GOLDEN HABITS OF HIGHLY PROFITABLE ON-LINE TRADERS

Habit #1 - The Habit of Trading ONLY with Risk Capital.

Many people have entered the activity of trading with money they could not afford to lose and as a result they started off trading with "scared" money. They' re fear of loss was bigger than they're desire for gain and they traded with a nervous and anxious state of mind. Scared money never wins. It's wrong to borrow money to trade or take out a second mortgage on your home for trading capital. The way to begin is to determine how much you could afford to lose financially and then from that amount determine how much money you could afford to lose emotionally. Many beginning traders will look to their accountant, financial planner or spouse for advice regarding the amount they could lose financially without considering the emotional side. If your accountant says you could afford to lose Rs. 5, 00, 000 without it severely impacting your financial status, the next thing to do is ask yourself "How would I feel if I lost Rs. 500000 trading in the next 12 months"?
As you can see, financially allocating an amount of money for risk capital is very different form emotionally allocating it. Anything can and will happen in the market. Develop the habit of only trading with money you can afford to lose financially and emotionally.

Habit #2 - The habit of accepting full responsibility for their own trades.

Successful traders always take full responsibility for their own actions in all of life and when it comes to trading they're no different. In today's day and age it 's easier and more convenient to blame others for our actions or to lie to ourselves. From our president all the way down to our children we can see examples of not wanting to own up and take responsibility for what we do. Successful traders realize that their success or failure is all their own and while it may be convenient to blame the specialist for screwing them on an execution or blame the stock picking service for a string of bad picks, the ultimate responsibility for their actions falls directly on their shoulders and they know it. "I lost "X" amount of money taking the advice of so- and- so" is not something you' ll hear a successful trader say. You can learn a lot from an experienced trader but your results are the result of YOUR actions.

Habit #3 - The Habit of Focusing on 1 or 2 Techniques that Work.

Rather than constantly searching for new strategies and techniques, the profitable trader will constantly use 1 or 2 approaches and nothing else. New traders often get in the habit of constantly searching for new trading strategies before they've even executed 1 trade with a proven strategy they've read about. They buy someone's book, then another then another and now they have 10 books on trading without doing a single trade. Or they'll trade stocks, then switch to options then switch to commodities then something else. Most professional traders use only 1 or 2 techniques and nothing else. One of the best traders I know made over Rs. 2500000 in one month using 1 technique. I personally watched him do almost every trade that month. Some days were better than others, which is true of all trading, but at no time during that period did he ever consider trying anything else. Even the most average of techniques, when executed with focus, will yield better results that the technique-du-jour if you're changing approaches every week. Find a system that works and work the system. The grass isn't greener on the other side of the fence. Learn your market, refine your personal approach to it and stick with it.

Habit # 4 - The Habit of Properly Managing their Trades.

Without exception, every trading author on the face of the earth say's that cutting losses is one of their "cardinal rules" of trading. But if you've ever traded you know how your own mind can work against you when it comes time to sell at a loss. You 'll start rationalizing why you shouldn't sell - "it will come back", "it's just moving around", "I'll sell when it comes back to the price I paid", take your pick of excuses but none of them are the right way to think - and the next thing you know you've got a nightmare loss on your hands. Everyone has had this happen to them in the learning stages. Successful traders identify their profit and loss parameters BEFORE they enter a trade. They set their stops and stick to their parameters.

Habit # 5 - The Habit of Staying Emotionally Neutral.

Successful traders don't get too high when they have a winning day and they don't get too low when they have a losing day. Taking a loss is as much a part of trading as is taking a gain. The difference is in how you emotionally deal with the losses and the gains. The market goes up and down constantly but successful traders don't come home and kick the dog after a bad day in the market. Nor do they rush out and buy a new Mitsubishi Lancer after a good day. Successful traders don't let the market put them on an emotional roller coaster. Staying emotionally neutral is the key to long term trading success. New traders often experience "burn out" which is more a result of emotional ups and downs than anything else. Don't buy into the hype that is constantly coming out of Dalal Street. Don't get scared when the market drops or pop the champagne when it roars higher. Just trade it. Save your emotions for the things that really matter in life like family and friends, not stocks and trading.

Habit # 6 - The Habit of Trading Without Certainty.

Successful traders are comfortable with risk. They know that they can't wait for certainty that the trade will be profitable before they do the trade. They trade in anticipation of a pattern or event. This mind set is extremely difficult for new traders. New traders want all the facts before they do a trade and by the time all the facts are out the trading opportunity is gone, then they enter the trade and wonder why it didn't work. If you're about to drive to town and you need every traffic light to turn green before you leave, you'll never get out of the driveway. Accept the fact that you can't have proof that a trade will work. Get comfortable with risk and learn how to manage it.

Habit # 7 - The Habit of Keeping a Trade Journal

Successful traders keep a trade journal of their trades and periodically review it as a way to refine their approach to profiting from the stock market. There is a tremendous amount of valuable information in your losing trades. Sometimes you can find easily identifiable patterns in your losing trades that you can easily eliminate. When reviewing their trade journals, successful traders don't think of them as profits and losses but simply results. Just because you have a loss doesn't make you a loser and just because you have a winning trade it doesn't make you a winner. Successful traders use their trade journal to find out about themselves in an objective way. They realize that their trading activities produce results and the results hold valuable information about themselves and offer the keys to improving the results of their activities. Keep good notes on each trade and review your notes often, it will help you trade b.