As a rookie stock market trader, I visited a place called Loss Vegas on a regular basis. It was teeming with would be investors and traders with aspirations of becoming the next stock market millionaire. Some were fully aware of the chances of success being less than ideal but pressed on regardless. I could be counted among the ignorant masses.



Why is it that 9 out 10 stock traders will fail? The reason is simple. 9 out of 10 people who enter the market are gamblers masquerading as traders. I, in fact, was a gambler and didn't even know it until I nearly faced financial ruin in the stock market.

Successful traders employ proven, winning trade strategies. Most beginning traders systematically make the same mistake over and over again. Venturing into the market without a sound trading plan is financial suicide. Here is a guide to structuring your own winning trading strategy.

Many principles of running a successful business can be applied to stock trading. Having a trading plan is essential to the success of your new venture. Consider this trading plan to be your road map that guides you to stock trading mastery. Skipping this step will ensure your permanent residency in Loss Vegas.

The trading plan must outline your purpose for trading the markets. Here's a little tip: It's NOT to make money. The sole purpose of stock trading should be to trade well. If you focus on trading well, making money will be a by-product of that goal. Counting money as you practice your trade is counter-productive to your success. You certainly wouldn't want a doctor calculating his fees while conducting a surgery, would you? The same focus needs to be applied to your trading.

After committing yourself to learning to trade well, the next step in the process is executing the plan. This includes but is not limited to:

1. Conducting Market Research-stock selection, risk/reward ratios

2. Precision Entry Points

3. Trade Management-placing protective stops

4. Targeting Exit Points

5. Review Trade Plan Execution- Did you trade your plan?

I use the above process when trading stocks and options. Deviating from your plan can impede your progression as a trader in two areas. First and foremost, the effectiveness of a trading strategy cannot be accurately measured when a trader is inconsistent in the execution of a trading plan. And secondly, changing your strategy in the middle of a trade is hazardous to your profit potential. A major mistake made by amateur traders is moving a protective stop in the opposite direction of the trade. This causes more capital to be at risk, which is never a good move.

Possessing and executing a proper trade plan certainly tips the scales in your favor of becoming a successful trader. After all, trading the stock market is a numbers game. Be sure to exploit the weaknesses of other traders and gamblers with a sound trading plan. Here's to fewer, less frequent visits to Loss Vegas.