What really sets the 1% of successful traders aside from the 99% that lose money steadily to the markets? What rules do they follow that we may not be aware of?
I read some books about this and amongst some of the reasons the 1% are successful is that they set a daily loss limit and once it is reached, they stop trading for the day.
They also have specific trading hours where their strategy has an edge and they do not trade outside those hours.
They add to their winning trades: when they open a trade and it becomes profitable they keep on adding to it by opening more positions of the same trade thereby maximizing the profit they are to get.
I guess they are better at taking losses. While the regular trader will try to recover losses by immediately re-entering the market, the 1% successful traders will let the loss go and try again the next day.
They also stick to their strategy. A regular trader will abandon his/her strategy after a few losses, while the 1% of successful traders stick to their strategy with the understanding that as a trader, you cant win everyday.
They also cut their losses early, they don't allow losses to grow while hoping the situation will turn around. This is why its important to use a low spread forex broker so that even if you close a trade seconds after opening it, the spread that will be deducted will not be too much.
Treating trading like a real business with a clear plan, rules, and tracking your results makes a big difference. Seeing losses as normal costs instead of failures helps you stay calm and improve. Good point.
