The six hurdles to successful trading are:

1. Trading for the thrill of it.
2. Trading for revenge.
3. Lack of money management.
4. No well-defined trading plan.
5. Inability to pull the trigger.
6. Inability to admit you’re wrong.

Here’s how to overcome the hurdles, from Trading Commodities and Financial Futures:

Condition Yourself to be Unemotional

If you are trading for the thrill of it, you’ll trade when the conditions favor your methods and you’ll trade when they don’t. Because you are trading emotionally, you will overtrade---the inevitable outcome of thrill trading. You will also overstay your welcome on trades not going your way and this invites disaster. It might work for a time, but there will come a time when it will wipe you out.

Revenge Trading; Another Recipe for Disaster

Has this ever happened to you? You have just been stopped out for a loss, a bigger loss than you had anticipated. Perhaps, it was a ‘gap open’ beyond your stop due to some unexpected news. It is early in the trading day, and you feel you must make it back. The market owes you your money back and it must do so today! Have you ever had this feeling?

Well, I have, and let me tell you when I’m out for revenge, 9 times out of 10 it ends badly. This is because the state of mind is unstable leading to bad decisions. When you get this feeling, force yourself to take a step back and relax. The market will be there for you tomorrow and there are always opportunities.

Preservation of Capital is Your Primary Mission

When you have no money management program, it’s impossible to preserve your stake. Unless you tell yourself you will only risk X percent of your account on any one trade, that one trade that looks so right will inevitably come along and you will overtrade it. Let me share a secret with you; they all look so right. I would not enter a trade unless it looked real good, but it seems there is no way to know in advance which trade is going to be the big winner.

If we knew this then these would be the only ones we would trade. For me, I’ve found it’s a small number of trades that makes my year each year, and many times not the trades I thought would be the big winners. You must preserve your capital, and this means taking small hits on the many and inevitable losers. The goal is to still be in the game when those ‘mega-trades’ finally materialize.

Your Plan Must be Well-Defined

Nobody enters a position expecting it will result in a loss, however it will not come as news that even top traders experience numerous losses. So if the best will lose, why would you be any different? A well-defined plan will define success and failure both.

Ask yourself why are you buying gold? If the answer is something like, ‘because it just broke above the 30 day moving average’, or ‘because the CPI indicates inflation is heating up and in the long run gold is sensitive to inflation’, you have not defined your plan. You have reasons why you entered, but no clear exit strategy.

You are trading on hope and this is not a recipe for success. You must define your loss point before you enter the trade, and if you are not mentally prepared to lose, you’ll never win. It is essential to realize you’ll lose countless battles in this trading war, or the war will never be won. You should have a profit objective. Stop loss points should be written in stone, however profit points can be flexible and you should have contingency plans when your profit objective is reached.

The plan could be nothing more than something like this; ‘I am risking $500 per contract on this trade and my technical profit objective is $1200. If the market moves $500 my way, I move my stop up to an approximate break even and if it moves $900 my way, I move the stop up to approximate a $400 profit. If it reaches my technical objective I watch very closely for signs of failure; if the market shows these signs, I sell at the market, however if it moves through, I tighten my stop to just under the previous low’. This plan may or may not work, but at least it is a plan, and without a plan you’re ultimately doomed to failure.

You Must Act Without Hesitation (if there's good reason to do so)

When you ‘paper trade’ you always take the loss or the profit. In the heat of the battle it is not as easy to pull the trigger.

Remember, you must lose to win in this game. Too many times, even good traders will not take the loss when the planned risk point is reached. It is a human trait not to be able to admit you are wrong, and it is seductive to wait just a bit longer or take just a bit more risk in the hope the market will turn back your way.

In the great majority of cases, this just exacerbates the pain. How do you overcome this shortcoming? Very simple. Place a physical stop loss order with your broker the moment you enter the trade and then just let the “Market Gods” determine your fate. Trust me when I tell you this; you won’t be stopped out of the very best trades.

Condition Yourself to be Humble

You cannot have an ego and be a successful trader. With apologies to Vince Lombardi, winning is not everything, and it is not the only thing. I had a client with an S&P day trading system that made money four out of five trades. The problem was that fifth losing trade more than offset the other four winners. Yet, until he ran out of money, he kept trading it for small profits because it felt good to him.

I have seen numerous clients try to pick tops and bottoms, yet this is an almost impossible task because every major move has just one top and just one bottom. Who cares if any one trade makes money or if you have more losers than winners? The name of this game is not how many winners you have, but making money at the end. Forget about being right on any particular trade and focus on making money!