For a lot of traders the psychological component of trading is the most important stepping-stone to their success. Like trackstar said, many traders have had a successful system for a much longer time than they have been able to trade it profitably, purely because of psychological reasons. As lescor has mentioned, one of the most important aspects of successful trading is to be able to stretch your tolerance for risk, this is what will also enable you increase your ability to profit.
Read the thread. 90-95% of this stuff has little real meaning. A successful trader: 1) Has and uses 1+ demonstrable outperformance edges at the present 2) Is well versed and always practices trade, money and portfolio management, including understanding the concepts of "Risk of Ruin" and other stats. Probably 95% of traders lose. Of the "5%", most of them break even or make small amounts. Probably less than 1 in 500 makes a living wage. And those who get "welathy" is a lot smaller than people imagine. If you don't have 1) and 2), everything else is fluff. The market is quite efficient, contrary to most beliefs. Psychology is useless without a STATISTICAL edge and good management. Almost all traders including those on ET, are unsuccessful, except on paper.
Also, there are 4 main hurdles to becoming a successful trader: http://listentoyourchart.com/2008/10/art-of-break-even.html Some other pretty interesting posts..........
I agree 100%. Early on a trader realizes how challenging trading is and how many fail. We all want to succeed. But are we all willing to make sacrifices? Are we willing to really do the small intangibles to help us survive the learning curve? Just like a guy wanting to play baseball in the major leagues. He starts out playing A ball. Riding buses from Savannah to Charleston to Asheville. Staying in budget motels. Receiving a meager salary. Some give up on their dream since they aren't willing to endure the rocky road early on. I'm in my 13th year of trading. Fortunately for me I always lived below my means, both in my prior corporate life and as a trader. Why? Because I know it can be taken away in a heartbeat. Consider this economy. Many competent employees of major corporations have, or will lose, their positions in the future. Are they prepared? What do they have to fall back on? Have they saved? Or lived beyond their means? Once one embraces the sacrifice, or "tightwad" mentality as Eric stated, it can become a part of who you are. You realize "stuff" doesn't necessarily make you happy. Being successful at trading makes me happy. Why? It allows me choices. Contentment and happiness come from within IMO. I volunteer and tutor kids 2 days/week in an inner city school. That brings me a lot more satisfaction that blowing a bunch of $$ on some new "toy". Point is -- for some the frugality you started with becomes a habit and you realize there's not much missing from your life.
I may have missed this -- but if not -- I think it's imperative that a trader not rest on their laurels (i.e. successes). If a system or approach begins to not be as profitable what does the trader do? Force more trades? Or begin to revise his trading approach? To survive longer term you have to change as the market changes.
IMO "rich" has absolutely nothing to do with $$$$$$$. I considered myself rich when I could make choices. When I could CHOOSE to take an after noon off from trading to go do something charitable -- to give back to the community in some small way.
1. Successful traders usually have good pattern recognition skills. 2. Successful traders are paranoid about taking unbounded risks. This is the most important factor in trading. If you trade all your life, and lack this trait, you will probably become penniless at some point. This factor is what ruins many otherwise talented traders. 3. Successful traders must also be able to pull the trigger. If you aren't comfortable taking (limited) risks, and thus hesitate before putting $$$ on the line, you may eke out a living but you are very unlikely to become truly successful. 4. Successful traders have at least one profitable market strategy/edge/pattern. I disagree that successful traders are always tightwads. Being a tightwad makes it easier to accumulate cash through saving, but saving is not trading. A guy who makes 7 figures trading per year and spends it all is a successful *trader* - he just isn't a successful saver.
And he would have nothing to fall back on if/when his trading style didn't work. A successful trader sees a lot more than today. He looks to the future -- which is unknown, and thus why he's a lot more intelligent with HOW he handles his money than a guy who has a year or two of success. For it is he who survives longer term. What you stated is why the failure rate is so high with traders.
a successfull trader has a neutral mind while trading.... a successfull trader knows= futures.. options ..stocks...currencys interest rates...almost everything... a successfull trader has a lot patient and never takes risks that he doesn't know..... EX: theta is free money if you know how to go around of it...
Gawd... This thread is sounding like a self-hypnotic crowd. I have to be... I have to be... I have to be... I am... I am.... I am.... ... Seriously... You guys sure have a lot of self-doubts and insecurities don't you. All you guys know how a ride a bike or drive a car right? Do you actually repeat all the BS like this thread? "Wait for pedestrian to pass. Wait for pedestrian to pass. Wait for pedestrian to pass." "Step on gas slowly. Step on gas slowly. Step on gas slowly." "Turn steering wheel. Turn steering wheel. Turn steering wheel." All guys have a major problem, this must be the neurotic crowd in ET... Funny shit.