This is the second half of the Trading Success Formula article I have written. I went over what I believe (and history has shown) is the most critical part of finding success with not only trading, but with anything you venture out to do with your life.
Most of us have been told that risk is the most critical aspect of trading success (no, entries do not make the list) and it certainly is once you are in a trade. But there is something that comes before risk….comes before you even place a live trade.
Attitude Is Vital To Success
This post is going to cover the remaining variables of the success equation and at the end of reading both portions of this series, you can take concrete action to start filling in the variables for yourself and finally have something to measure your trading progress.
For a reminder, the formula is: Success=A(LTV+D+E/T)
E/T actually is like the big brother to D.
Once you have D (discipline) in place, you are now able to build upon your positive habits and start committing more time….more useful time….to your ultimate goal of being successful trader.
E/T = Effort over time
When I say useful I mean there is a huge difference between 5 hours of focused work and 5 hours of a haphazard approach rife with distractions. The quality of the effort weighs more heavily than the quantity of time.
As an analogy, I know people who wear the fact that they spend hours in the gym as a badge of honor where I can be in and out within the hour. Once I attended the gym with them, I could see why they spent all that time there. Very little was dedicated to actual training. There was the change room banter, the strutting around the gym deciding what to do next, and of course they constant gazing at members of the opposite sex.
If they would have simply focused on the task at hand they would be spending less time in the gym and no doubt having better results.
For trading, you want the effort to resemble that of a successful trader. How they succeed is well documented in various trading books and when you have their habits, you may be able to have something akin to their success. When they sit down to trade, scan the markets or do other research, their focus is like a laser. With that type of focus, silly errors are also not likely to happen.
Practice thinking and acting like a professional trader who keeps a keen eye on their business and trade plan. You may find yourself not only acting LIKE a professional trader……but actually being one.
Notice the A is outside the brackets which indicates it is a multiplier. That A = Attitude. You may have all the other variables locked down (risk, mastery of trade plan, effort) but with an attitude that is a constant downer and brimming with negative energy about your trading journey, the road will be a rocky one.
You will never give yourself the chance to make it.
- Blaming the markets
- Blaming your system
- Blaming the analyst
- Blaming the broker
Blame and finger pointing is the hallmark of a failing trader. Nobody forces you to trade. Nobody forces you into a particular trading method. The only finger pointing should be at yourself and even that should be done in a positive way….as simply a bump on the road to better trading. Understanding from the start that the path is not easy is the best way to handle the curves.
Remember that the most talented are not always the ones that get the break. For the most part, it is those with an attitude slanted to the positive that usually end up on top.
If you believe in energy, positive people project positive and in turn, receive positive right back. That is something to strive for and while it can be a challenge at times, it is the most productive way to be.
Your Steps On The Success Journey
You now have an equation to help ensure you are on the right path or at least are giving yourself that chance to succeed. Fill in each part of the equation…put pen to paper. For attitude, do an honest self evaluation and see if that is something that will hold you back.
Are distracted while back testing or trading? If so, you are spending more time than you need to and your E/T is not optimal.
Do you skip trading sessions or fail to stick to your back tested trading plan? Discipline is weak and although you may be strong in E/T, you are not consistent in your approach which will randomize any results you do get.
Frustrated because you have not doubled your account every month like the marketeers promise? Your LTV is a fantasy and you must understand the realities behind the trading business. Reach out to the Market Wizards or any other trading book and see how long it took the successful to actual find the results they seek.
Your definition of success may be different than mine but that will not diminish the importance of perfecting the success equation for yourself.
For more updates from Mark and the team at NetPicks, be sure to visit their trading tips blog at NetPicks.com.