Seven steps to successful traders

Successful countries, societies, businesses, people, including successful traders, all, owe their success to the fact that they are following seven concrete steps. As long as they follow these steps consistently, they can be successful. LegacyFX introduces these steps in order for traders to be successful when get involved in trading. 

In the first step, successful people including successful traders, need to have the ability to observe if a set of data create conditions for a remarkable event. An event is remarkable if it causes great interest. 

A set of data that indicates a continuous and significant disturbance in social behaviour or major economic data, or a change in price values, are some examples that can create a remarkable event that causes interest. Thus, a pandemic that affects social behaviours or, the continuous decline or increase in GDP or a big fluctuation of the prices of a financial instrument, all create conditions of remarkable events, which cause lots of interest. 

Where there is interest, there is a challenge and opportunity from which a significant benefit can be created. A set of data that affect the prices of a financial instrument create remarkable conditions for this instrument, which could cause the interest of traders for this instrument, while arise opportunities that can give significant benefits. We will call this step the step of finding interest.

In the second step, each data set creates patterns for the economy, society, business, or financial instrument. Successful people, countries, entrepreneurs, and traders need to map and discover these patterns. 

There is no, a unique mapping neither a unique pattern. So, as they will find and analyze multiple patterns, finally they must choose which are the pattern or the patterns that need to follow. 

The type of pattern they will follow is very important because at the end of the day, the pattern, or patterns they will choose, will determine the strategy they will follow. A set of data that includes price movements and the volume of a financial instrument over multiple time frames creates many different mappings and patterns. The same is true of all financial and business data or a set of behavioural indicators. 

In this step, countries, or companies, or traders, must choose the patterns that will follow. Based on these patterns will create strategies by determining signals for action. We call this step the step of choosing patterns. 

In the third step, once the patterns have been selected, policymakers or traders await confirmation of the designated signals, such as hunters waiting for their prey. For example, policymakers determine the patterns to follow according to a set of data on the level of GDP, unemployment, and inflation, for example over the last three quarters and they take action when signals to reach specific levels on the above indicators are confirmed. The same for traders, when signals confirmed, is like the prey appears, and thus, like hunters they shoot, and acting, as they are getting involved in a trade. For example, when signals of patterns where price formation and/or combinations of technical indicators are confirmed, the trader receives an entry signal, taking immediate action, for trading. We call this step, the step of action taken. 

In the fourth step, successful people, countries, people, entrepreneurs, traders set their goals and loss limits. The ratio between the result that gives potential goals and losses must always be bigger than 1. Goals and losses are determined by the pattern or patterns used to pursue a policy or for traders to engage in a trade. As trade is executed, the stop-loss order determines the maximum tolerance if the direction of the financial instrument will move against the expectations. The target price is defined by the expected positive movement, for this financial instrument. The ratio between the target price and stop-loss indicate how attractive a trade can be. The higher the 1 the more attractive the trade is. We call this step the step of attraction.

In the fifth step, successful people, countries, entrepreneurs, traders when participating in challenges and opportunities, calculate their optimal position in them in relation to the potential losses that may occur. As a basic principle that they follow is that all the challenges and opportunities that are exposed, in the worst-case scenario will never be able to irreparably damage their total wealth. For traders, their total exposure is calculated for all their positions, in terms of the total risk they take and their total wealth. As a general rule, all positions in the worst-case scenario should not cause losses of more than 8%-10% of their total wealth. While the potential gains can be unlimited. We call this step the step of limiting risk.

In the sixth step, successful people, countries, entrepreneurs, traders find the optimum leverage in order to use more efficient their capital to support their challenges and opportunities arise. Since the limit of risks indicates the optimal size of an opportunity, high leverage gives a competitive advantage, for success with risk limitation. 

In trading, high leverage secures more power to traders, since risk limitations stay unchanged, while with high leverage which means low capital requirements, make diversification, and expected profits more effective. We call this step the step of efficient diversification and capital.

In the seventh and final step, countries, people, entrepreneurs, traders, as they act by setting targets and limits of losses and as they engage in policymaking or trading, in real terms, and facing real outcomes, they are forced to manipulate their emotions. This means that they are in the most difficult step towards success. 

There are many ways to manage emotions when you are experiencing real results. One of the most effective ways is when one can have a broad overview of all the critical issues mentioned in the steps above. Thus, it is vital to have an overview of all the data that is of high interest in conjunction with the patterns that have been chosen and the specific signals that confirm the patterns that policymakers or traders choose. The overview should also include the ratio of potential goals and losses to assess the attractiveness of an opportunity. Also, success requires a broad overview of leverage as an indicator of capital efficiency. 

There can be no management of emotions if there can be no comprehensive overview of all the important issues mentioned above. Emotion management, then, is closely linked to a broad overview of all-important issues. We call this step as the step of a broad overview.

If you think about it, every each of us experience the same steps in our daily lives for many of our activities. From time to time remarkable events happen everywhere. In many countries in many industries, eventually in all forms of activities. People are interested in these events and are looking for ways to take advantage of them by looking if there are patterns, so that they can engage in the opportunities that a remarkable event may offer. As establish patterns, they are waiting for signals to get involved in an opportunity and set the values to engage in an opportunity, they set their expectations and risk limitation to find the optimal exposure and deal with the real outcomes by managing emotions. 

The good news is that in trading, all the above-mentioned steps can be quantified: 

If you think about it, every each of us experiences the same steps in our daily lives for many of our activities. From time to time remarkable events happen everywhere. In many countries in many industries, eventually in all forms of activities. People are interested in these events and are looking for ways to take advantage of them by looking if there are patterns so that they can engage in the opportunities that a remarkable event may offer. As establish patterns, they are waiting for signals to get involved in an opportunity and set the values to engage in an opportunity, they set their expectations and risk limitation to find the optimal exposure and deal with the real outcomes by managing emotions. 

The good news is that in trading, all the above-mentioned steps can be quantified: 

• set of data that create conditions for a remarkable event
• patterns to create strategies
• confirmation of the designated signals to take action
• goals and losses that indicate the attraction of a position
• risk limitation in relation to the optimal position
• optimum leverage as the capital and diversification to be more effective
• the manipulation of emotions by establishing a broad overview

All the above issues and the combination of them is a good recipe that LegacyFX offers for traders to be successful.