The 3 Essential Elements in your Roadmap to Success

Having studied many professional traders, I found that there are 3 crucial factors that have led to their success. All these market wizards have found success because they have understood and mastered the 3Ms of trading – Method, Money and Mindset.

Method (chart-reading): Process by which a trader enters into the market, using either technical or fundamental inputs to make their decision

Money (risk management): This includes capital allocation, risk parameters (drawdown limits), risk-to-reward calculations (entry price, profit target, stoploss)

Mindset (psychology): Market psychology the most important part of trading, and determines how well you can execute your trading plan in the markets in real time

The 3 Essential Elements in your Roadmap to Success - Wrong Allocation!

The 3 Essential Elements in your Roadmap to Success – Wrong Allocation!

To many new traders who know of these 3Ms, they tend to make the mistake of giving equal weightage to all 3 parts (refer to above), or even worse, almost 100% weightage to the “Method”. The most obvious danger is neglect to the other essential parts.

In reality, a professional trader should allocate the 3Ms as depicted below here:

“Don’t focus on making money; focus on protecting what you have.” – Paul Tudor Jones

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Spencer Li is a trader, investor and entrepreneur who currently manages his own portfolio of stocks, REITs, currencies, cryptocurrencies, properties, and 10+ businesses across different industries, while providing consultancy services to individuals & corporations. As a former professional in private equity and proprietary funds, he has over 10 years of market experience, and has been featured on more than 20 occasions in the media.

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