Habit 1

One good habit to have is:
1. Understand the true realities of the markets.
2. Understand how money is made and what is possible.

The markets are what is called chaotic systems. Chaos theory is the mathematics of analyzing such non-linear, dynamic systems. According to Edgar Peters, author of Chaos and Order in The Capital Markets, mathematicians have conclusively shown the to be non-linear, dynamic systems. Among other things chaotic systems can produce results that look random, but are not. A chaotic market is not efficient, and long-term forecasting is impossible. Market price movement is highly random with a trend component.

Unsuccessful and frustrated traders want to believe there is an order to the markets.
Sad traders
1. think prices move in systematic ways that are highly disguised.
2. want to believe they can somehow acquire the "secret" to the price system that will give them an advantage.
3. think successful trading will result from highly effective methods of predicting future price direction.
4. have been falling for crackpot methods and systems since the markets started trading.

The truth is that the markets are not predictable except in the most general way.
Successful trading :
1. does not require effective prediction mechanisms.
2. involves following trends in whatever time frame you choose.
The trend is your edge. If you follow trends with proper money management methods and good market selection, you will make money in the long run. Good market selection refers to selecting good trending markets generally rather than selecting a particular situation likely to result in an immediate trend.

There are two related problems for traders.
1. following a good method with enough consistency to have a statistical edge.
2. following the method long enough for the edge to manifest itself.