This article is for education purposes only, and not to be taken as advice to buy/sell. Please do your own due diligence before committing to any trade/investment.
If you’re looking to get into stock trading and want to gain financial control over your future, the time is now for learning the basics. While there are countless factors that play a role in building additional income through stocks in 2023, there are three key pillars of success that should not be overlooked.
If one of these pillars is missing or weak then your whole trading will crumble. So if you want to perform 10x better than 98% of other traders, read and make sure you are working on them.
What Are The 3 Pillars?
- Have a proven strategy
- Mastering risk management
- Psychology & balancing emotions
Miss one of these and everything will crumble…
In this blog post, we will explore each one of these components with tips on how you can apply them to make profitable trades while staying safe. With insightful techniques from experienced pros and all the necessary info in one place, by the end of reading this article you’ll have everything you need to start trading like a pro!
Breaking It Down:
The first two are really a matter of just putting in the work to learn and understand. The last one psychology however is the hardest and what essentially holds the majority of the 3 pillars together.
Without the right mindset, you won’t be able to follow your strategy and will disregard risk when the time comes.
This is why I am a big advocate for trading with a proven system that you can repeatedly follow and why I wrote my book ‘The Systematic Trader” to help traders overcome their mental obstacles.
You see strategy and risk are like a car but psychology is the driver without the driver it becomes irrelevant how good the other two are. It won’t drive without the right operator who knows how to handle it.
The Strategy is the car, the Stop loss is the seatbelt and the skilled driver is psychology.
1st Pillar: Having A Proven Strategy
Having a proven strategy is essentially the first step when it comes to successful stock trading. Strategy is how you will approach the markets, identify opportunities and carry out trades. Create a system that you are compatible with and go through the multiple testing phases to confirm you have a positive expectancy.
How do you know which strategy works?
- Forward Test
Without a well-tested plan in place, we can’t expect success – no matter our experience level or the amount of capital available to trade.
The strategy you choose to adopt should be well-researched and have several factors that you can use to identify entry/exit points. The strategy also needs to be flexible so it can be adapted for different markets or if conditions start to change. It’s important to remember that just because a strategy works in one market condition doesn’t mean it will work in another.
This is when backtesting and forward testing comes in. This involves testing out the strategy over various historical data points to see how it would have performed and then fine-tuning it for present conditions. Once you are confident in your strategy, you can practice with a demo account before taking the leap into the live markets.
By having a proven strategy, we can ensure that our decisions will be based on logic rather than emotion and that’s essential for consistent success.
2nd Pillar: Mastering Risk Management
Risk management is an integral part of any successful trader’s plan – no matter what level they are at or which markets they are trading. It’s essentially all about reducing the amount of risk you take on each trade so that if the trade doesn’t go as planned you don’t end up losing too much money.
Sounds really simple, yet easily overlooked by 95% of traders.
The key to mastering risk management is to not just think about the potential gains, but also the potential losses. You need to set a plan in place that will limit your losses if things don’t work out – such as setting stop-losses at a certain percentage, as well as having predetermined limits for how much capital you are willing to lose.
You also need to consider your risk/reward ratio and make sure this is in line with what your strategy dictates. The ideal risk/reward ratio used by many successful traders is 1:2 minimally. This means that for every $10 you are risking, you stand to gain $20 in return.
This is essentially a game of probability. Structure a good risk management plan and you will forever stack the odds in your favour, just like a Casino.
By mastering risk management, you can ensure that each trade is more likely to be successful and your capital will remain safe in the event of a loss.
In a nutshell, your ultimate goal when it comes to proper risk management is to achieve this:
Lose small when you are wrong. Win big when you are right.
3rd Pillar: Psychology & Balancing Emotions
Failing to master this pillar makes the previous pillars completely useless.
No matter how strong your strategy is, it’s worth nothing if the emotional side of trading isn’t managed correctly. Trading can be incredibly stressful and there will be times when our emotions take over and cause us to make mistakes.
Psychology is the glue that binds everything together. You need to be able to execute and follow the plan. As you trade you will begin to feel sorts of emotions you never expected and this is where most traders fail or give up due to no understanding of what’s happening.
This also explains why most traders are focusing on the wrong thing.
When going through the psychology stage, traders often try to find outside sources to take the blame for their lack of results.
And think this is the key to fixing their trading.
But the truth is their psychology is simply not yet ready.
What they really need to do, is simply focus on their strategy without letting emotions get to their head.
To be successful in trading, you need to learn how to recognize and manage the emotions of trading. This involves understanding why you feel the way that you do, what triggers those feelings, and how to prevent yourself from making impulsive decisions based on emotion instead of logic.
Once you begin to understand your own behaviour better and replace that with a more structured approach, it’ll become easier to stay focused on following your strategy as opposed to getting caught up in the emotions of a trade.
Finally, understanding how market conditions can affect us is important because it’s easy to get caught up in the hype and make poor decisions when things are going our way. The ability to stay rational at all times and not let emotion cloud our judgement is something that will only come with experience, however having a plan in place can help reduce its impact.
By understanding these psychological pitfalls, we can ensure that we are better prepared to face whatever comes our way – whether good or bad. This will help us remain consistent in pursuing our trading goals and ultimately become wildly profitable traders.
Putting All 3 Pillars Together:
Focus on the 3 pillars and the rest will fall into place. It takes time and effort to master but so does anything worth doing.
Use a strategy to have an edge.
Use risk to stay in the game.
Use psychology to play forever.
When you break it down to just these 3 pillars then you can begin to speed up the process to success. By consistently working and reviewing these 3 things you can now begin to move forward.
If you would like to have a full step-by-step breakdown and how I implement the 3 stages in my trading then come and watch me demonstrate LIVE in my upcoming free live training the very 3-step system I have been using for the past 10+ years to consistently extract profits from the market.
1 Simple Strategy To Reap Explosive Profits This Year (2023):
2022 by far has been one of the toughest years to trade in the past 5 years.
Lots of Singaporeans who dabble in trading or investments have suffered badly this year.
From inflation, interest rates, Ukraine war, financial tensions between US & China, and most recently, the dramatic crypto meltdown…
We’ve seen nothing short of constant volatility and a persistently declining stock market this year.
Many people I know have incurred 5 to even 6 figures losses and others are holding on to 20-80% unrealized losses.
It’s unfortunate to see that the goals of becoming financially independent to provide better lives for their family have turned into losses for many.
Yet, as a matter of fact, all these losses could have been easily prevented and turned into profits instead if these people had the right knowledge.
Having the right knowledge, and having a tested and proven methodology for trading strong stocks
– This is exactly what helped me and over 5000+ of my students to end the year with decent gains in our portfolio despite the odds stacked against our favor.
Within our SMT community, we use a really simple yet powerful 3-step system that allows us to identify and capitalize on strong stocks.
This is why even amidst the poor performing market this year, we are still able to extract extensive profits from the market – by identifying ‘hidden gem’ opportunities.
And if we are able to reap decent gains in such a bad market this year, think about how immense the profit potential would be like in 2023…
Especially when the market is poised to trend stronger upwards in 2023 and the number of opportunities would be greater than ever.
With that said, it is extremely important to know what to do and how to best take advantage of the markets in 2023 while maintaining a really low risk.
I will be sharing about the ONE strategy you’ll ever need to know to reap maximum profits in the market in my upcoming LIVE training (100% free).
This training will be nothing like you’ve seen before.
I will hold nothing back to reveal my exact game plan and strategy to skyrocket your portfolio in 2023.
Register now here before seats are capped out.
I will show you the full process from identifying winning stocks all the way to executing the trade, and how it can be done in just 15 minutes.
I will also be opening up questions to the floor where you can ask me to analyze ANY stock of your choice,
The biggest gains are not made during an ongoing bull market, but from the preparation before the bull market even happens.
There is no better time than now to be introduced into the world of profitable stock trading.
After all, what excuse do you have to not pick up the skill to capitalize on this impending huge opportunity at this very moment?
I’ll see you real soon!
Click HERE to register your seat before we hit full capacity!