I was having a conversation with an old friend recently and we were talking (mostly) about money and wealth and why some people get it and others don’t. A friend of mine asked me, “What do you think is the main reason why only a few people in this world are rich?” This is a rather heavy question and may take some time to answer, but the main answer is that most people are prepared to consistently do what it takes to become wealthy. No. And it’s exactly the same way in trading.
Just as most people stay in the middle to lower class financially speaking, most traders end up losing. The reasons are very, very similar in most cases. Excluding truly unfair variables, such as being born in an economically depressed area, being born with a severe physical or mental handicap, 95% of people fail in trade, business, wealth, etc. Here’s why: -Creating is pretty much the same across the board.
What makes the top 5% of traders different from you?
stay in the trade longer
The top 5% of traders are guaranteed to be trading much longer than you. I have written on this topic many times, and perhaps the most important lesson you should read is that time is the single most overlooked trading factor.
Make the most of your time in the market. Don’t worry about closing the trade too early. Give them a ride and give yourself a chance to make big profits in the market. This is part of how the top 5% of traders got to where they are today.
Place stops appropriately and intelligently (not greedy)
Properly setting your stop loss is one of the key factors that can break or break you as a trader. Indeed, the top 5% of traders have mastered the art and skill of placing stop his losses, and you should too. Probably the most helpful advice I can give you on this matter is to use a wider stop loss than you think. or choose a suitable entry signal, but the stops are too tight and take a beating from the natural daily price movements that occur. It is to set beyond the critical level.
Trade on clean charts and focus on end-of-day data
Consistently profitable traders over years (not just a few lucky months) need to focus on a clean chart at the end of the day to get the most accurate picture of the market. I know that In other words, they focus on the higher timeframe charts, mostly daily timeframes, and primarily use the price action data on that timeframe to make trading decisions. It would be very difficult to find a long-term successful trader who only looks at short-term timeframes and scalps them. Scalping and day trading are silly games that not only make the whole process much more difficult, time-consuming and stressful, but also lower your chances of consistent trading success over the long term.
Utilize a clear arsenal of trading strategies
Professional traders know exactly what they are looking for in the market. They define a series of setups and trading strategies and patiently wait for entry signals to form just right. To be successful, you need a clear trading strategy arsenal. You can’t just think of ‘getting it’ instead of just ‘winging it’. All you “understand” is that you were wrong and lost money.
You should create a trading plan that includes a printout of the optimal setup you are looking for. So, if you are trading my price action strategy, you will print the pin bar signal and its variations (among other price action signals for example). You should have a checklist that you go through daily before you analyze charts and before you make any trades.
Apply appropriate risk/reward for each trade
The top 5% of traders reached their positions because they understood the risk reward. They understand the calculations behind risk-reward and also how to properly place stops and targets to make them work in practice.
Part of the risk/reward is actually realizing the risk/reward, and we do that by always letting trades execute without interfering (like the bottom 95%). As you learn to set and forget your trades, you will start to see your trading performance improve slowly but surely.
Find a confluence
Whenever a trade has multiple merging factors, a ‘weight’ or ‘authority’ is added to that trade setup. That means it should be at least slightly more likely to work in your favour. Professional traders know that they need to tip the odds in their favor. One way he does this is by knowing which “evidence” on the chart constitutes a “confluence” and waiting for them to come together to form a high probability. entry. Basically, we want to find as much technical chart evidence as possible to back up our trades.
think and act correctly in the market
How you think and how you act in the market are two key factors that determine whether you will be profitable in the long run.
You cannot be overly emotional about trading or overly influenced by recent trading results (recency bias). Thinking and acting properly in the market requires trusting yourself and remaining calm, calm and confident in the face of the constant temptations and adversities of IS trading. The top 5% of traders have developed a sort of “sixth sense” regarding trading intuition and market “intuition” because they have thought and acted appropriately in the market for so long. This is the result of years of thinking the right way about the market and doing the right thing in it.
Write daily/weekly market summaries or record trades
To be one of the top 5% traders, you need to understand the markets and It must be “in sync”. I call it “reading the market like a book”. When you start writing daily summaries of your favorite charts, the charts become easier to understand and you can follow your money’s footsteps. Check out my member’s daily market commentary to get an idea of how to do this. Starting this daily journaling/market commentary will take your trading to a whole new level.
treat the transaction like a business
Professional traders treat their trading career like a business. There are costs/expenses (losses, computer equipment, internet data, etc.) and there are profits (winning trades). Like any business, profits are made when revenues exceed costs. Sadly, most of the bottom 95% of traders lose too much money by taking too many risks, trading too much, or not knowing what they’re doing, which is why they spend so much money. has become very large.
You need to start treating your trading as a business by doing everything we’ve covered in this lesson and acting like you’re already a highly successful trader. Remember to trade like a hedge fund manager, even if you are not one yet.
Get up quickly after being knocked down (confidence and resilience)
If you want to be a successful trader, I recommend going to Rocky’s movies. Because the way he gets back up after being knocked down and coming back to fight more is exactly what you have to do in the market.
You will lose money. If you let it run longer, you’ll get a winner that would have been a big winner. Barely off target, it will turn around and make a deal to stop you. As a trader you will experience many “near misses” and “losses”. You must immediately return to your horse and remain calm. If you feel like you can’t do that, step away from the chart for a while until you calm down. You can’t be afraid, angry, or sad because you lost a trade. You have to bounce back from being knocked down, be (mentally) intact, and be ready.
Conclusion
Perhaps most of all, the top 5% of traders understand that self-mastery is the path to mastering the market. Ironically, markets are not for everyone to master. All you can do is master yourself.
How do you “master yourself”? Start by accepting that you are imperfect and flawed, just like everyone else in this world. Those flaws mean you are human and humans are doing very stupid things in the market. But through continued trading education, an open mind and not accepting failure as an option gives you a real chance to rise from the bottom 95% of traders to his coveted 5% group. Remember, there is no “Holy Grail” for trading success. Just master yourself, stick to your plans and goals, and do whatever it takes to achieve them.
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