Here is a list of essential things that I feel a trader needs to have in order to become successful.
1. Stop overtrading!
Overtrading is the one thing that will destroy your account like nothing else. Obviously if you don’t trade or trade minimally it’s difficult to make money. Some newer traders are almost afraid not to be glued to their computer watching the markets 40+ hours a week in fear of missing out on trades and therefore losing out on money that they could be making. But understand that not trading is a position in and of itself. Honestly, trading too much and trading on a whim is an easy recipe for disaster. I learned the hard way by wiping out more than one trading account when I first started out, compounded by the fact that I didn’t have a viable trading strategy to begin with. This brings me to my next point.
2. Have a trading plan
Having impeccable self-discipline is absolutely vital to trading success. This might seem like an obvious statement and it’s easy to say, “okay, I’m going to be disciplined while trading.” But it’s very simple to gauge whether or not you truly are maintaining the discipline required to be a successful trader. If you’re not, you will overtrade, experience emotion while trading, and very likely lose your money. Therefore, you need to follow a trading plan, which first and formost includes how to execute your strategy over and over again with minimal error. This is what the bulk of my blog articles cover – how I execute my trading strategy over and over and over again with as little emotion as possible.
The second thing that your trading plan should cover is your money management. How are you going to invest your money in each trade? My recommendation is to trade fixed investment sizes. In the past I did not do this given that I was trying to turn a small amount of capital into a larger amount. But by that point I was already very confident in my trading ability due to being profitable in the past. Now, however, I do trade fixed investment sizes. That is, each trade I take is the same size. And it’s also never more than 1% of the amount of money I can afford to lose that I dedicate to trading. Keep this investment fixed – don’t scale up or down until you’ve achieved a sizable increase in profit. The trade size should be so small that it almost feels like you’re wasting your time even trading. It sounds counter-intuitive being your goal as a trader is to make money. But if you try to invest more than you should in each trade, it’s demonstrative of a lack of discipline and invites emotion into your trading. And emotion-based trading will destroy anybody. Always define your risk as part of your trading plan.
And never ever use the Martingale method of money management to recoup past losses. Even if your Martingale strategy is set up such that you won’t wipe your account until you accumulate six losses, it could very well happen. I can speak from personal experience on this point. I had a Martingale money management system set up such that I wouldn’t wipe out my account unless I lost EIGHT trades in a row. You know how long my account lasted? Two days. Even if a trader is very good and averages 70% ITM, it is extremely likely that over time, at some point in his career, he will lose six trades in a row. In fact, it’s nearly a certainly if enough trades occur. So please don’t use Martingale in your trading at any point, as gratifying as it might sound to be able to make up for several consecutive losing trades in a row with the help of a single winning trade. But if enough time elapses, the end result is never pretty.
It can also be helpful for your trading plan to have set trading rules that you willfully adhere to (because you need infallible self-discipline to a successful trader). For instance, it could be something like “if I lose more than two trades in a row, I’m done for the day.” This, in my opinion, is a solid rule being that after three straight losing trades, you’re probably feeling pretty bad about how the trading day has gone and you might just very well have a strong temptation to get back at the markets to try and win your money back. And revenge trading is emotional trading, and will only serve to destroy your account. Having a “must-win” mentality might be good if you’re an athlete with a strong determination to perform your best, but it certainly will not work as a trader.
You could also put into your plan the opposite rule about never trading beyond three winning trades in a row during the course of one day. Trading with a sense of euphoria or overconfidence can often be just as dangerous as trading with frustration.
To summarize this point, the entire purpose of a trading plan is to keep yourself accountable. A trader’s biggest enemy is always himself, not the market. A trading plan, in some way, is basically a means of saving yourself from yourself, if that makes sense.
3. Keep a trading journal
I believe that it’s important to keep track of all your trades in the form of a journal. Of course, in this day and age it only makes sense for it to be electronic based given that all your trading occurs on a computer. My blog here on is actually what I consider to be my own trading journal, in addition to my personal thread on the forum here on binaryoptions.net.
Keeping a blog or a thread on an trading-themed Internet message board is a great way to archive your progress. Granted, you don’t need to type up 1,000+ word posts for a trading journal as I do here on my own personal part of the website, unless your aim is to directly educate other traders in an in-depth manner. But starting a thread in the forum, as other traders have done, is a fantastic way to chronicle your progress and share it with others. It can work to inspire other traders and hopefully help them learn from your own mistakes. Posting screenshots and very brief descriptions is all you need to do, and it shouldn’t consume more than ten minutes of each trading day. Even if you have a really bad trading day, it’s worth it. It’s never a shame to have several days of bad trade results if you’re still learning the ropes of trading the markets. When I first began, I would have some good stretches and also some very bad stretches where I would lose five trades in a row and other similar streaks. In fact, I remember a time looking at my trade history screen on my account profile, and I had gone 1/10 ITM on my last ten trades. I think it would have been cool if I had been archiving my trades somewhere from the very beginning. It would really show how far I’ve come since then. But regrettably, I never did keep a trading journal of any sort when I first started out.
It can also be private if you so choose, by keeping screenshots of your charts with annotations showing where you took the trades and perhaps any brief description of your thought process as to why you took that particular trade.
4. Appropriately choose your asset and charting timeframe
You should always choose assets that you’re very familiar with before beginning to trade them live with real money at stake. If you read my binary options blog articles here, you’ll see that I pretty much trade the same exact asset every single trading day. Choosing the highest paying asset(s) your broker has to offer can be a good way to maximize your profit margin. But be sure that you’re considering assets that you feel comfortable trading with respect to volatility, how it obeys its support and resistance levels, the relative smoothness or choppiness of its price action, and so forth. Choose assets that fit your personal trading preferences.
For me, I always avoid exotic currency pairs in my trading. For instance, I’m pretty sure I would be awful trying to trade the EUR/SEK (Euro/Swedish Krona). To me, the chart looks like a mess on most, if not all, timeframes. Overall, skipping around from asset to asset and trading impulsively is never a good thing. Sticking with the same asset (or same couple or few) and applying your strategy/system to it continuously is your best bet.
Considering your trading timeframe is important, as well. For short-term binary options, many like the 1-minute chart and many like the 5-minute chart. Some use both nearly equally. With the common ten- and fifteen-minute expiries, using a timeframe encompassing price candlesticks with a shorter duration than the trade expiry makes sense. Viewing shorter chunks of organized price data can give you a better resolution of how price is acting on a smaller scale. For me, I think the one-minute chart contains a ton of noise given the fact that you get a limited viewing window of previous price history and the simple fact that not a lot of action usually occurs in the span of one minute. Therefore, when trading ten- or fifteen-minute expiries, I like to use the five-minute chart, which gives a solid blend of viewing the price action on a more microscopic level while still giving enough of a viewing window to see how price has been acting over the course of the past several hours. But if the one-minute chart is your preferred viewing window, then that’s perfectly okay. Trading is largely about sticking with what works for you.
5. Always strive to improve
Looking toward resources that can help you improve your trading is essential. Investing in yourself in the form of education is important throughout life. Learning a new trading strategy or investment technique or anything related to trading can be very rewarding. The Internet has many great resources (binaryoptions.net being one of them) and there are many trading books out there that you can look to for technical analysis related assistance, strategy, or basic inspiration.
Trading successfully boils down to self-discipline, consistency, and putting in the required effort. The very best traders and investors almost always have years/decades of experience behind them. Most of all, be sure that you’re finding some level of happiness in the pursuit of trading. If trading is something that’s causing you stress and you have trouble enjoying it, chances are that it’ll be very difficult to become successful at it. That being said, it’s perfectly fine to follow quality trading signal service provider or to have your account managed by an investment service altogether. Having a passion for trading in the first place is what should ultimately allow you to have success at it and for you to thrive at this pursuit going forward.