3 Steps to Become a Profitable Trader - The Profit Score

3 Steps to Become a Profitable Trader

In this article we shall cover how the bad habits in trading can ruin your trading career and how to become a profitable trader. Why trading psychology matters? Why few traders are successful and few are not although they are working on the same trading strategies.

After analyzing many different trading strategies, you probably know what trading strategies are good and will make you a profitable trader and what strategies will make you lose money. As a trader, we always want to make money, that’s obvious. But if you make 200 random traders use the same profitable trading strategy, there is a good chance that at least half of the traders will lose money, and the rest half will be profitable. Why is that? Let’s say a trader use a strategy that gives more than a 70%-win rate, but when you try it, it gives completely opposite results. Why can’t you make money with the same strategy?

Let’s start with a question. Do you find trades every time you open the trading charts? If your answer is yes, then you might have a bad trading habit, that can stop you from becoming a successful trader. There are 3 main things you need in order to make money in trading.

1.   Profitable trading strategy that you know actually works.

2. Proper money management. It is as important as having a profitable trading strategy

3. Trading mindset. It is the most important thing to be profitable trader

Profitable trader, money on the table

As you probably know, many people come to trading with a get rich quick mindset. Trading is not a get rich quick scheme, for most people, it’s a lose money quick scheme. You see, on the internet, people like to watch exciting stuff. So, if one person makes a ton of profit in a very short period of time, luckily or by using a strategy, it’s common for people to show interest in that story compared to someone who made the same amount slowly but consistently. Because of this, someone who has never traded in their life, can think that the stock market and forex is the place where people get rich quickly. But the truth is, trading is just like any other business or profession and becoming a profitable trader takes time and effort. For example, to become an engineer, you first have to spend time studying engineering. But in trading, people don’t think like that, many people don’t want to spend time understanding something they have never traded before. Everyone wants to get rich quick. Sure, you can get rich, but first spend time understanding why 90 percent of the traders lose money. If you do that, you will realize that most unsuccessful traders don’t follow proper money management, and they think with their emotions. Now, thinking with emotions is a very common thing among beginner traders. At the beginning of trading career, if a trade is lost, Trader cannot wait to take the next trade to recover the current loss, and because of this, he is taking stupid trades that he should not have taken. 

Profitable girl trader

So, apply a little trick. Make a checklist of trading rules before entering into any trade. Then you will see the trading opportunities based on that check list that will help you to become a profitable trader.

For example, if one indicator is giving a crossover signal, and if the price is above a moving average, it’s a buy signal. So, what you have to do is the verify the opportunity based on that check list made on your trading rules. If you are identifying the trend based on moving average then, In this scenario, the first point of the check list may be, is the price above 200 period moving average? If the answer is yes then you can move to the next point of the check list which will be the next rule of your trading strategy. If the answer is No, then sit back and have rest and wait for the next opportunity. In this way you will trade based on logic not emotions. This can help you stay focused on your strategy rules even if you lose multiple trades in a row. Because writing strategy rules down definitely help you as a beginner trader.

Now another thing professional traders do that beginners don’t, is play the waiting game. You see when you decide to wait for a good trading opportunity, you are deciding to save the money that you could have lost on a bad trade. If you are a beginner, and if you realize that you are not finding trades frequently even on a smaller time frame, then you might be on the right track. Because if you are not finding trades frequently, then you are most likely analyzing the market and are filtering bad market conditions. In other words, you are very close to becoming a profitable trader. If you don’t know how to filter bad markets and take high probability trades, you should focus on educating yourself in finding the right trading strategies. 

Profitable trader celebrating

Since we are talking about loss in trading, there is one thing you have to get used to in trading, which many beginner traders struggle with. You see, when you do a job, you get paid for the number of hours right? So, in a job, you are not used to directly losing money out of your pocket, right? In a normal scenario, you go to work, and get paid. But in trading, if you put in the work to take a position, there is a good chance of you losing the money, you just had in your hands. Many people who are not used to risking money in order to make more money, get very uncomfortable after placing the trade. This can lead them into taking bigger losses and smaller profits. As a beginner trader, you have to understand that this is completely normal. If you follow proper money management with a good strategy, your chances of making money in the long run even after losing multiple trades in a row, are really good. Many of the trading strategies have multiple losing trades in a row, and still managed to make money in the end. So don’t focus on few winners and losers, focus on the big picture where proper money management and a profitable trading strategy makes you more money in trading.

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