The Successful Trader Checklist
No.1 | Know the Basics
Why is this important?
No.2 | Pro Trader VS Normal Job
INCOME
The income of a trader is often more variable than that of a person with a traditional job. Traders can earn significant profits from successful trades, but they can also incur significant losses.
No.3 | Follow My Rules
Why is this important?
Self Belief, Consistency, Risk Management, Discipline & Accountability!
How to achieve this?
Have a comprehensive list of rules that I follow every time. Always check that the setup matches my rules before ever entering a trade position.
No.4 | Demo verses Real
Why is this important?
There is a huge psychological difference between trading a demo account to trading a live/real account with your own money. When real money is at stake, it has a significant difference on the way you trade. You can become more cautious, cut winners short in fear that it might hit SL, letting losers run thinking that it might reverse and move to TP, or being hesitant in placing a trade in the first place.. etc.
There is no rush, consistency is superior to speed.
How to do you do it?
The answer is a simple one, trade a demo until you are consistently profitable and are fully confident in your ability to place a valid trade. Trade minimum lot sizes on live account until consistently profitable, then and only then, increase trade size incrementally after each profitable full month. If a particular month you are not profitable do not increase lot size, keep trade amount the same for next month and only increase once profitable again.
This will help in maintaining your account size and stability which will also benefit you psychologically. You need to remain relaxed when trading.
No.5 | Mental Preparation Before Entering a Trade
Why is this important?
There is no rush, consistency is superior to speed.
You need to understand and accept the associated risks of trading such as SL hits.
Its for this reason why it is imperative that you focus and ensure that all the trade entry rules have been fully met, this is non negotiable which will help in keeping your emotions in check. It will also help to visualise the outcomes of each trade you place both good and bad.
This helps in preparing your mind for both eventualities, but more importantly prepares you for the inevitable losses that you will have. Not trader on Earth has a 100% success rate. So accept them as a cost of doing business.
So how do you achieve this?
Before taking a trade, take some time in accessing that all your trade entry rules have been adhered to and met, ensure that the correct trade size has been set for your risk level and mentally visualise both outcomes win or a loss to help prepare you mentally so that you can accept the end result.
No.6 | Handling a Losing Run...
Why is this important?
If you can pick up after a crushing defeat, and go on to win again, you are going to be a champion someday.
The ability to remain positive when all things seem to be going against you is one characteristic that will see you through a trade losing run. Being able to accept that no matter how good you are – even city traders – a losing run is an inevitable part of being in the business.
Even those in normal jobs have shitty days where nothing seem to go right. This can adversely impact your mental wellbeing, which will make you doubt yourself, question what you are doing, the strategy, question the broker even the markets.
So how do you achieve this?
- Accept that losses are a inevitable part of being a pro trader, all part of the process!
- Make sure you are following all your rules, if you are, then you are actually winning.
- Feeling overwhelm? then take a break, speak to other traders, come back when ready!
- Remain positive, knowing that winning trades will return, why wouldn't they!?
- Keep a trading journal which will help in seeing losing run in context, which could highlight where you may have gone wrong... Always be learning.
No.7 | Trading While Working a Full Time Job
Why is this important?
Not everyone will be able to devote hours and hours each day to learning day trading. Most will only be able to study whilst holding down a full-time job which means they are really restricted to the amount of time each day they can focus on learning.
Being able to progress in your trading journey whilst still working is essential if you aim to become a successful pro trader.
So how do you achieve this?
- Analyse your daily commitments and access when you will be able to trade.
- Pick instruments and time frames that fit around your availability.
- Use pending orders where possible so you set them up and go about your day.
- Use mobile trading apps to monitor the market during break times and check the markets during the times you work. (This is not to be overused)
No.8 | Create a Watchlist
Why is this important?
You need to have a set of instruments that you are happy to trade, such as currency pairs, stocks NASDAQ, commodities, index… look those in your watchlist and after a while you will become familiar with them in how they move and what they do. Being focused on certain instruments you will become familiar with how they function and move which will make you aware of how certain pairs are correlated, meaning you will being to get a feel for the market.
- FOCUSED approach.
- Efficiency of the time you have available.
- Overtime you will develop a good understanding of how the price of each instrument in your watchlist moves.
- Better risk management and ease of managing risk exposure.
- Allows you to identify potential trade opportunities in advance and 'flag' them for easier selection.
- Setup technically analysed charts for each instrument.
- Creates an environment for consitency of trading decisions.
So how do you achieve this?
You create a watchlist inside your charting package (TradingView) then go through each instrument and flag those that have potential setups.
No.9 | Backtest
Why is this important?
This is done to ensure the trading strategy you are going to trade has proven itself over an extended period of time to be consistently profitable. This process is essential in gaining and maintaining confidence in the strategy. It also gets you use to looking for patterns and identifying potential trade setups in live market conditions. This also increases y
So how do you achieve this?
Use the bar replay function in TradingView (or other trade software). Go back in time on chosen instrument and start replay – markup patterns as you see them forming and and see them playout (feedback) to determine if you are fully understanding the strategy fully and seeing the outcome of those trade setups. Document your results, then move onto another instument and begin the process again.
BARRIERS YOU WILL FACE…
- Overwhelming amount of information to absorb and understand.
- Wanting to rush ahead without completing the foundations and fundamentals.
- Making time to study and practice, this is not going to happen overnight.
- Loss of confidence when things get challenging, not understanding certain elements where you feel confusion and don't feel your moving forward.
OVERCOMING THESE BARRIERS…
- Take your time, there is no rush with this... ONE STEP AT A TIME! Make sure you study each element in the correct sequence so you understand it 100%, and do not move forward until you do... being comfortable and knowing what you are doing is far more essential than speed of progress.
- Be consistent, set aside time each day no matter how small, and be precious about this time, do not let anything interfere with this time unless unavoidable. MAKE IT A HABIT!
- Follow the process and it will all fall into place.
STAY MOTIVATED DURING THESE BARRIERS
- DO NOT WORRY, every barrier will eventually be overcome given time, patience, discipline, determination and self-belief, a knowing that I can and will achieve this!
- YOU ARE NOT ALONE ON THIS... every successful trader went through these exact same issues and challenges believing the task ahead was insurmountable at the time.
HOW TO REMAIN CONSISTENT?
Consistency is all about discipline, following the rules and sticking to what works and doing the same thing every time. Acknowledge that it can and will get boring, but boring can make you a significant amount of money.
- Have a cheat sheet that list each individual rule that you adhere to each and every time, do not deviate from this, EVER!
- Document each and every trade in a trade log complete with notes. One of the columns should be 'DID I FOLLOW THE RULES?!' to which I should be answering 'YES' each and every time. If I ever answer 'NO' then I am heading into serious issues that could potentially impact my progress in a huge negative way. NEVER BREAK THE RULES!
- Practice finding setups as often as possible, the more I practice the right things the better I will become period, it's that simple.
WHAT A UNPREPARED TRADER LOOKS LIKE:
From the outset everything will seem new and a little bewildering, and even overwhelming. You will make mistakes and sometimes quite often and have difficulty understanding some of the concepts of trading.
WHAT A SEMI PREPARED TRADER LOOKS LIKE:
- Understands the concept of trading and the potential consequences.
- You will know and fully understand the rules that need to be followed.
- You will have a demo account setup all ready to trade in a safe environment.
- I will know when and how I will trade by accessing and analysing my own lifestyle, commitments and will have set when and how long I can devote to learning and when I will trade once ready.
- As a result my mind will be much clearer and less confused as I learn and continue to practice all the individual elements of the strategy.
WHAT A FULLY PREPARED TRADER LOOKS LIKE:
- Will have a great understanding of the basics of trading.
- Will have all of the tools setup and be fully proficient in their use.
- Will be studying and practicing in a disciplined and consistent manner.
- Will fully understand the risks and potential consequences of trading and accept them as a inherent element of the 'job'.
- Will be mentally prepared to deal with losing trades and runs and act accordingly.
- Has the discipline to follow the rules at all times, keep and maintain a detailed trade log without exception.
ACTION ITEMS…
- Download the Successful Trader Checklist - DONE!
- Post any questions using the form in section
- Move onto next lesson and complete project.