I think successful traders realize a few important things that escape the failures. It doesn’t seem to matter if they trade discretionary or with systems, they all seem to know that the market is the boss. They are defensive and have a great deal of respect for risk. They all tend to manage risk and let reward take care of itself. The failures are for the most part completely focused on the reward, usually at the expense of risk.

Also successful traders share similar attitudes toward expectation for reward. They, for the most part, believe there is a risk premium over the hedger that is available to the speculator. They are also well aware that they are not entitled to it, only that it is available. Second, they believe that the rate of return is tied to the cost of money. Finally, they view their jobs to be a long term process to obtain that return without risking a drawdown beyond what they can handle, or the random risk of ruin. The failures tend to think there are returns consistently available at the higher levels of 50% and 60%. Unfortunately they find out the hard way that they must be more realistic to survive.

There is nothing magical that I can share with our readers. The reality is that trading is one of the most challenging endeavors that you will ever undertake. Get a precise logical plan. The logic behind the method you choose is critical. It is impossible to trust the interpretation of past data where logic is absent. Then proceed with realistic expectations, understanding that you will encounter more obstacles than you might imagine. Accept the real risk. Previous draw downs are simply a statistical guideline to potential risk and not the true risk. True acceptance of risk means you know you can lose your money. The good news is that this freedom should allow you now to think in probabilities as opposed to being driven by emotion. Also seek help. Get smart people around you. Get aligned with other traders or a firm that can help you work on these concepts.