What a Trader Really Needs to Be Successful

By Robert Prechter, Jr. President and Founder of Elliott Wave International

When I first began trading, I did what many others who start out in the markets do: I developed a list of trading rules. I created the list piecemeal, with each new rule added, usually, following the conclusion of an unsuccessful trade. I continually asked myself what I would do differently next time to make sure that this mistake would not recur. Approximately six months after I completed my carved-in-stone list of 16 trading rules, I balled up the paper and threw it into the trash.

What was the problem? My error was in taking aim at the last trade each time, as if the next trading situation would present a similar problem.

Here's an example. One of the most popular trading maxims is, "You can't go broke taking a profit." (The brokers invented that one, of course, which is one reason new traders always hear it!) When you have entered a trade at a good price, watched it go your way for a while, then watched it go against you and turn into a loss, the maxim sounds like a pronouncement of divine wisdom. But, what you are really saying is, "I should have sold when I had a small profit."

Now, let's see what happens next. You....

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