I’ve recently started reading a book written by a very successful trader named Alexander Elder. The book is called «Trading for a Living». If you guys haven’t read it yet, put it at the top of your list of books to read because it is an absolute GAME CHANGER!
For a while now, I’ve realized that there is nothing wrong with the trading system we use on this website. It is indeed very powerful, consistent, and reliable. It’s myself as a trader that is, as Mr. Elder would call it, the «weakest link» of the trading system.
In the book, he constantly reiterates the fact that the key to success as a trader is not in the trading system, your analysis methods, or finding the right guru. It’s all about managing your emotions and trading based on intellect. And I couldn’t agree more.
Time and time again, I’ve seen the MACD trading system produce amazing results, but yet, here I am, still trying to work out some kind of detail. Truth be told, the details were not the problem. It was my tendency to trade emotional AND very poor money management. Trading without stops is NO LONGER ALLOWED!
The rest is up to you to read but I did want to give you a 7 step plan from the book that I believe will truly help you become the professional trader you want to be, as it’s already helped me grow by leaps and bounds. Enjoy!
Alexander Elder’s 7 steps for becoming a professional trader:
1. Decide that you are in the market for the long haul – that is, you want to be a trader even 20 years from now.
2. Learn as much as you can. Read and listen to experts, but keep a degree of healthy skepticism about everything. Ask questions, and do not accept experts at their word.
3. Do not get greedy and rush to trade – take your time to learn. The markets will be there with more good opportunities in the months and years ahead.
4. Develop a method for analyzing the market – that is, «If A happens, then B is likely to happen.» Markets have many dimensions – use several analytic methods to confirm trades. Test everything on historical data and then in the markets, using real money. Markets keep changing – you need different tools for trading bull and bear markets and transitional periods as well as a method for telling the difference.
5. Develop a money management plan. Your first goal must be long-term survival; your second goal, a steady growth of capital; and your third goal, making high profits. Most traders put the third goal first and are unaware that goals 1 and 2 exist.
6. Be aware that a trader is the weakest link in any trading system. Go to a meeting of Alcoholics Anonymous (yes, Alexander Elder actually went to an AA meeting and every time he heard the word «alcohol», he replaced it with the word «losses». Talk about commitment!) to learn how to avoid losses or develop your own method for cutting out impulsive trades.
7. Winners think, feel, and act differently than losers. You must look within yourself, strip away your illusions, and change your old ways of being, thinking, and acting. Change is hard, but if you want to be a professional trader, you have to work on changing your personality.