Let us begin by asking you a quick question, "Does your trading experience belong to any one of the following categories?" Don't rush, take your time and really see which clearly describes you.

1. You are making winning trades consistently and generating a nice income for yourself
2. Your losing trades outnumber your winning trades
3. You make more winning trades than losing trades but each losing trade will wipe out 3 or 4 of your winning trades and in the end, you either barely win, breakeven, or worse, still lose

If you belong to category 1, well done - keep up the good work!

If you answer "yes" to the other categories, don't worry - you're not alone. Over 95% of traders (some say it's even as high as 97%) either barely make it or lose more money than they make.

Pitfalls To Avoid

Why is it that so many traders lose money? Is it ignorance or are they trading because they feel that luck is on their side? Hopefully not, we are sure that nobody in his or her right mind is willing to gamble away so much money. We believe that a lack of right trading knowledge or know-how has got a lot to do with it.

Most of us learn to trade the financial markets (stocks, bonds, commodities, futures, currencies, etc.) from books, courses, workshops and seminars. If you type the relevant keywords in Google, Yahoo or any of the search engines, hundreds of offers on trading the various financial markets are available quite extensively. Good news, right? Not really. The percentage of winning traders has not improved - worse, we now see an increase in the number of new traders losing money.

Where have we heard this before? Your new trading system looks great on backtesting and paper trades but when it comes to "live" trading, the same system does not seem to work as well. You then surf the Net, spend more time and money buying and studying other books and charts, adding one indicator on top of another, switching from one "guru" to the next, until you are so confused and frustrated that you feel like quitting altogether.

Figuring Out The Expensive Way

A majority of today's trading systems are based on mathematical analysis that assumes the past will be like the future.

For most of our lives, we have been taught to think in a "myopic" way. We have been led to believe that for every effect, there is a cause; for every action, there is an equal but opposite reaction. If we want to prove or disprove a hypothesis, we employ mathematical tools to analyse the data through the use of statistics. Applying these mathematical tools to stable, non-turbulent data, have yielded results which can be quite useful.

However, if we assume that the same tools are also adequate and effective for analysing the behavior of the financial markets, we are making a very BIG mistake. This is because these markets are complex and volatile in nature, and analysing them requires a very different approach.

Don't Lag Behind The Market

Are you currently using technical indicators in your trading? Technical indicators are very popular with traders who utilise technical analysis in making their trading decisions. However almost every technical indicator is a lagging indicator. Moving averages, Bollinger, RSI, MACD, Stochastics, you name it, they're all lagging indicators.

Here's how technical indicators work. First there is a move in price, then sometime later, the indicator signals buy or sell, which has lagged behind the current market action. That's why lagging indicators are called such. They give signals after the fact. Lagging indicators are only useful to confirm and not to predict price action. Therefore serious traders should use technical indicators as complementary tools only.

Nothing Comes Easy

Many investors today prefer to hand over hard earned money to "experts" to do something with it. Don't get us wrong, while there are a few money managers out there that actually do make money for their clients, most do not. The notion of someone else doing all the hard work and making money on their behalf is very appealing to those who are looking for short-term convenience instead of going for what is best in the long run. It might be initially convenient to give money to an expert, but not so convenient as the money slowly or quickly, as is often the case, disappears.

Trading the financial markets is not easy. It is not a slot machine or a lottery ticket. When you trade stocks, bond, commodities, futures or currencies, you are in hostile territory and there's only going to be winners or losers - nothing in between. It is an ever changing market and lots of money can be lost in a very short time.

Doing Things Right

When it comes to successful trading and making money from the financial markets, there is no substitute for personal responsibility, self-education and making one's own investment and trading decisions. If you view trading like you would a serious business and respect it as such, it can bring great profit. It is therefore critical that you have a solid strategy and ensure that it is able to get the job done.

The Payoff

A solid trading strategy will enable you to trade for success. Of course there's no "Holy Grail" in trading. What you need is a strategy that can withstand the test of time which makes winning trades consistently and profitably. And when you are trading successfully, good things will come your way in terms of making a substantial income, improving your lifestyle, and a whole list of benefits that many people can only dream of.

Interested to find out more? Click here to see how we can help you develop such a trading strategy ....