_________________________________________________________________________________________
After finishing in 1st or 2nd in a worldwide, REAL money, futures trading
contest 3 years in a row (with over 100% returns each of those years!), I think I am qualified to talk about the keys to successful
trading. I hope you enjoy it!
Keys To Successful Trading
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 flawed.
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 Successful Trading."
Whether you are a beginning, intermediate or advanced trader, it never hurts to review
and contemplate the following keys to successful trading:
Have
a 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.
Know the 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.
Perform Due 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.
Beware of Backtests - Traditional optimized trading backtests can
be easily manipulated, and can be very deceiving. One better alternative is to use a walkforward backtest.
Assume the 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.
Have Enough 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 successful trading.
Know 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.
____________________________________________________________________________________________
