Here are ten questions to ask yourself to see where you are along your own path in the trader’s journey.
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Are you willing to exit your trade if it gets to a predetermined price level that indicates you are wrong about it?
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Are you structuring trades through position sizing and stop losses so that if you are wrong you will lose no more than 1% to 2% of your total trading capital on any one trade?
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Are your entries and exits quantified?
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Are you consistently trading a specific method or methods that all your trades fit inside of?
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Do you have a written trading plan that gives you rules to follow while the market is open?
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Are your trades based off of specific price action?
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When you trade do you always do what you planned on doing before the market opened?
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Is your #1 priority in trading to make money?
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Have you done adequate historical back tests on your method or system in different market environments to ensure it is profitable?
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Are you willing to do the work necessary to make you a successful trader?
Give yourself ten points for every yes you have.
Results:
0-40 points: You have lots of work to do before you start actively trading, paper trading and homework is what I would focus on at this point to get up to at least 5-9 yeses before puttin real money at risk.
50-90 points: Trade small to learn from real experiences of losses and wins but finish your homework and get to all “yeses” before trading at your full trading size.
100 points: You are ready, only time and the right market conditions separate you from great success if you can maintain your discipline, perseverance, and keep your ego in check.