I first studied the beliefs of top traders when I completed my master’s thesis on ‘Top leaders and top traders: an exploration into why they succeed.’

What I learned was that the Market Wizards share many common beliefs, and have many trading habits in common.

I believe if you model the majority of these beliefs, you will develop a powerful forex trading belief structure that will last you a lifetime.

These are the top 24 beliefs of successful traders:

1. You alone are responsible for your trading results

You are responsible for your own trading results.

The cornerstone of an effective approach to trading is responsibility.

By taking responsibility for your profits and losses, you gain control over your financial future.

It is easy to look for others to blame, be it your money manager, forex broker, or even the market itself.

By accepting that you are the ultimate determining factor in your success, you gain the ability to work on yourself and improve the way you trade.

2. Having clearly defined goals are vital to successful trading

You should know the reason you are trading. This is your overall goal or life purpose.

Perhaps you’re looking for an early retirement on the beach (nice!) or would like to help a loved one live a better life (nicer!).

These powerful motivations keep you from straying off the beaten track (your trading plan) and help you trade with discipline.

Once you have uncovered your trading goal, you can then define an objective.

An objective is like a milestone you aim for in order to achieve your main goal

For example, if your overall goal is to use trading to pay for your child’s education, your objective may be:

I want to make a profit of 10% a month, and I don’t want my account to be down more than 5% in any month.

Once you have worked out your goal, you can then work out how much to trade in order to help you reach your objectives.

3. Trading is a statistical game

Good traders know the outcome of any one trade is not 100% predictable.

Rather, they seek to make a profit over a series of trades. Some trades are going to lose, and some will win.

What matters most is that, overall, the profit from the winning trades is greater than the losses from the losing trades.

4. You have to take risks to achieve your goals

Acceptance of risk is a challenge for many traders.

Market Wizard Van Tharp explained that changing his perception of risk tolerance was important to grow his company’s retirement account.

Previously, his goal had been to never have a losing year.

He then established a new rule that allowed him to risk the chance of a 25% drawdown on the account, but only if the trading opportunity was A-grade.

By doing this, he was able to purchase a silver stock that was undervalued, which then quadrupled in value, and it gave him the best trading year he’d ever had.

Taking risks is hard for many traders to accept, but it’s a necessary step towards becoming a fearless trader.

5. It’s okay to lose more often than you win

It’s not how often you lose that matters; it’s how much you make when you win that’s important.

Top traders are not afraid to make losing trades.

Of course, all traders would prefer to make money without ever having to lose any.

But losses are a fact of life in the markets.

Accepting this fact is a positive thing.

It frees you to create a trading plan that will allow you to achieve your goals without being hampered by the fear of making a losing trade.

6. Position sizing is more important than the entry point

Position sizing means knowing exactly how much you are risking on each trade, so you can achieve your financial objectives.

It is a mathematical equation that is completely solvable – unlike picking the direction of the market.

Successful traders know their objectives and decide how much to trade based on this understanding of risk management.

7. Trade differently in different markets

Would you trade the same way in a bull market as you would in a bear market?

Or the same way in a trending market as in a range-bound market?

Successful traders don’t. One of their core habits is to identify the current market type first before starting to trade.

Once they know what the current market type is, they adjust their strategy appropriately and are prepared to be flexible in their approach.

8. You need an edge over the market

An edge is an advantage that, over time, will allow you to make a healthy profit from trading.

All successful traders have established an edge over the markets.

Examples of edges that successful traders have include:

• A strong knowledge of technical analysis
• A good grasp of fundamental analysis
• Knowledge of statistical analysis
• Receiving trading advice from someone else who has an edge

9. Have a simple entry strategy

Take a successful trader and an amateur trader. One is complex. The other is simple. But perhaps not in the way you might think.

The successful trader has a subtle, insightful, and in-depth trading plan, but he or she has rules for entering the market that allow for decisive action when necessary.

An over-complicated set of entry criteria can be confusing at a time when decisive action is required.

10. Have a complex exit strategies

While they do value simplicity, successful traders may have many reasons to exit a trade.

For example, they may have:

• An initial stop-loss
• A profit target when they enter the trade
• A trailing stop to protect profits while in the trade
• A way to exit a trade that does not hit their target
• A exit if conditions become overbought or oversold 
• A exit if a trade moves rapidly in their favor 
• A way to take partial profits 

These exits all serve to maximise profits and minimise losses while handling different market conditions.

11. Let your profits run

One of the habits of successful traders is to let their profits run.

If you are in a good trade, don’t be tempted to take your profit too quickly.

Use a method that protects your gains, but at the same time allows you to capture big wins if the trade does go well for you.

12. Cut your losses short

The flipside of letting your profits run is cutting your losses short.

Successful traders see losing trades as a ‘cost of doing business’ and are quick to realise a loss and get out of a trade.

Less experienced traders tend to do anything to avoid taking a loss, including holding on to big losing positions.

13. Understand the risk/reward ratio of every trade

A cardinal habit of the successful trader is checking the risk/reward of a trade before entering into a position.

If it is not favorable, then they won’t place the trade.

For example, you may want to have a risk/reward of at least 1:3 on any individual trade, meaning your potential profit from the trade should be three times as big as your potential loss.

This means that if you only get 40-50% of your trades correct, you will still have a winning trading system.

14. Be willing to accept you may be wrong

Top traders have several beliefs about how the market works, but there will be occasions when those beliefs don’t mesh with reality.

Even if the belief is logically correct, and all factors line up, the market may do something completely different.

Top traders are willing to accept they may be wrong, and to change their strategy according to market reality.

15. Be adaptable to changing market circumstances

If you hold on too tightly to your beliefs, then you may not see what is happening right in front of your nose.

This could result in missing out on a significant opportunity, or not closing a trade as quickly as you should.

Good traders treat their beliefs with a grain of salt, and are willing to be adaptable.

16. Treat trading seriously, like a business and not a hobby

Successful traders run their trading like a business.

They have a carefully constructed plan for their trading, and follow a ‘rules-based’ approach to selecting, entering, and exiting positions.

17. Record your trading results

Successful traders have developed the habit of tracking the results of their trading.

They know that without recording their results, they won’t know what is working, and what is not, so they won’t know what to change to improve.

Once you record your results, a simple way of improving your trading is checking what is working, and then doing more of that, and less of what is not working for you.

If you don’t track your performance you lose the opportunity to continuously improve your trading system.

18. Continuously review you trading system

Successful traders will periodically review their trading strategy.

If a strategy starts to produce disappointing results, a good trader will soon know about it and stop trading or switch to a new strategy.

By adopting a ‘continuous improvement’ mentality, top traders keep their edge and adapt swiftly to changing market conditions.

19. Prepare the mind before trading

Like an elite athlete, successful traders only place trades when they are on top of their game.

If they are not mentally prepared, then trading mistakes can happen, and performance can suffer.

Similar to their athletic counterparts, top traders have a routine to ensure that trading decisions are made when they are in the zone.

This may involve visualising placing a successful trade, meditating, or using techniques to reduce stress and regulate their emotions.

20. Take care of both the mind and the body

There is a deep connection between the performance of the mind and the health of the body.

You may notice when you feel an emotion, you can physically feel it in your body.

There is good reason why we talk about a ’tension headache’ or a ‘nervous stomach.’

You feel tension across the chest or nervous in the pit of your stomach.

By helping your body relax, you help the mind to relax too.

Successful traders know this, and make a conscious effort to maintain their physical health.

It’s common for top traders to practice yoga or run marathons.

21. Have a life outside of the markets

Top traders know that sometimes they need to switch off and unplug. They know when it could be time to take a break.

You should plan your trading time carefully and make sure you give equal attention to other aspects of your life, such as your loved ones.

I will often take breaks in my trading, depending on what is going on around me.

22. Be grateful for trading success

If you have the ability to achieve your goals through trading, you are fortunate.

Be thankful, and acknowledge the good things you have in life.

Gratitude keeps you happy and helps you to stay grounded when you are successful.

Overconfidence and arrogance are the demons that gratitude keeps in check.

23. The importance of self-work

Top traders know they are the most important factor in the profit equation.

Their success or failure is entirely dependent on their skills and abilities, so they spend less time focusing on the market, and more time focusing on themselves.

Cultivate a habit of self-improvement that allows you to consistently function at a high level.

Occasionally, you will get your butt kicked by the markets.

Self-work will give you a foundation of strength to remain persistent even in times of stress.

24. Trading is a game, where you set the rules

Successful traders know they make the rules. There’s no one telling you what to do. No schoolteacher. No boss. No forex broker.

Great traders know they are free to set the rules, and so they can choose the rules that are most advantageous to them.

This freedom is empowering, because it gives you the ability to choose those beliefs that give you an edge, and can help you unlock the powerful trader inside of you.

How do your beliefs compare?

In this lesson, you listed your beliefs about trading.

How does the list you made about your trading beliefs compare to the list above?

Now come up with a new list of beliefs about trading. Which of your initial beliefs do you want to let go of? Which of the beliefs of top traders do you want to adopt? 

By the end of this course, many of these beliefs held by successful traders should be integrated into your trading approach.

Take care,