20 Tips for Trading Success
Brought to You By Scott Redler's Power Plays – Get My #1 Idea Every Week.
It's not easy to succeed as a trader. But it’s also not impossible.
Regardless of style, the most successful traders tended to have a common set of mentalities, philosophies, and behaviors.
And by the same token, struggling traders tend to suffer from their own common issues.
So I wrote this article to help you identify holes in your game, and help you become a happier, more productive trader.
As you read it, you’re going to realize that trading success is not just about technical analysis and intelligence.
Your lifestyle, routines, and thinking process matter a lot.
1. Have a Plan
I follow a strict set of risk management principles so I keep moving in the right direction.
I respect key moving averages, pay close attention to the big trends, and keep losing trades in check.
And, most importantly, I enter every day with a plan.
When the market opens, I have a list of stocks I’m ready to buy or sell at specific levels depending on what I see.
This way, I’m ready to react instead of hoping to stumble onto opportunities.
2. Create a Daily Routine You Enjoy
The number one thing traders waste time and energy doing is… figuring out how to use their time and energy.
Create a daily routine that keeps you happy and productive.
For me, that includes everything from jumping in my ice barrel to doing my morning charts to checking on my Power Plays names.
There’s nothing less exciting than a schedule.
But the more I plan out my day ahead of time, the easier it is to concentrate on the market and get things done.
Distractions kill your profits. So kill distractions with a routine!
3. Take a Blue Collar Mentality
Trading isn’t about turning on your screens and swinging for the fences each day.
It’s about hitting singles and doubles.
Success comes from showing up and doing the work every day, the same way carpenters, ironworkers, and plumbers put together a building.
For traders, this includes forming an effective trading plan, observing the market, and aiming for consistent profits.
I’ve seen a lot of traders search and search and search for some kind of secret sauce.
Hard, steady work is the closest thing to it.
4. Don’t Try to Fix Monday’s Losses on Tuesday
Every day is a fresh start.
As traders, we must maximize the opportunities that are in front of us in the present moment.
Forget about what happened yesterday, and don’t obsess over what may happen tomorrow.
Let’s say you have a bad Monday. Don’t come in on Tuesday thinking you have to make up for it.
You won’t be able to manage risk because you’ll be trading out of desperation.
We all have rough stretches. But if we follow our principles and enter every day with a plan, our good days will outweigh the bad.
Just take it one day at a time.
On the flip side, if you make a fortune on Tuesday, don’t get lazy on Wednesday!
Stick to your plan and make the most out of what you see.
There's no reason you can't do better tomorrow.
5. When Things Go Wrong, Get Small
Trading is a lot like poker.
You can prepare and study for years to get an edge over the house.
But sometimes, you just get dealt a bad hand and there’s nothing you can do about it.
We all find ourselves on losing streaks from time to time. What matters is how we pick ourselves up.
If you’re in a rut, trade smaller and focus on just getting profitable again. This way, you can rebuild your confidence without digging an even bigger hole.
One thing you must never do is up your bets after you’re down.
That’s how you go from 5% down to 20% down to 50% down.
6. Keep an Even Keel
I don’t know what’s worse: having too much confidence or not enough.
So don’t go overboard celebrating your trading wins.
We want winning to be a normal day at the office — not special occasions that are so rare they’re worth celebrating!
And don’t go overboard crying over your losses, because underconfidence will prevent you from executing on the good opportunities.
You have to accept that losing is part of the game.
Just make sure you lose small, and use those bad trades to figure out what you can improve for next time.
If you learn from your losses, you’re at least getting something out of them.
7. Use Technicals – Not News Headlines and Economic Statistics – As Your Guide to the Markets
I earn my living trading, so price is the only thing that really matters.
The news flow and macro trends are important, but not as much as actual market movement.
Be aware of what’s going on in the world. Just take it all with a grain of salt.
We make money by riding price movements — not by being trying to be ‘right’ about politics and the economy.
If you read the news, you'll always find a reason to sell.
Like inflation or the debt ceiling or the election or geopolitics or whatever.
The reality is the market can go up on bad news, and down on good news.
Doomsday will happen sooner or later — but let the market tell you when.
8. Know Your Time Frame
If you’re a short-term trader, you have to know your levels, what sectors are doing, and what’s on the calendar each day.
But if you’re a long-term investor in a 401(k) or 529 plan, just keep those funds pumping in every month.
So for each type of account or portfolio you have — short-term, long-term, aggressive, conservative, etc. — let your time frame guide your pace of activity.
Be active and tactical with your short-term money, and slow and steady for long-term wealth building.
In my short-term trading account, I can be in and out of positions in minutes, but I never touch my retirement and college savings accounts.
9. Don’t Overcomplicate Things
Don’t get caught up chasing every bright shiny object and every new flavor of the month.
You don’t need to know 100 strategies and 2,000 stocks.
You can make a lot of money trading just a few strategies and a core group of 10-20 stocks that you know well.
If you subscribe to Power Plays, you know that my universe isn’t that big.
I focus on 20-30 tech and growth names while rotating other groups of interest in and out.
It’s working for me, so why complicate things?
Once you have your core strategies and stocks in place and you’re making money, you can start looking to expand your coverage.
But don’t complicate things before you’re making money.
10. Focus on Execution First, Money Second
If you get good at anything, the money’s going to come eventually.
So focus on developing your skills and properly executing the strategies you learn.
That’s what’s going to keep you in the game for the long run.
Fast money leaves just as fast as it arrived.
You want to develop a set of trading strategies that can give you consistent profits, no matter what’s happening in the market.
Once your brain gets big, your wallet follows.
11. Develop a Pro Mindset
You can have a 180 IQ, but to succeed, you’ve got to adopt the mindset of a pro.
Pros don’t think about Ferraris and private jets while they’re trading.
We think about what we could lose.
When you’re trading for a living, your paycheck can actually be negative if you give enough money back.
So always keep the worst case scenario in mind, and be ready to act to avoid it.
Because while it’s important to win, it’s equally important to not lose.
Every $5,000 you avoid losing is another $5,000 you don’t have to earn.
12. Get Started and Give Yourself a Chance
I talk a lot about keeping your ego in check.
But at the end of the day, you’ve got to believe in yourself.
You need to know that you can develop trading skills and apply them in the real world with real money on the line.
One of the biggest mistakes you can make is not giving yourself a fair chance.
Too many aspiring traders never get started because they don’t think they can do it.
They’ll spend all day paper trading and reading books, but they’ll never actually pull the trigger.
So get started. Smart small, but start!
13. Treat Trading Like a Business
The average person on the street thinks trading is like hitting the craps table at the Bellagio.
But trading is a business just like any other.
You have to balance your books every month, make it through slowdowns, and most of all, not put yourself at risk of bankruptcy.
Sometimes I talk to people about my career and they think I lose $10 million one day and make $20 million the next.
NOTHING could be further from the truth.
My trading account is a business I run to pay my bills.
It’s not a hobby!
14. Be Part of a Community
Trading attracts people with competitive, individualistic mindsets.
But it’s actually a team sport.
I can promise you, I would not be where I am today without the support of my partners and colleagues.
They made me better, and I hope I’ve made them better.
So get out there and start talking with your fellow traders, whether it’s online or off.
When a group of traders regularly shares ideas and techniques, everyone gets better.
15. Don’t Fall in Love with Your Opinions
Fall in love with a process that helps you succeed. Not your opinions.
Some traders go into every situation with a preconceived notion about what should happen.
For example, some traders are always in love with gold.
And no matter what happens in the price action, they find a way to be bullish on gold.
That’s why I take an ‘if-then’ approach to trading.
I have opinions like anyone else, but my respect for what the action tells me is what really matters.
16. Tune Out the Noise
The most productive part of my trading day is when I sit at my desk, turn up my music, and start checking charts.
The TV is off, and I’m not talking to other traders.
I’m left alone with the price action, which is what I need to focus on to succeed.
If you are serious about becoming a successful technician and trader, set aside some time to tune out the noise and just drill down your charts.
You may be surprised at how differently you operate when you’re not distracted by headlines and chatter with other traders.
Don’t assume you are immune to the influence of outside forces.
Many technical analysts fail because they ignore their own analysis as soon as they hear a conflicting message from the outside.
17. Take Responsibility for Every Penny
When you lose money, don’t blame the Fed or an analyst or some guy on TV.
After all, when you do earn a profit, you take the credit. Right?
Take responsibility for every penny.
You agreed to place the trade. You hit the keys.
So you must own whatever comes next, whether it’s win, lose, or draw.
Traders that blame others for their actions don’t last. Because when you always shift the blame, you stop improving.
It’s okay to lose sometimes. Use that an excuse to get better — not to pass the buck.
18. Set Goals for the Future
As I’ve discussed, it’s important to have a short-term plan. And netting money as often as you can is key to success.
But think about where you want to go as a trader, whether you want to be a pro or not.
Once you have some goals in place, you can step back and start to put a blueprint for success in place.
Maybe you’ll need more trading education, or to learn a new asset class like forex or options.
You may also need to develop more psychological resilience to deal with the day-to-day chaos.
So set some goals for yourself, even ones that seem out of reach.
You may just surprise yourself.
19. Remember That a Bad Day in the Market is Not a Bad Day in Life
We all have losing days.
They are part of the game.
If you can’t accept down days, weeks, and even months, you had better look for something else to do.
But you can’t let the bad times get you down.
Life has to go on, no matter how good or bad your trading is going.
There are worse things in life than losing money — especially when you think about the big picture of health, family, etc.
Never forget that.
20. Live a Balanced, Healthy Life
If you’re happy and healthy, you’ll think more clearly when trading.
So tackle your personal problems as best you can. A good home life means a sound mind. And when you can, put your body to work and let your mind get away from the markets.
You don’t have to run a marathon.
Play basketball. Lift weights. Or just take a walk.
There’s a time to work hard, and there’s a time to settle down.
You need both in your life.
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*Scott Redler Positions Disclosure as of 2024-11-27 at 8.28.04 AM
