The Basic Principles Of Online Trading Success

by Jerrico_Usher

Trading requires a great deal of focus, attention to detail, analysis, and more, here is a honest approach to trading principals

Before we dive in, let's get your head in the game. Experts don't actually predict the future- if they did they wouldn't have created courses or software to share it with anyone. They’d instead have hired a team of people to execute their strategies and live the good life without worrying about anything else. Many of them are not only not wealthy (other than selling their courses), but they take airlines to their own seminars- not Lear Jets- and they often fly coach!

I decided not to be gullible and to realize the truth about trading and it’s in the work, the predictions are but one of the tools you use and only as a way to map out a game plan. My old way of thinking was that the experts and geniuses in the stock market were like fortune tellers who could somehow see into the future, they certainly spoke about “predicting” a lot. I came to realize as I seasoned my awareness in this “trade” that if they were so brilliant at this magical feat they wouldn't be wasting time teaching their tactics or writing newsletter after newsletter. Let's get into it. Prepare for some interesting reading...

Trading Principles For Success

trends

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The Truth Is, Nobody Knows Where The Market Is Going, Although They Can Guess And Even Use Educated Guesses (From Research/Analysis), But In The End It’s He/She Who Puts In The Work, Tests The Market, And Notices Trends Developing That Get Ahead In This Game.

In part it’s about seeing a trend start and develop early and riding the coat-tails of that trend that help you strategize- not using software that guesses for you (you can use it for analysis help but don't depend on the data without verifying it)!


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Realize That Market Experts Are Not Magicians

They put in the work and simply try to predict things for you(r) money. Often they don’t even bank on their own predictions (like they claim you can) because they are likely only that- guesses. When the market shifts they dynamically try something else but because they sold you a bill of goods you are paying for their predictions, so either way they don’t lose! 

Sound Strategy Trading Is The Most Important Tool

In the end it’s using sound trading practices that makes you successful. Prediction is but a cog in the machine of trading practices. It’s akin to the research you do before writing an article. The research is not the article, nor does it necessarily become a major cog in the end result. It’s but a tool you use to gather data, analyze it, and use it to perform the next move.

 Market Experts Have Simply Learned Trading Discipline

When you realize that the trading market is as dynamic as the income, the ups and downs, the successes and failures; you come to the realization that it’s not individual predictions that make you successful or a failure- its trading discipline. Discipline is your ground when the market fluctuates (as it always does), and it’s the non dynamic element in a dynamic trading world that gives you both perspective and closure when things fail.

Failure is part of the game and if you use that failure as a dynamic tool to learn and hone your trading sword, so to speak, then you will level out in both successes and failures. The successes will be the monetary gain the failures the evolutionary tool to your successes. Strategy makes the money not predictions. Predictions are essentially intangible “ideas” based on facts and guesses, but strategy and discipline are the real tools that create those predictions and more Instead of trying to predict the market- use it as a tool to create a strategy- nothing more.

I’m going to show you how to culminate your strategy, discipline, and true trading power source- not using predictions solely as your best tool. That’s like bringing a knife to a gun fight!

Becoming a disciplined trader requires you to realize that there are certain things you have to constantly watch and be aware of. Some are knowing why you're entering the market and how to execute this entry; knowing when the right time to exit a market and primal execution of your management stops. Managing your risk is essential as is managing and maximizing your cash flow- your capitol and an important tool you can’t trade without!

To summarize; exits, entries, and stops are your main calibration tools. Awareness of each as well as synergizing all is what make you a professional and successful trader. Don’t second guess your decisions, especially based on pure data analysis and intuitive trading. 


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A Guy Once Told Me A Story That Made It All Click, Below I'll paraphrase it:

I often tell this story utilizing the metaphor to explain how the market works in a nutshell. In this story I talk about how a great restaurant opened and was accepted with a great deal of praise. It was eventually ranked a five star restaurant- one of the best tasting dining spots in the city. 

You’d think this would mean guaranteed long lasting success right? You’d be wrong. The restaurant, he continued, had outstanding food, many restaurants couldn’t even touch them in that area- and many think the food was the reason a restaurant is successful- but the reality is this restaurant only lasted a year before shutting down.

Why?

Because contrary to logic based on popular belief- food isn’t actually the key to running a successful restaurant- sure it’s a tool, but the real key is cash management and risk control, and effectively managing your staff! By keeping costs down/under control (risk), and staff management that is effective, you can thrive- break either of those rules and the taste of your food won’t mean a thing.

 

Decoding Jealousy And Cheating


 

 

 


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Similar to the restaurant business, the key to trading profits are in how well your strategy for trading is planned and executed- not the predictions or indicators- but your strategy- the way you do things, the way you plan, and the way you analyze and follow data and trends!

Watching any good trader, you will notice that they aren’t worrying about where the market is going but rather WHEN the next big move will happen. Even this data is temporarily used in the strategy to plot their next move.

They don’t want to tweak their indicator but rather are more concerned with the risk on both sides of every decision towards the change and preparing for either outcome. A good trader can earn in both sides of any change.

A prediction offers only one side and if that prediction doesn’t pan out or some dynamic element changes the predictions end result- you lose-lose.

Some of the questions they ponder are whether or not the trade is being executed correctly, their risk factor- how much of their account is at stake, whether or not their stops are properly and effectively placed, and so on.


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Consider The Source

If you want to give yourself a reality check- pick your favorite successful market expert, choose someone known for their market prowess, someone who uses predictions and trading expertise to make their trades.

Take a closer look at their numbers and you’ll see that they are nothing special.

The numbers of their courses or software sales may be promising- but that doesn’t reflect on their own success, just their ability to spin words that sell products.

Instead of watching their success or believing their claims at face value- look at their numbers and be amazed to see they are not usually anything special.

Iin fact you may be shocked at how easily they persuaded you with no real proof or disclosure!

(smoke and mirrors).

Check their percentage of profitable trades, their returns for any given account, profit to average loss, and trade losses in a row.

You may be shocked to see what you find. Doing this due diligence is not just a fun way to prove to yourself that they are not always what you thought they were nor is their products- but it’s the best way to protect yourself from being swindled or tricked.

Trading Rules: Strategies for Success

Trading Rules has evolved into a classic among trading books. In simple, no-nonsense style, William Eng pulls from his own experience to offer 50 hard earned rules that lay the ...

View on Amazon

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Be In Harmony with the Market

The name of the game is harmony. The market is dynamic and as people are dynamic the name of the game is keeping up. When you and the market are in harmony money starts to manifest. Don’t fight the market on predictions, opinions, or wild goose chases, tap the pulse of the market by keeping up with the data, the trends, and knowing when to apply the three areas mentioned above- exits, entries, and stops (and money management, risk management).

Fighting the market is inharmonious in the first place. Being in harmony affords you more mistakes, more insight, and even more options in all sides. Fighting the market is a sure way to lose money, frustrate yourself, and possibly even to the point of quitting. Risk and money management will ultimately, like the restaurant analogy above- determine your fate. Fighting the market also affects judgment (frustration being the main catalyst).

When judgment is impaired we tend to try to save our ego by appealing to our judgment and trying to prove it’s correct instead of impartially analyzing the data and being open minded enough to change strategies when necessary. This is a great hindrance to success and often what many people do wrong!

Another great metaphor for this is going canoeing. You leave your car down stream and launch the canoe upstream then paddle down. It’s no fun paddling upstream to your car just because it’s easier at the start. Preparing your car downstream and putting in the work upfront to walk up stream (or taking a bus) makes the entire journey easier and more manageable. Launching downstream with the canoe, paddling downstream and guiding it WITH THE FLOW just makes more sense. Going against the market, against the flow of trades, is unreasonable.


Keep It Real – Money Doesn't Fall In Your Lap At First


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Unrealistic Expectations

Unrealistic expectations of great wealth even with the greatest of research and analysis at first is what kills most people’s motivational spirit.

Realize that as you play in the market you learn- as you learn you develop more discipline, more experience, and more skill sets.

This is an evolutionary process and it would be a good idea to think of the money making concept in this same light.

Don’t chase the money wholeheartedly in the beginning.


Chase the education, the skill set development, and the evolution into a brilliant marketer. Try to break even if anything and consider the losses at first as your tuition. This way you don’t lose your motivation when you don’t earn. In fact you make more later because of the losses your suffering now if you take advantage of that information, that experience, and learn to develop good strategy.

This business is not about short term income anyway- it’s about long term investments that yield that money over time. It incrementally grows if you play your cards right. That won’t happen if you don’t develop your skill set which is only done through experience. There are no real shortcuts other than learning that strategy not prediction is the best method of operation. Learning the requisite historical testing- how you develop a sense of your personal ability to earn, recoup, and develop strategies on the fly is the secret to developing your skill set fully. There is a lot of work to do at first- mainly learning.

You develop in time the power to know your own limitations, skills, and ability to determine the market. Developing this now helps you sustain in the future as it gives you far more to go on than other people's ideas.


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Crystalize

 

Crystallize Then Dynamically Use the Psychological Keys of Trading

Your biggest asset is going to be developing a good grounded psychological key to trading. Millions have been spent on books, seminars, and videos that teach people this concept but in reality trading isn't all that difficult. You just have to nail a few key psychological points and your home free.

One I already mentioned- accept losses as a cost of doing business- especially at first. Don’t always have to be right, successful, or on point. Make mistakes and learn from them or their just frustrations. Utilize those mistakes as learning sign posts. Over time you will likely make the same mistakes again and again- this is ok.

Each time you make that mistake it will be in a slightly to largely different scenario and you will sharpen your skill set each time you figure out what went wrong and try a different approach. This isn't always a drastically different or fully different approach. Sometimes just tweaking it a bit will show you what you need to know. Sometimes you tweak it- see that didn't work (learn from that and) then go back to the drawing board changing that tweak back and tweaking a different aspect.Each time you get to see different things- there is no true losses- just growth. 

Decoding Jealousy And Cheating


 

 

 



Analysis

Crystalize

 

Use historical statistics

Many have done this by hand but more recently there are great software programs and sites you can utilize to speed this up. Everyone uses historical statistics to develop their trade strategies. This could be your own history once your experienced but also and mainly at first historical data from others trades will be of utmost importance in helping you achieve success. 

This doesn’t neglect that you will make mistakes, you will definitely do that, but another layer you will be learning to navigate are the waters of historical statistics as an integral part of your trading strategy and trading conceptualizations.

Concentrate on Execution

Execution is more than just taking action when the markets open. There is a lot of pre-execution steps you need to do long before the markets gates open. By the time your ready to execute your plan you should have a very good idea of how you're going to do this. This lends you more time and bandwidth in your thinking to handle the rough parts of the journey- the tides, the dynamicity of the trading currents, and other things.

Once you’ve developed your performance statistics summary you should have it close at hand to help you determine your moves. This will help you with the personality of the strategy you're going to implement. This information helps you by showing you how much the trade has made over time and the string of losses so you can determine your next move based on more predictable reactions in the market waters.


 

When you contact your broker you should be able to quickly communicate all this data to him or her without haste. You don’t want to have to find the papers, the research, and waste the broker's time because you’re not organized at the moment you make the call. You should know what kind of orders you are going to place, and how you are going to communicate this to your broker.

The last thing you should be worried about during market hours is where the market is going- that should be figured out beforehand to some degree. You should spend your time developing the strategy and watching for market trends and shifts. Your mind shouldn't be pondering during market hours if you’re making money or losing it, what the news says, and so forth. That is all done before hand and market hours are used to watch the trends and executing your strategy.

After the market closes you start developing your next one based on the new data you acquired as a result. Always be IN the market. This helps you develop where the next Big move will happen. Harmonize with the market by always being in it.


Final Analysis

Ultimately, the market is just a collection of people simultaneously strategizing and placing money in the market based on those strategies. Buying low and selling high is a common sense tactic that most people employ with great emphasis and determination.  Planning is a major part of that. If you fail to plan you plan to fail- nowhere else does this stand true more. Statistically, 95% of the people in the market lose money. To successfully trade and make money you have to counter what these 95% of people are doing- that takes planning, flawless execution, and especially strategy building.

  • These things take experience, time, and skill set development.

 

At first you will be among the 95% even if you employ the right strategies. This is not failure- it’s where you learn and evolve out of the 95% and into the top 5%. Don’t forget that. Nobody enters the market and immediately gets it, makes a go of it and even the most successful, experienced individuals lose money a lot of the time. The power is in being able to recoup it later and learning to balance your portfolio and play the market like a fiddle. It’s not easy at any level to maintain success but that doesn't mean it can’t be a great deal of fun.


You will develop a sense of loving a good challenge because you will soon realize it’s in the challenges and chasing them full heartily- that you learn the most the fastest. Ultimately you have to follow the rule of Buy High, Exit Long -Higher and Sell Low, Exit Short -Lower.

Good Luck!

Luck is opportunity met with action- you have the opportunity- now let’s see some action!


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All Images are public domain and found on the amazing Pixabay.com (all but one)


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Updated: 02/13/2013, Jerrico_Usher
 
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Jerrico_Usher on 02/05/2013

thanks! Man you changed everything about how I format articles- I had no idea we could do so much html (most sites don't allow most of it).... much thanks, making wizzles is now much more fun.

This information applies to just about any business, including internet marketing :)

TonfaGuy on 02/05/2013

Interesting article..

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