HOW TO TRADE FOR A LIVING

 

There are three fundamental requirements that must be met before a trader can even contemplate trading for a living.

 

The first requirement is that the trader must first find a positive objective systematic approach to trading. Everyone knows that in order to succeed in any complex venture, you need a plan.  No one should risk money in the markets without having a well thought out trading plan in place.  This might be in the form of an objective trading system that the trader has purchased, or it may be some system that the trader developed himself. The system has to show a positive result over time – preferably 2 or more years. You “can’t make silk out of a sow’s ear”. The trader can’t even start to think about trading for a living without first having satisfied the first requirement.

 

The second requirement is for the trader to have the discipline, the perseverance & the tenacity to take each and every trade as dictated by the trading system – through good times and through drawdowns. Without fulfilling this requirement, you might as well forget about trading for a living.

 

 

The final requirement is based on the fact that the trader absolutely  cannot  make a living trading if a money management approach is not incorporated into the trading plan. No one is going to turn a small or average size trading account into a lot of money ever without a solid money management strategy. The general goal is to build the trading account to a size so that the trader can use it to help retire.

 Let me give you an example of how this is done.  Let's say you start with $50,000.  You use a solid, technical based strategy to build the account, and if over the next 12 months, the system produced, on a single or double contract per trade, an $80,000 profit. The money management strategy could have increased that total profit to over $140,000 during the same time period without risking any additional capital! As time progresses, this disparity will increase proportionately and within a few years, the net profit will reach astronomical proportions.

 

How?

 

Using proper money management strategies, you increase the number of contracts as the profit equity increases and protect profits by decreasing contracts as equity decreases.  This is mathematical fact, not speculation.  This approach greatly reduces risk, the trader’s number one priority.

 

If done right, the long-term fruits of the trader’s labor can be very worthwhile if the trader follows the requirements as stated above.

 

It should be noted that our web site may be able to help you in your endeavors. If you have a trading system that is profitable and that you are comfortable with, but do not have the means to determine how to implement the money management approach, we can supply you with the necessary spreadsheet that not only keeps an accurate record of your trades, but will also offer you the ability to determine automatically, the proper number of contracts to trade – both adding contracts while your profit equity is increasing, and decreasing the number of contracts while in a drawdown mode. For more information just click on the information below:

 

MS EXCEL SPREADSHEET

Using Fixed Ratio Position Sizing Approach

For all contract based markets

 

 

GOOD LUCK

 

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