1. Learning Phase - This will probably be a starting point for all the traders out there unless he/she are using signals to trade the markets. This is the point where you should try out different systems, attend webinars/seminars of successful traders and select a system which suits you the best, meaning some prefer to day trade, some prefer swing trading etc. Try to get your hands on books which teach and basic risk management techniques.
2. Building Your System - No two trading plans are the same because no two traders are exactly alike. You should select a strategy and make adjustments or certain changes along the way. At this stage, you need to have a selected strategy/system for further testing. But remember, deciding on a system is less important than gaining enough skill to make trades without second-guessing or doubting the decision. Confidence is key, which will be gained in the next step.
3. Paper Trading - Successful paper trading does give the trader confidence in the system they are using if the system is generating positive results. Test your system in the live markets either by paper trading or using the reply tool on the TradingView platform, which enables you to test your strategy on the previous year's data. Try to create a watchlist of stocks that work well on your trading system.
4. Transition to Live Trading - Successful paper trading does not guarantee that you will find success when you begin trading real money. That's when emotions come into play. That is why you need to start with a small amount and gradually increase your account as you gain confidence and start seeing results. Before shifting to live trading, you should have proper risk management, trade management plans to tackle the of the market. Write down details such as targets, the entry and exit of each trade, the time, levels, daily opening range, market open and close for the day, and record comments about why you made the trade as well as the lessons learned. Maintaining a simple trading journal is one of the most important things that you can do if you want to be successful in the trading space. You should go back and analyze the profit or loss for a particular system, drawdowns, average time per trade, Risk to Reward and other important factors. Remember, this is a business and you are the accountant. You want your business to be as successful and profitable as possible.
5. - I probably cannot emphasize in words, how important this part is for your trading success still it is not looked upon and given importance by the majority of traders. It is that minor difference between a highly profitable trader and a good trader. Professional traders know before they enter a trade that the odds are in their favour or they wouldn't be there. By letting their profits ride and cutting losses short, a trader may lose some battles, but they will win the war. Most traders and investors do the opposite, which is why they don't consistently make money. I have addressed some points of successful traders below, so you can get an insight into their trading mentality -
1 - They are all comfortable with taking risks.
2 - They are capable of quickly adjusting to changing market conditions.
3 - They are disciplined in their trading and can view the market objectively.
4 - They don’t give in to being excessively excited about winning trades or excessively despairing about losing trades.
5 - They make the necessary effort and take the necessary steps to be self-disciplined traders who operate with strict money and risk management rules.
Trading is a difficult game to master. Very few people become highly successful at it. However, virtually anyone can become a master trader as long as they are willing to make the necessary effort.