How to be in the Top 10% Traders List
As the saying goes, 10% of traders make money from the markets while 90% loses. So, what differentiates these top 10% trader? How to be in the top 10% traders list? Let’s take a look at some of them.
1 – Exercise Discipline
Winning traders are disciplined. They formulate a routine and they follow it rigorously. The routine starts from the time they wake up, have their breakfast, study the market, plan their trade to execution. Everyone has a different routine but top 10% traders always practice a routine that they are comfortable with. This gets them into the trading zone to get them to peak performance. It also eliminates any unnecessary distractions during when they execute their trades.
The more disciplined you are, the better your trade performance will be.
You can refer to this link on how to cultivate your trading discipline.
2- Have a Trading Plan
All top traders have a trading plan. The trading plan can be based on fundamental analysis or technical analysis. Many use a combination of both. They key to the trading plan is know when and where to enter a trade, when to exit a trade. Understanding your profit and loss based on the entry price, profit target and stop loss point. Good traders leave nothing to chance. The trading plan set up allows them full control of their profits and losses.
To be the top 10% traders, start writing a trading plan before executing any trades. Your written trading plan should have objective measures of your entry price, your stop loss as well as your profit target. If the market opens outside of your range of entry price unfavorably, you are not obligated to execute that trade. Stick to the plan and stay out of the trade. Capital preservation is more important than losing money.
3 – Trade the Plan
Now, you see that it is critical to have a trading plan, but there is absolutely no point in making a plan for a trade if you are not disciplined enough to follow it. Don’t worry about where the prices are going. Worry about what you are going to do when they get there. Winning traders follow their plans meticulously. They exit their trade when they hit their profit targets, or they exit their trades if it hits their stop loss. They may add or reduce their trade sizes along the way, but it is all in the plan.
Once you are in the trade you cannot control the prices. Concentrate on executing your trade based on your plan. By doing so your trading becomes very systematic and it removes the emotions that can affect your decisions.
4 – Practice Good Money Management
Good money management means trading the right position size and setting the right stop loss for your trade. You need to know how much risk your portfolio can take. The key is not to be greedy, aim for the sky but on the other hand, expose your portfolio to destruction. Many traders want to make it big on one single trade, but they end up wiping out their entire portfolio.
Diversification is also part of good risk management. Diversification can mean several things. Investing in different financial instruments, investing in different business sectors, or hedging the market with both long and short positions. Key is not to put all your eggs in one basket. Again capital preservation is critical for all successful traders.
Check here out on how to manage your risks and practice good money management!
5 – Tracking and Measuring Performance
All good traders track every single of their trades. They measure how they fair on every trade and on their overall portfolio. This good habit allows them to look back and understand what went wrong and what went right. They learn from their mistakes and make necessary adjustments to their trading plans. Everyone needs to continuously learn and improve. Markets change, technology advances, people get more educated as time goes. If you do not track, you do not know what is right and what is wrong.
Other good reads:
- Number 1 reason why most people lose in the stock markets
- Trading Dividend Stocks in a Bear Market
- Most Watched Stock Market Indices
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