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Psychological Outlook
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Aside from employing proper risk management strategies, one of the other most crucial yet overlooked elements of successful trading is maintaining a healthy psychological outlook. At the end of the day, traders who are unable to cope with the stress of market fluctuations will not stand the test of time—no matter how skilled they may be at the more scientific elements of trading.

Emotional Detachment

Traders must make trading decisions based on strategies independent of fear and greed. One of the premier attributes good traders have is that of emotional detachment: while they are dedicated and fully involved in their trades, they are not emotionally married to them; they accept losing, and make their investment decisions on an intellectual level. Traders who are emotionally involved in trading often make substantial errors, as they lend to whimsically change their strategy after a few losing trades, or be­come overly carefree after a few winning trades. A good trader must be emotionally balanced, and must base all trading decisions on strategy— not fear or greed.

Know When to Take a Break

In the midst of a losing streak, consider taking a break from trading before fear and greed dominate your strategy.

Not every trade can be a winning one. As a result, traders must be psychologically capable of coping with losses. Most traders, even successful ones, go through stretches of losing trades. The key to being a successful trader though, is being able to come through a losing stretch unfazed and undeterred. If you are going through a bad stretch, it may be time to fake a break from trading. Often, taking a few days off from watching the market to clear your mind can be the best remedy for a losing streak. Continuing to trade relentlessly during a tough market condition can breed greater losses as well as ruin your psychological trading condition. Ultimately, it's always better to acknowledge your losses rather than continue to fight through them and pretend that they don't exist. Make no mistake about it: regardless of how much you study, practice, or trade, there will be losing trades throughout your entire career. The key is to make them small enough that you can live to trade another day, while allowing your win­ning trades to stay open. You can overcome a lot of bad luck with proper money management techniques. This is why we stress a 2:1 reward-to-risk ratio, as well as why I recommend not risking more than 2 percent of your equity on any single trade.

Whether you are trading forex, equities, or futures, there are 10 trad­ing rules that successful traders should live by:

•  Limit your losses.

•  Let your profits run.

•  Keep position sizes within reason.

•  Know your risk-reward ratio.

•  Be adequately capitalized.

•  Don't fight the trend.

•  Never add to losing positions.

•  Know market expectations.

•  Learn from your mistakes—keep a trading journal.

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