I do not claim to be a great trader, far from it, I am just an excellent student of the markets. With my experience and knowledge and everyone's experience and knowledge being contributed here, I intend to make myself and anyone interested here into an excellent trader.
What I'm looking to do is to create an easy to use, trade-able system that consistently brings in profits, but what I'm really looking to do is to have a group of traders who have ‘what it takes’ to make money month in month out with the system.
Remember, it is not the system that loses or makes money, it is the trader. Its a cliche but, even a mediocre system with a good trader can produce good results but even a holy grail in the hands of a bad trader will result in a margin call.
Lets talk numbers for a second. Who is an excellent trader? I would rate a trader based on several things. For my arguments sake, lets take a trader staring out with $5,000 as his investment.
1. Discipline. This is the ultimate litmus test of any great trader. It is my experience that one cannot ever achieve any sort of trading consistency without being disciplined. I have lost $5,000 in a week, even in a day. Many people have, why? Lack of discipline. Discipline is a wide area that involves money management, strict adherence to trading rules and withdrawal of funds from a trading account.
Money Management requires that a trader take as little risk as possible while attempting to make as much profit as possible. A trader with a $5000 account in my opinion should never take a trade greater than 0.13 standard lots. That’s 2.5:1 leverage on 100% of the account.
Strict Adherence to trading rules is all about entry and exit signals. If you miss an entry, you’ve missed it. Don’t chase the markets. For me, timing is everything. And Place your stops, always.
Always have a plan on how you are going to withdraw profits from your trading account. This is a sign of a great investor.
2. Goals: A great trader has goals. SMART goals. Specific, Measurable, Achieavable, Realistic and Time-Bound. In this template of a system, we do have a specific goal. To make 40 pips per day. To stop trading if we lose 100 pips in a day. That’s measurable, achievable and realistic. We are day traders so this is our trades are definitely time bound. Now, out trader, making 0.13 lot trades and making 40 pips a day is making $50 or 1% per day. That’s 20% per month. This trader will turn $5,000 to $45,000 in a year. This is great trader.
3. Professionalism. Whether you are starting with $100 or $50,000, the trader who will ultimately make it will be the one who treats this as a career. No way around this. If you have a day job, you cannot be a trader point blank. Maybe an investor swing trading with buy and hold strategies but not a trader in the true definition of the word. So work ethic has to be there.If you want to make five figures from trading, it has to be your job and you have to respect it as such.
This template will be based on the trader starting with $5,000 dollars, for illustration purposes. The goal is to turn this trader into a millionaire in three years.
5,000 - 45,000 (15,000 withdrawal) Year 1
30,000 - 270,000 (90,000 withdrawal) Year 2
180,000 - 1,600,000 (600,000 withdrawal) Year 3
1,000,000 -
With this figures in mind, lets begin our journey!
