Analyze yourself: How much risk can you handle? What goals for returns do you have? What timeframe can you trade most comfortable with the lifestyle you want and your current circumstances?
Choose your Method: Will you be a day trader, trend follower, swing trader, value investor, growth investor, scalper, or option trader? What school of thought will you use to make money?
Analyze the method you have chosen: How does your school of thought make money? What is their edge? Why are the best in your field profitable? You have to study charts and backtest strategies to understand how it could be possible to make money in the future based on past price action.
Choose your goal for returns: The bigger the returns the greater the risk and drawdown that must be taken on in almost every case. If you do not have a target for annual returns it will be difficult to structure your trading to achieve it.
Prepare your trading plan to achieve your chosen goals: You have to structure your written plan for entries, exits, and position sizing to give you a good probability to achieve your annual returns and limit your drawdowns.
Execute your plan: The discipline to actually follow the system and plan that you decide on after your homework will give you a chance of success.
Protect your capital: Your number one job is not to make money but to keep what you have. Position sizing should not risk big losses Your stop losses should ensure that you exit a trade when you are wrong and the loss is small.
Perseverance: Make adjustments to improve your trading. Quit when you’ve won not when you are tired.
