4 - 6 minute read
For traders, passing tests is crucial for success in the industry. These tests validate a trader’s ability to follow rules and manage loss. Successful traders pass these tests with confidence and repeat the same behavior when future tests come their way. Traders who fail these tests learn from their mistakes and work on building skills to achieve success.
Passing tests is essential when it comes to being a successful trader. To become a profitable trader, there are 5 key tests you must pass. The first test is hitting your loss limit. Your loss limits are the rules you decide on when it comes to your trading planning, and you should not exceed those limits. The second test is being almost perfectly wrong, which means that you will be wrong almost perfectly. The third test is being distracted and missing a great trade. The fourth test is having significant drawdown. And the fifth test is having your trading rules cause you to miss a great trade.
The Five Key Tests Traders Must Pass:
To become a successful trader, it is essential to pass the tests that come your way, which include being disciplined and following the rules when it comes to trading. However, traders often face challenges when it comes to passing these tests, and it’s crucial to understand how to overcome them.
Traders who fail these tests drive themselves into a deeper hole and make it harder to come back. Therefore, traders must understand their limits and what they “should and should not” do when it comes to trading. Being able to trade with discipline and following the rules is the key to being a successful trader.
1. Hitting Your Loss Limit:
The first test is hitting your loss limit. When trading, you must be familiar with your trading rules, especially the loss limit, and stick to it. Traders will encounter moments when they hit their set limit, and at times they feel like they can keep trading and make a profit. However, it is essential to recognize that when you reach your loss limit, you must stop trading and follow your set rules. It’s a test of discipline and willpower, and traders who pass this test can prevent themselves from further losses.
2. Being Almost Perfectly Wrong:
The second test is being almost perfectly wrong. Traders will make mistakes and be wrong, and it’s not the end of the world. At times, traders might make several wrong trades, but that does not mean they are entirely wrong. It’s a test of patience and discipline, and traders who pass this test can go on to become successful traders.
3. Being Distracted and Missing a Great Trade:
The third test is being distracted and missing a great trade. Traders often encounter tremendous opportunities but miss out on them because they get distracted. It could be anything from a phone call to another market that diverts their attention. When traders encounter this test, it’s essential to see what they can do to avoid these distractions in the future. It’s a test of focus and discipline, and traders who pass this test can seize great opportunities.
4. Having Significant Drawdown:
The fourth test is significant drawdown. Traders will face a drawdown at some point in their careers, and the key is to recognize when to stop and take stock of the situation. It’s a test of emotional control, discipline, and strategy, and traders who pass this test can come back stronger than ever.
5. Your Trading Rules Cause You To Miss a Great Trade:
The fifth and final test is your trading rules causing you to miss a great trade. Traders set rules for themselves to stay disciplined and focused. However, at times, being disciplined can cause traders to miss out on great trading opportunities. It’s a test of discipline and courage, and traders who pass this test can maintain their structure and stick to their rules.
There you have it, the five tests that traders must pass to be successful in the industry. Passing these tests requires discipline, focus, and emotional control. These tests are a chance for traders