Becoming a successful trader is a process. It doesn't happen overnight or everyone and their mother would become traders. It's a process of constant research and studying, which can actually be very mentally challenging (yet stimulating at the same time).
There are no successful traders who made a killing on the first day - myself included. It is the daily steps you take towards your financial goals that truly become your foundation for a long and profitable career. And with that there are 3 major, unbreakable laws of trading that you must obey to be successful in the long run.
1) Trading is a Process.
There is no magic key or system - by now you should know this. You have to undergo the process yourself and should look for guidance and help from other professionals. To think that you will be up and trading millions of dollars next week is a fantasy.
Remember that we all learned to crawl before walking and running. We learn how to fall and get back up in the process and it goes the same in trading the markets. Many people tend to jump ahead, skipping some of the most important parts in the process - mainly how to lose money and still survive.
Everything you do should be a well though out process- a series of steps, activities and education all leading towards your goals. Don't skip steps.
2) The Law of Inertia.
"Every object stays at rest until is acted upon by an external force" is a famous quote we all have heard before. So how does it apply to trading stocks and options? Simply put, you need to break the internal force that prohibits you from letting learning lead action.
The law of process above will be useless if you fail to practice what you learn at some point. Paper trading is a great way to get started and you don't even have to risk real capital. I still paper trade on a daily basis, testing new strategies and techniques.
You probably have attended conferences, workshops, seminars, and read books on everything by now right? But what good is all this education if you don't put it to work. Some things you have to learn by doing, so start making trades already!
3) Law of Probability.
Experienced traders understand that trading is not more than a game of probability. Nothing is 100% certain about predicting the market, so more or less you are just making educated guesses. Beginners learn this the hard way but eventually get it down the road after losing money.
You must stop trading based on hunches, emotions and news headlines. Focus on using technical analysis tools and make sure that you have a solid risk management plan in place. If you understand the law of probability then you know you should position your trades according to their likelihood of making money - higher probabilities get more allocation.
The stock market (or any financial market for that part) is different from all other business environments. Trading has the appearance of being something that should very easy to do with the "right" tools - throw in the possibility of making a lot of money quickly and you can see why so many try and fail.
What is Your 1 Unbreakable Law?
Regardless of how long you have been trading, I'm sure you have learned at thing or two you could share with everyone. Add your 1 unbreakable law of trading you have learned over the years below.