How to Become a Successful Trader (Step-By-Step)

<p>There is a specific process to becoming a successful trader.</p>
<p>If you don't follow this process, you have almost no chance of success…and that's why about 90% of new traders ultimately fail.</p>
<p>So if you're willing to put in the work, but aren't sure how to proceed, then here's the roadmap.</p>
<p>This is the time-tested method that has worked for countless successful traders throughout history.</p>
<p><strong>Follow these steps to become a successful trader:</strong></p>
<ol>
<li>Learn the basics of your market.</li>
<li>Pick a strategy that appeals to you.</li>
<li>Create a trading plan.</li>
<li>Backtest your trading plan.</li>
<li>Forward test your trading plan.</li>
<li>Journal your trades and improve.</li>
<li>Start trading live.</li>
</ol>
<p>Now that you know the basic steps, let's dive into the details.</p>
<h2>Learn the Basics of Your Market</h2>
<p><img decoding="async" fetchpriority="high" class="alignnone size-full wp-image-1023487" src="https://www.tradingheroes.com/wp-content/uploads/trader-7.jpg" alt="Trader at computer" width="1200" height="600" srcset="https://www.tradingheroes.com/wp-content/uploads/trader-7.jpg 1200w, https://www.tradingheroes.com/wp-content/uploads/trader-7-768×384.jpg 768w" sizes="(max-width: 1200px) 100vw, 1200px" /></p>
<p>The first step is to learn the basics of the market you're going to trade.</p>
<p><strong>This means learning things like:</strong></p>
<ul>
<li>What is being traded (currency, shares of stock, etc.)</li>
<li>How to place a trade</li>
<li>Transaction costs</li>
<li>Loss/gain per minimum price movement</li>
<li>If you can place both long and short</li>
</ul>
<p>If you're interested in trading Forex, take <a href="https://www.tradingheroes.com/free-forex-trading-course/" target="_blank" rel="noopener">this beginner's course</a>.</p>
<p>I'm working on guides for other markets, but the concepts are similar in other markets.</p>
<p>Do some Googling and check out the fantastic videos on <a href="https://www.youtube.com/" target="_blank" rel="noopener">YouTube</a>. There is a lot of great information out there.</p>
<p>Once you know the basics of the market you want to trade, it's time to learn some trading strategies.</p>
<p><strong>Trading strategies are methods of trading a market that can include: technical analysis, fundamental analysis, or a combination of both. There is no single best trading strategy, all that matters is what works best for you.</strong></p>
<p><em>So take some time to examine a few different trading strategies.</em></p>
<p>When I first started, it wasn't easy to find information on trading strategies.</p>
<p>I had to buy some fairly expensive books if I wanted to learn.</p>
<p><strong>Now there are tons of great strategies on the internet for free. </strong></p>
<p>Again, do your own research and find resources for trading strategies.</p>
<h2>Pick a Strategy That Appeals to You</h2>
<p>The next step is to pick a <a href="https://www.tradingheroes.com/category/trading-strategies/" target="_blank" rel="noopener">trading strategy</a> that appeals to you.</p>
<p>Many new traders want to find the perfect or most profitable trading strategy.</p>
<p>If you insist on trying to find such a strategy, then you're in for a long and painful trading journey.</p>
<p>This is a ticket to ride on the <a href="https://www.tradingheroes.com/trading-silodrome/" target="_blank" rel="noopener">trading silodrome</a>.</p>
<p><strong>In reality, the best strategy will be the one that you understand the best, and matches your strengths/beliefs.</strong></p>
<p>Yes, your trading strategy has to match your beliefs about the markets. If you believe that you'll make the most money in trends, then you'll have a difficult time trading a non-trend strategy.</p>
<p>Likewise, your strategy also has to match your strengths.</p>
<p>Some people are good at reading charts. Other people are better at analyzing fundamentals like earnings reports and balance sheets.</p>
<p>Pick a method that you like and makes sense to you.</p>
<p>If you want to learn more about which trading strategies match specific personality types, then <a href="https://www.tradingheroes.com/trader-personality-profile/">read this</a>.</p>
<h2>Create a Trading Plan</h2>
<p>Once you find a trading strategy, it's time to create a <em>written</em> trading plan.</p>
<p><strong>Most of the trading strategies on the internet are NOT trading plans. </strong></p>
<p>A trading plan has specific rules for entering, managing and exiting trades.</p>
<p><em>In other words, you need a complete plan that will give you everything you need to place trades.</em></p>
<p>If you take a trade and you have any doubt as to how to enter the trade, manage the trade or exit the trade, then you <strong>DO NOT</strong> have a trading plan.</p>
<p>So before you can become a successful trader, you need to have a written plan.</p>
<p>Learn how to create a <a href="https://www.tradingheroes.com/forex-trading-plan-guide/" target="_blank" rel="noopener">complete trading plan in this article</a>.</p>
<h2>Backtest Your Trading Plan</h2>
<p>Congratulations!</p>
<p>You now have a trading plan.</p>
<p><strong>This is further than most traders get, so take a minute to give yourself a pat on the back for a job well done.</strong></p>
<p><em>But don't get too comfortable yet. This is where the hard work really begins.</em></p>
<p>Now take your trading plan and backtest it completely. When I say completely, test it on as much historical data as possible.</p>
<p>There's a common myth on the internet that backtesting a trading strategy 100 times proves that it works.</p>
<p>This is not necessarily true.</p>
<p>Watch this video to figure out how many <a href="https://www.tradingheroes.com/best-forex-backtesting-manual-software/" target="_blank" rel="noopener">backtesting</a> trades makes sense for your situation.</p>
<p><iframe title="YouTube video player" src="https://www.youtube.com/embed/NU6NYkKhksU?si=c7_6KxqNFUGkWlOK" width="840" height="450" frameborder="0" allowfullscreen="allowfullscreen"><span data-mce-type="bookmark">?</span></iframe></p>
<p>Now that you understand about how many trades you need to feel comfortable with the results of your strategy, let's get into more details about the backtesting process.</p>
<p>You can learn how to do <a href="https://www.tradingheroes.com/forex-backtesting-guide/" target="_blank" rel="noopener">your first backtest here</a>.</p>
<p><em>One final word before I leave the backtesting process…</em></p>
<p>A common backtesting mistake is to change your trading plan in the middle of the test.</p>
<p><strong>Do not do this, otherwise you won't get reliable data on your trading strategy. </strong></p>
<p>It's like a doctor mixing blood samples from 2 different patients together and doing a test on the mixture. He won't be able to tell which patient has the problems that he sees in his test.</p>
<p><em>So the best thing to do is to complete your current test. Then if you want to change the rules, create a NEW trading plan, then do an entirely new test. </em></p>
<p><strong>Doing this will help you find a profitable trading strategy faster. </strong></p>
<h2>Forward Test Your Trading Plan</h2>
<p>Once you have a trading strategy that is profitable in backtesting, you're not done yet…</p>
<p>You still need to figure out how well your strategy works in real-time.</p>
<p><em>Many traders skip this step and this is another reason why so many traders fail.</em></p>
<p>So once you have a trading strategy that is profitable in backtesting, it's time to test your trading strategy in a demo account.</p>
<p><strong>This is very important, so I'll repeat that. You want to do this in a DEMO account.</strong></p>
<p>Backtesting is great, but it's sped up a lot.</p>
<p>You'll need to have some patience when you're demo trading in real-time.</p>
<p>By demo trading, you're getting closer to real world trading conditions and this allows you to see how well you execute your trading plan.</p>
<p>Learn more about <a href="https://www.tradingheroes.com/forex-forward-testing-guide/" target="_blank" rel="noopener">how to Forward Test here</a>.</p>
<h2>Get Into the Habit of Journaling</h2>
<p><img decoding="async" class="alignnone size-full wp-image-1023488" src="https://www.tradingheroes.com/wp-content/uploads/AUDCAD_2023-09-16_02-44-56.png" alt="Trading chart" width="1346" height="848" srcset="https://www.tradingheroes.com/wp-content/uploads/AUDCAD_2023-09-16_02-44-56.png 1346w, https://www.tradingheroes.com/wp-content/uploads/AUDCAD_2023-09-16_02-44-56-768×484.png 768w" sizes="(max-width: 1346px) 100vw, 1346px" /></p>
<p><strong>While you're Forward Testing, the most important thing to do is to journal your trades.</strong></p>
<p>Again, if you don't journal your trades, you'll have very little chance of success. This is because you need to figure out what you're doing wrong and what you're doing right.</p>
<p><em>Only journaling can show you these things.</em></p>
<p>Your journal <strong>doesn't</strong> have to be fancy.</p>
<p>Some traders geek out about having the perfect trading journal.</p>
<p>My advice is to start simple.</p>
<p>Just use a simple marble notebook, like you used in elementary school.</p>
<p>…or whatever works for you.</p>
<p>You can also use the following tools:</p>
<ul>
<li><a href="https://www.tradingheroes.com/how-to-create-a-free-forex-trading-journal-with-trello-and-loom/" target="_blank" rel="noopener">Trello/Loom</a></li>
<li><a href="https://www.tradingheroes.com/how-to-video-journal-your-forex-trades/" target="_blank" rel="noopener">Video journal</a></li>
<li><a href="https://www.tradingheroes.com/evernote-forex-trading-journal/" target="_blank" rel="noopener">Evernote</a></li>
<li><a href="https://www.tradingheroes.com/best-trading-journals/" target="_blank" rel="noopener">More options</a></li>
</ul>
<p>Now what are you going to be writing in your journal?</p>
<p><strong>Here is some valuable information that you should put in your journal:</strong></p>
<ul>
<li>Open and close prices of each trade</li>
<li>Edits or trade management to did while the trade was open</li>
<li>Reasons for taking the trade, editing the trade and exiting</li>
<li>Trade open/close screenshots</li>
<li>Intuition on how the trade will work out before you open the trade</li>
<li>Trading strategy you're using</li>
<li>Post-trade analysis</li>
</ul>
<p>Again, don't make it too complex. Keep it simple and you're <a href="https://www.tradingheroes.com/easy-trading-journal/" target="_blank" rel="noopener">more likely to do it</a>.</p>
<p>Finally, it can also help to journal trades that you missed.</p>
<p><a href="https://www.tradingheroes.com/journal-missed-trades/" target="_blank" rel="noopener">Find out why here</a>.</p>
<h2>Start Trading Live</h2>
<p>Many traders jump into live trading right away and they wonder why they lose money.</p>
<p><strong>Once you've honestly gone through all the steps above, it will give you maximum confidence to trade your strategy.</strong></p>
<p><em>Only jump into live trading when you're confident that your strategy has a high probability of working in the real world.</em></p>
<p>Also make sure that you're able to execute your strategy consistently and you have addressed all of your issues related to trading psychology.</p>
<p>Going through the above process will also give you the historical data to understand if your strategy ever stops working.</p>
<p>Again, do NOT jump into live trading until you've done the previous steps and you're confident in your skills and your trading strategy.</p>
<p>There is a strong temptation to jump straight into live trading.</p>
<p>DON'T DO IT.</p>
<p><strong>Follow the <em>entire</em> process and you'll have a much, much higher probability of success.</strong></p>
<h2>Final Thoughts on Becoming a Successful Trader</h2>
<p>Many new traders think that they can learn a trading strategy in a weekend and they will become a consistently profitable trader for the rest of their life.</p>
<p><em>Nothing is further than the truth.</em></p>
<p>Just like with any other skill, there is a learning process that needs to be followed in order to become successful.</p>
<p>You have to practice for hours to become a good basketball player and you have to go to school for years to become a doctor.</p>
<p><strong>Trading is no different. It might not take as long to become a successful trader, but you have to be willing to put in the work.</strong></p>
<p>That's the roadmap.</p>
<p><em>Now get to work.</em></p>
<p>The post <a rel="nofollow" href="https://www.tradingheroes.com/become-successful-trader/">How to Become a Successful Trader (Step-By-Step)</a> appeared first on <a rel="nofollow" href="https://www.tradingheroes.com">Trading Heroes</a>.</p>