Keys To Successful Trading
By Kevin J. Davey
After trading for over 20 years, I have seen many traders come and go, and
many trading styles, techniques and strategies come and go. This is a
consequence of the simple facts that most people who attempt to trade fail, and most trading strategies are
Why do most people fail? There are
probably a million individual reasons, but at the root, it all boils down to trading fundamentals.
I believe most people fail because they never learned what I call the "Keys to
Whether you are a beginning, intermediate or advanced trader, it never
hurts to review and contemplate the following keys to successful trading:
Plan - Not having a trading plan is
like driving in a foreign country without a map. Maybe you'll get to your destination, but it will be by sheer
luck. Not many people can successfully trade without some kind of plan.
Competition - Once you realize you
are up against highly motivated professional traders, you will understand why I consider this one of the keys to
successful trading. You have to execute your game at a professional level.
Diligence - When businesses buy
other businesses, they conduct what is called "due diligence" - they examine the accounting books and kick the
tires. It helps them make an informed decision on whether to buy or not. You need to do the same with any
trading system you develop or purchase.
Backtests - Traditional optimized
trading backtests can be easily manipulated, and can be very deceiving. One better alternative is to use a
Worst - In trading, whatever can go
wrong, will. Have plans in place to overcome these inevitable setbacks.
Diversify - Trade as many unique systems as your capital allows. Your
equity curve will likely be smoother.
Capital - The number one reason why
traders fail is that they are undercapitalized. Being properly funded is truly one of the most important keys to
Yourself - What and how you trade
must fit you. Any disconnect will eventually lead to serious problems.
Of course, there are other keys to successful trading, too.
But if you focus on only these eight keys, you will be better off than almost
all the traders out there.