Do You Have What It Takes to Be a Trader?

[lrushing]

Whether you’re a doctor, a basketball or tennis player, a musician, or even a cowboy, knowledge and skills are going to determine your status in your “community” of peers. The level of your knowledge and skills can either catapult you to world class status or usher you out the door; create increased (or decreased) demand for your services or performances; provide opportunities to win awards and generate tons of money if you’re the best, or no awards and little money if you’re not.

Whatever you choose to do in life, your knowledge and skill level will determine your success level. If you’ve been in the workforce for a while now, you probably already know that how much you know (knowledge) and how well you perform (skills) are major factors in whether or not the company will keep you or fire you. Let’s take a look at how trading knowledge and skills determine your success in trading.

While many people believe that the goal of trading is to make money, professional traders know otherwise. Being an active, professional trader, I know that making money is a byproduct of the primary goal of trading, which is to acquire the necessary knowledge and skills to protect your capital. Simply put, it is extremely difficult to make money if you don’t have the capital with which to make the money. Nearly all entrepreneurs would not have been able to start their businesses if they didn’t first have seed money, a line of credit or loan, or investors to do so. Trading is no different. Trading is a business, not an investment. Successful traders know this. It’s all about protecting your capital.

If you are still struggling with your trading when it comes to making money consistently, take a look at your level of trading knowledge and skills vs. those who are actually trading successfully. What do they know that you don’t? Why are they doing well while you are not? Where did they get the knowledge and skills to do so well? It could be anything - from your

1. Knowledge (Have you mastered the concept behind candlestick charts, studied up on risk and money management in trading, established an understanding of the stock market price cycle like the back of your hand?),
   
2. Skills (How good are you at identifying Traps and 3-Bar Candlestick Plays, or how quick are you at responding (vs. reacting) to the trade signals with the proper set up?), Or even your
   
3. Psychology (Are you too desperate, unable to control your emotions, distracted?),
   
4. Habits (Do you have the discipline to follow your trading plan no matter what, the tenacity to focus on the charts on your computer screen 8+ hours a day, the determination to get up every morning no matter how bad it was the day before to do it all over again?).
   
5. Attitude (Are you willing to learn from your mistakes, to get help from experienced traders through coaching or mentoring, to practice patience and a willingness to do what it takes to succeed?).

At the end of the day, if you are deficient in your trading knowledge and skills, be prepared to work harder than those who are already successful. Commit to do what it takes to protect your capital and make money. If you don’t, you may well be ushered out the door sooner than you would like.