The biggest secret to successful trading

The biggest secret to successful trading is ...

Trading Discipline

Emotions are probably the biggest obstacle any trader has to overcome. Many traders become losers because they can't follow a plan. They see a couple of losses, get excited, abandoned the plan and start to take wild shots at the market.

Traders who develop a sound set of trading rules that match their financial situation with their objectives, and then stick with those rules, increase their chances of becoming big winners. Trading discipline can be more important than your trading system.

Discipline means you must become mechanical in making trades when certain price actions occur. You must shut off your emotions, and not accept one trading signal over another. Disciplined traders let profits run and keep losses short by following rigid guidelines.

Again, discipline does not mean you will have perfect results. If you've select a diversified portfolio, you know that you can expect losses in some markets. Yet, discipline forces you to trade the whole portfolio and keep you from second guessing your system. If you have a training system that's proven successful, discipline may be the only thing you need to get profitable returns.

Note these concepts all work together - you can't have the right trading system and no discipline, you can't select the right trade without the right system, you can't diversify without having adequate capital, etc. If you adhere strictly to all of these rules of money management, trading may not be as glamorous as you probably thought it would be.

However, by using sound money management techniques, you spread out your risk and take a conservative approach aimed at getting 25-50% returns on your investments, year in and year out. That's a good return on investment in anybody's book, and that's the approach any new trader should take towards markets.

Adam Hewison


Co-creator, MarketClub

8 thoughts on “The biggest secret to successful trading

  1. I heard that 40% of the china stimmulous for 2010 will go for shippers costs of the bulk shippers
    that China needs to get iron ore ,oil. grains and building meterials.The China 2010 stimulous
    was set at 586 billion..have you heard this? what do youi think of the sea bulk shippers?

  2. Hello ,I baught PRGN they give a .50 div per quarter,and the price is under 8 bucks.They are buying back common shares in 09 for $20 million and earnings were up recently 233%...the stock price rolls up and down every day now between
    5.50 and 6.30 or higher .I never get a chance to sell and buy back since short sellers move in .in he early am and its always a waiting game as the an afternoon settling do i get an order done without getting shut out...i cant seem to catch the constant up and down swiings? Do you have any advice on this .....thanks....Harold


    Thanks you for your feedback. Here is what we have to say about your stock

    Sidelines Mode
    Smart Scan Chart Analysis indicates a counter trend rally is underway The current up-trend could be changing and moving into a trading range Sidelines Mode.

    We would be on the sidelines on this one until we see a clear trend underway.


  3. Another great post, specially relevant for the current market conditions where greed and fear can easily overcome trader's minds.
    As traders we all need to Plan our Trades and Trade our Plan.
    Good luck and happy trading!

  4. In the 10 years I have been trading, I have yet to achieve that 25-50% return. I don't think there are to many investors or traders who do.....anyone out there doing that consistently year after year?

  5. Please give us some training/info on trading foreign markets like the Bovespa of Brazil, the BMV of Mexico and the Borsa Italiana of Italy.

    Please, Please, Please.


  6. Thanks Adam, this is a very helpful article and helps everyone to focus on the most important aspect of the trading strategy.

  7. Adam,

    Excellent article. Without your authorization I copied to my blog (but I gave to you the credits). If you want I can take it off, let me know, please. Basically we are doing lots of day / swing trades here in Brazil. Just a few crazy Brazilian investors are keeping long term positions. If you need any help regarding Bovespa or any other issue here in Brazil just let me know! Again, congratulations!!! Your post was excellent!!!

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