The DNA of Successful Trading


The world of trading is often filled with enigmatic elements due to the fact there is no one formula to trade and be successful. Think of the trading market as an ocean and imagine that all the traders in it are surfers. Now, what does a good surfer require? He requires balance, discipline, patience, a proper surfboard and a keen eye on the environment around him. That is what will allow him to ride the waves successfully and not crash at every attempt. Well, the world of trading isn’t that different and you have to do all of the aforementioned if you wish to conduct successful trading.

The DNA of Effective Trading

The Approach

Before you begin to trade, it is important that you first prepare. You should identify your targets, your goals and align yourself with the market and the instruments you would require to successfully accomplish your goals. Do what you know best. For example, if you’re into retail, then look up retail stocks instead of oil trades.

A Proper Time Frame

After you set your goals, the next thing to do is identify a proper timeframe in which you will assess what type of trading is best suited to your ability and your attributes. For example, trading using five-minute market charts indicates that you are more comfortable in a position where there is no overnight trade risk. However, selecting a weekly chart to trade would suggest you are more comfortable with overnight trades and the risks associated with them which includes letting a couple of days slide by.

Moreover, try to first determine whether or not you have the strength and focus to sit in front of your laptop or PC or if you would rather do research all weekend and arrive at a trading decision in the week ahead based on your evaluations. Always remember that if you want to make money in the trading market, learn to wait.


Once you have determined a timeframe, the next thing to do is discover a good methodology. For example, most traders prefer to buy support and then sell resistance, while others prefer to buy or sell breakouts, yet many trade using MACD and crossover indicators. Furthermore, upon selecting a methodology, it is important that you give it a test run to see whether or not it is consistent with your strategies. If you see that your system combined with your methodology is reliable most of the time, it is safe to say you have an edge. So, test each methodology for positive results.


Discipline here refers to how much patience you have. It is essential that you have the patience to sit and wait for you system to indicate an opportunity for you and when that happens, you have to be ready. However, there will be times when the price action will not reach your predicted price level. When that happens, you have to be patient enough not to start second guessing your system.


Objectivity plays a crucial role in trading and it can make or break a trader. Your emotional detachment relies on your strategies and methodology of trade. When you see you have a system that gives you a good entry and exit into the market, you have nothing to worry about. You can’t allow your emotions to get the best of you and be influenced by other traders who will never be interested in your trade levels and may often misguide you. This is by the far the most important aspect of trading.

Keep Your Expectations Real

It is true that, at times, the market does makes exceptionally big moves, but being realistic here implies to the fact you can expect to make $2000 off a $500 trade each time you make a move in the market. Though using short-term timeframes entails fewer opportunities to make a profit, long-term trades carry high risk, but high profits. In the end, you will have to make a ‘reward versus risk’ decision.

Control the Risks

At the end of it all, successful trading depends on how you control and manage your risks. Be quick with taking losses, if necessary. It is important you direct your trade in the right direction. If it pushes you back, exit the market and try again. Controlling risk requires both discipline and patience.

So, in the end, it is all about your approach, tactics and discipline when it comes to pulling off successful trades. In regards to this, Warren Buffet says that there are two rules to trading successfully

  1. Don’t ever lose money

  2. Always remember rule number one.

So, always be prepared to counter losses quickly and never wait for big losses to happen.