I know you are likely busy setting your goals for 2007, and I believe any accomplishment of a goal involves some simple, but critical building blocks.  I believe successful trading boils down to these critical factors:

1. Have an Edge.  Become an expert at one type of pattern in the markets and then to exploit that pattern when it reappears.  We generally look for opportunities with a 3:1 reward-to-risk ratio or higher.  My edge involves technical accelerations on the upside and the downside, plus the ability to spot extremes in fear and greed via our sentiment indicators.  We are constantly testing other systems to improve our edge in the markets. Can you define your edge in writing?

2. Disciplined Execution. Once you have an edge, you have to be able to execute.  I personally like the systematized approach, as it takes your ego out of the game and allows you to focus on how well you are executing your trading plan.  Can you say that your trading plan allows you to define how you will execute your way in and out of both good and bad trades?

3. Effective Money Management.  Overly aggressive investment allocations can ruin even a good system with excessive drawdowns, while overly conservative allocations of capital will not optimize your total returns.  Have you tested your method to determine the appropriate amount to risk per trade?

4. Have a Plan and a Clear Preparation Process.  If you're not prepared, by creating a written trading plan of your goals, and knowing specifically how your battle-tested trading method dictates your entries and exits, you give yourself no chance to confidently execute the plan. If you're flying by the seat of your pants, your emotions will take over and force you into a reactive mentality (for example, selling only after a significant decline).  Do you have a written trading plan and a defined preparation process (outside of market hours)?

5. Accountability.  No matter what approach you use, you must believe that YOU are the ultimate one who is personally responsible for getting results.  This gives you an internal locus of control that gives you a greater ability to make quicker decisions that can help you get to your goals. I believe a regular review of your trading results is an important part of keeping yourself accountable.  Do you have a regular review process for your performance?

6. Commitment.  You must have a determination not to quit when things are not going your way. I have learned in life that those who succeed in any endeavor have made a commitment to seeing it through both good times and bad.  Certainly you must also define your maximum risk tolerance and make sure you do everything in your power to keep your equity in an overall uptrend.  Commitment is enhanced by continuous testing of new ideas and regular monitoring of your existing approach.  Do you have a certain amount of time set up for future R&D testing plus a defined process for monitoring your positions?

Price Headley is the founder and chief analyst of BigTrends.com.