The Seven Secrets of the Highly Successful Trader! - 3) PLAN A TRADE AND TRADE A PLAN

The point of this rule is that you must develop a system that is right for you and then stick to it no matter what. As a result, your plan must be able to cater for every eventuality. Once you put your money down then you no longer can control what happens. You won't know what the prices will do so you can't worry about anything except following your plan. What will you entry be? What will your exit be? What happens if there is a merger? What happens if the price gets close to your stop order? Do you see what I'm getting at? You don't want to have to answer these questions AFTER you put your money down! You want everything to be automatic by that point. So make sure that your system plans for everything. Then you just need to follow your rules and you won't have to think (or stress) at all.

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The Seven Secrets of the Highly Successful Trader! - 2) HAVE A SYSTEM THAT FITS YOU

Every successful trader, investor, money manager, etc. has a system that perfectly fits his or her ideals and personality as an investor. The system really doesn't matter, it's secondary. Value investors like Warren Buffet have made millions with their value approach. Day traders have made millions with their system. I have colleagues who have made millions with momentum investing. So it can't be the system per se. Instead, it's the fact that those winning traders have discovered and developed the system that fits them best. If you are a very worrisome person who absolutely cannot take losses without getting ulcers then I would not suggest day trading as part of your system. On the other hand, some investors would go crazy if they had to buy a stock and hold on to it for a year or two. So how do you find a system that works for you? You have to work backwards by discovering what your objectives are. What annual rate of return are you looking for? Do you want to trade full time or just leisurely? Would you get stressed with daily gains and daily losses? Are you extremely patient with your investments? Do you need to make lots of decisions? Which trading systems do you know and feel comfortable with? How much research have you done? There are so many questions to ask yourself because it is absolutely vital that you choose a system that really works for you. If you are not comfortable with your system then you will always be tempted to break your rules. Your health will likely suffer as much as your portfolio.

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