The Road to Successful Trading

 
How to define your trading “destination” 
 
One of the first things you need to do when planning your journey to becoming a successful trader 
is to define what “successful” means. Does it mean becoming a millionaire? Does it mean you can 
make a living by becoming a trader and working out of your laptop and cell phone? Does it mean 
that you can provide an opportunity to earn extra income apart from your regular job? Does it mean 
you can live in an area you desire without the need of finding a “real job”?
Yes, success means different things to different people but one thing in common with trading is that 
to stay in business as a trader, you have to win more than you lose. In other words, you must make a 
profit or eventually you will come to the realization that you are no match for the market. So, let’s 
take it for granted that making a profit is a major goal in trading. 
But that’s not enough. You need to be much more specific. A goal must be relevant and realistic.
So first, you must identify why you want to trade before you can define what your picture of 
success will look like.
For example, if you want to be independent and live where you want, you must first decide how 
much income you will need to lead the lifestyle you want. If you need $6,000 per month for living 
expenses, you can quickly see if your trading capital can provide you with that level of income. If 
you have trading capital of $100,000 (not including savings of at least 6 months living expenses), 
you would need to generate an annual return of 72% or 6% per month return on your trading. 
If you just want to make extra money for a vacation, home, or other material item, first decide how 
much that material item will cost in the future and use that as your goal. For example, if you want 
the down payment for a new home, you establish that amount and then look at what amount you 
have to invest. If you need to have a $50,000 down payment on that dream home and you plan to 
invest $10,000, if you can produce a 40% annual return (3.33% per month) you could accumulate 
the $50,000 in about 41/2 years discounted for inflation and not including taxes.
How to Design and Construct An Effective Trading Plan 
5
If you just want to earn enough for that yearly vacation, find out how much it costs and figure out 
what sort of return on investment (ROI) you will need to get there. For example, if you want to 
travel to Peru and spend one month mountain climbing in the Andes, you estimate that it will cost 
about $7,000. If you have $20,000 to invest, a 40% annual (3.33% per month) ROI would return the 
amount you would need in about 12 months-not including taxes. Sounds simple, doesn’t it! As 

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always, however, the devil is in the details. But to have a realistic goal, you first need to accurately 
describe your goals….your destination. 
A trader must also develop a clearly defined process to identify what is feasible and desirable for 
each individual trader. As most traders vary in their levels of knowledge, wealth, temperament and 
risk tolerance, developing a trading plan is a customized affair. However, once developed it must be 
followed. Before preparing for a flight, all pilots-regardless of experience, go through a checklist to 
make sure that everything is set up properly before embarking on a flight. It’s just plain common 
sense and in this book you will learn how to develop your checklist that will help insure that you 
reach your intended destination.