Top Five Tips For Trading and Investment Success

The five most significant points or stages that every successful trader or investor must go through are highlighted in the list below. After several years of market failure and varied degrees of success, I came up with this list. The list is also a synthesis of several debates and interactions I've had over the years with fellow traders and market practitioners.

1. RESEARCH THE MARKETS

BEFORE you enter the markets, make sure you know what you're doing. Begin by learning the essentials. Ask yourself, "Why does this particular market exist?" "What is its purpose?" "Who are the primary market participants in this market?" and so on. You will develop a profound grasp of why markets behave the way they do by asking yourself (and answering) these basic questions. Before moving on to the next stage, you must have a thorough mastery of this fundamental knowledge.

1. CREATE YOUR OWN "THEORIES"

If you want to be a successful trader, start with the basics and then add your own observations on price movements and behaviour. If you want to be an investor, however, build on your foundational knowledge and learn how to read (and comprehend) company and industry data, as well as create a market opinion based on your research.

3.TRADE IN PAPER

This is where you can put your "theories" from step/stage 2 to the test. Shadow boxing is similar to paper trading. It certainly makes you fit and powerful, but it doesn't prepare you for the adrenaline rush (fear?) of someone waiting to "punch your lights out" in the opposite corner of the ring. Although paper trading has its advantages, it is merely the first step in becoming a great trader or investor. You should only go to the following stage if you have successfully completed the paper trading stage. Under no circumstances should you join the markets with an unprofitable trading technique (after transaction costs)

1. BEGIN SMALL

Once you've figured out how to set up a good system — (steps 1,2 & 3). You'll need to open an account with a broker. To open a broker account, you'll normally need a few thousand dollars (or the equivalent in your local currency). Spread betting (if permitted in your country of residency) may be the way to go, but there are other risks to spread betting that I will not discuss here.

Forex broker accounts can usually be started with a lot less money than I said earlier. However, there is a significant amount of leverage involved, as well as a slight (but not zero) risk of limitless losses, such as if the market gaps through your stops. When it comes to leveraged accounts, it's preferable to stay away from them.
ADJUST AND LEARN

Learn from your mistakes, keep track of what works and what doesn't, and alter your methods and/or trading mentality/psychology as needed. No one ever gets past this point. Even the most seasoned traders and investors have reached this point (and will remain at this stage for the rest of their lives).

Because of the psychological and emotional aspects of trading, this is the case. Becoming a truly successful trader or investor has a spiritual or "Zen" aspect to it, since it requires one to overcome oneself and learn to control/manage fear/greed without becoming unduly tied to a specific outcome.

There is always opportunity for improvement, and anyone who chooses to reject this guideline will be "placed on notice" by the market. As the old adage goes, there's no such thing as bad luck.

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