- 1. FIRST THINGS FIRST
- 2. EXAMINE YOUR MOTIVES
- 3. MATCH THE TRADING METHOD TO YOUR PERSONALITY
- 4. IT IS ABSOLUTELY NECESSARY TO HAVE AN EDGE
- 5. DERIVE A METHOD
- 6. DEVELOPING A METHOD IS HARD WORK
- 7. SKILL VERSUS HARD WORK
- 8. GOOD TRADING SHOULD BE EFFORTLESS
- 9. MONEY MANAGEMENT AND RISK CONTROL
- 10. THE TRADING PLAN
3. MATCH THE TRADING METHOD TO YOUR PERSONALITY
It is critical to choose a method that is consistent with your own personality and comfort level. If you can’t stand to give back significant profits, then a long-term trend-following approach-even a very good one-will be a disaster, because you will never be able to follow it. If you don’t want to watch the quote screen all day (or can’t), don’t try a day-trading method. If you can’t stand the emotional strain of making trading decisions, then try to develop a mechanical system for trading the markets.
The approach you use must be right for you; it must feel comfortable. The importance of this cannot be overemphasized. Remember Randy McKay’s assertion: ”Virtually every successful trader I know ultimately ended up with a trading style suited to his personality.”
Incidentally, the mismatch of trading style and personality is one of the key reasons why purchased trading systems rarely make profits for those who buy them, even if the system is a good one. While the odds of getting a winning system are small-certainly less than 50/50-the odds of getting a system that fits your personality are smaller still. I’ll leave it to your imagination to decide on the odds of buying a profitable/moderate risk system and using it effectively.