1. Risk/Money Management
If you ask a professional/successful trader what is the one aspect of trading that separates the winners from losers? Majority will say RISK MANAGEMENT. Successful traders know that their trading capital is the key to their very trading existence and protecting this is actually more important than their gains. Without capital you can’t earn from trading. They know that any one loss or series of losses is all part of the trading game. To achieve long-term trading success, they must ration their trading capital appropriately by only risking a small percentage of their capital on any one trade.
You may have heard the famous 1 percent per trade or even some professionals who trade multiple derivatives or instruments cap a certain percentage of their portfolio per day or week. The main point here being you must only be prepared to risk with what you are comfortable with. In contrast, unsuccessful traders do not show the same respect for their trading capital showing signs of inconsistency and makes them prone to incur losses which materially erode (or even eradicate) their trading capital unnecessarily.
2. Trading is a 'Marathon' not a 'Sprint'
Successful traders do not “throw in the towel” or become dispirited when going through bad trading patches or incurring back to back losses, as they understand that losing is an inevitable part of the trading experience. The most important thing is how one manages themselves through these downtimes. It’s important not to take trading losses personally as long as you executed properly and have the appropriate stop loss placement, trading losses are just part of the normal trading process.
All great and successful traders learn from their losses and this is why trading is a unique profession as one can alter and adjust their trading plan by avoid the same pitfall and mistakes. Unsuccessful traders too often fail to see the “woods from the trees” and succumb to the pressures of trading troughs to their detriment.
All instruments stocks, currencies & commodities behave and trend in their own unique way and those traders who stick it out to see these cyclical movements can always take advantage when seeing a particular trade e.g. a scenario for you: AUD/USD can move a certain number of (PIPS) on a particular day of the week with high volume movements during a certain hour of the Asian session. If this is recurring, then its cyclical characteristics can only be foreseen by those who spend that extra amount time on the charts and show patience in executing at a trade at the best possible price.
3. Adequate capital funding
When starting out as a beginner we always recommend to start with a demo account to practice your chart setups and learn how to place trades as many interfaces and trading terminals differ, the most common being Meta Trader. At the moment there are many trading terminals in the market e.g. Ninja trader, Trading view, Meta Trader etc. Once you’ve learnt how to draw charts & use drawing tools e.g. trend lines, fib retracements etc. the next step is to move swiftly onto a live account to apply your methodology and strategy learnt. Although majority brokers have minimum requirements for live account funding mainly in the region of $50-$100, it is very important you understand managing risk using small accounts (please see calculation breakdown based on risking 1-2% per single trades). As shown in the link being consistent with risk and risk/reward ratio is vital but a lot of traders when starting with a micro/nano account can be risking more than 1%. The inevitability resulting in one blowing their initial capital.
Successful traders treat trading as a serious undertaking and like any business, it needs to be adequately funded. Embarking upon any venture without sufficient funds is a recipe for failure and being undercapitalised places the trader at a serious disadvantage from the very start. Majority of retail traders fail to understand this and are too often “blown out” due to inadequate funding. After all, imagine a business with no rules, procedures and systems which operates solely on an ad-hoc basis. The chances for success are not very high. This is contrasted by the approach of many unsuccessful traders who crave the excitement and thrill of trading stocks, forex and even cryptocurrency with inadequate risk/money management.