step is to select your trading market based upon two key factors. Whatever you select must take into account the big picture and what is likely to happen in the next five to ten years.

Ninth is strategy preparation. There are several key sub steps that you should take before you think about trading.

Tenth, learn the key steps in strategy development and how to test for each. You will learn about testing exit signals; how to determine what your initial risk will be; and how to select and test your profit taking exits. This is not a substitute for our specific System Development or Mutual Fund/ETF workshops; instead, we will be discussing the key steps that you must take and how to test them.

Eleventh, properly evaluate your system. You need to know how to test and compare your system with any other system. You will need to know whether you have a weak, average, good, excellent, or superb system.

The twelfth step is a simple way to really get to know your system well without a lot of cost.

The lucky thirteenth step is where you will be working on your objectives to actually develop position-sizing models. This step is one of the keys to developing a system that fits you.

Step fourteen do a complete self-assessment. This includes: Knowing your personality type and how it impacts trading. Knowing about the most important attitude that you must have as a trader and understanding your beliefs and values and how to assess yourself.

Step fifteen is the step that will really separate you from other traders and launch you toward top trader status. This includes six to eight things that you can do on a regular basis to really improve yourself.

Step sixteen is to develop a top down approach to discipline. If you combine top-down discipline with regular self-work, you will be amazed at the difference in your trading.

The seventeenth step is putting all of the the other steps into action.

Click the Success As A Trader header link above to learn more on how to be a long term successfull investor, speculator, and trader.

Have a good day.