Welcome back, Traders!
As promised, today we start our new mini-series of Trading Top Ten tips and tricks that can and will help you become a better trader! Let's start with the Top Ten Personality Traits that we believe are key to becoming more profitable and successful in your trading journey!
Your positive attitude is key when trying to become a successful trader. Trading is very challenging, there is no doubt about it. Don’t trust promises of ‘easy money made from your phone’ as these are never true. You have to develop a strong and positive mindset when it comes to trading. Your attitude towards trading, how you handle both your wins and losses will ultimately shape your trading career! If you want to make a living out of trading financial markets you have to possess a certain level of knowledge, understanding of the cycles and trends (both come with experience and learning!) and, above all, an enthusiasm for the markets that has to come from within!
Stay disciplined and stick to your trading plan at all times! You have to also always respect your risk management rules. Regardless of how good or profitable the strategy is, if there is no risk management in place, you will most likely lose your money. To become a successful trader, you have to be able to eliminate emotions from your trading. Instead, you should develop a trading plan, test it in the demo environment until you’re 100% confident with it and then put it into action on your live account! Staying disciplined allows you not only to sustain through the losses (you will have losing trades, no doubt about it!) but to make the most out of your winners! Disciplined traders learn how to exit losing trades early while taking the most out of their winning positions!
Another important trait of a successful trader! The ability to recover from your losses is crucial. There is not a single strategy that guarantees a 100% win rate. Period. Some of the most successful trading strategies deliver an 80%+ win rate. This means that, on average, 20% of your positions will hit your Stop Loss levels! This is where your risk management comes to play and shine! If you are disciplined and stick to it at all times you should be able to continue trading regardless of the losses you’ve experienced! You should also, always try and learn from your losses! Look at your losing trades as an opportunity to learn going forward! It will give you plenty of information that can help you adjust your strategy or adapt to ever-changing market conditions!
Trading is a very competitive field, after all your win means that someone else lost. But this should not discourage you from trading and taking advantage of the ample opportunities markets have to offer! Being competitive is a great personality trait that most successful traders have! It allows them to always try to improve their strategies, motivates them to stay focused on their long-term goals and objectives and to grow on both personal and professional levels!
Flexibility! Another key trait that most successful traders have! Markets react to everything: new monetary policies, elections, acts of terrorism, unexpected events (such as COVID19), as such you must stay flexible and be able to adapt to these conditions! You don’t want to stay out of the markets for a couple of weeks or months at a time because ‘something happened’ and the markets have reacted to it! You have to learn how to adapt to changing circumstances, this includes adjusting your strategy in line with the changes you experience! Don’t ever be afraid to ‘think outside the box’ to find a creative solution for your trading! Just make sure to always try it on a demo account first!
Remember, trading is not ‘get rich quick’! It is a long-term investment and should always be considered as such. If you start with a £1,000 deposit, do not expect you will be able to quit your day job and become a full-time trader within a month! Your trading plan should include your trading objectives and you should have a brief idea of where you want to be 3 to 5 years from now and trade accordingly! Moreover, some of the trading strategies you may learn will only work during certain times of the year! It may be due to the volatility, trends, support/resistance levels that simply are unfavourable for this particular system! If that happens you need to have patience, re-adjust your risk management to reflect these conditions and wait for the markets to be back in a more favourable spot for your strategy! If you trust your system never panic, just stay patient and follow your plan!
To become a successful trader, you have to commit to this new lifestyle. If you’re new and have no experience or understanding of how the markets work you will have to put extra work on a demo account first! Do not trade on live accounts unless you fully understand your system and the importance of risk management! Unfortunately, many new traders blindly follow signal providers which, more often than not, results in substantial losses, disappointment and eventually quitting. Trading is not easy and it will require a lot of commitment and dedication from you! Make sure that you focus 100% of your attention when you’re analysing the markets and executing your trades! Try to eliminate any external distractions when you’re concentrating on the markets! Make sure you can dedicate enough time to improve!
Trading is about making decisions! Whether they are right or wrong, only time (and markets!) will tell! But you have to be decisive if you want to become a successful trader in the future! As a trader, you follow your plan, have and understand your strategy & risk management and most importantly you act on it! You analyse the markets and decide whether to enter a position or not based on your interpretation of the current market conditions. You have to become comfortable making these calls! You trust your judgement and you act on it!
You also have to be decisive when it comes to managing your open positions! Traders often have a more hands-on approach and monitor their open positions (despite having appropriate Stop Loss levels) to cut their losses early in case of any unforeseen or sudden news that affected their entries! They simply act swiftly to preserve their capital!
We want to make it clear: YOU are responsible for your trading! No one else can take responsibility for the trades you enter or how you manage them. This is true for both manual and automated trading! As such, you have to be confident in taking ownership of your trading activities. You must develop a sense of independence if you truly want to succeed and be a successful Forex Trader. Of course, there is help available: you can access trading courses, seminars, books or even find a more experienced trader to mentor you but at the end of the day, you decide to enter the trade based on the setup you have seen! Remember, we all have different personalities and trading preferences so the system that works for one trader may not work for another! As such, it is very important to become independent as soon as possible and work around systems and strategies that work for you!
Finally, you have to trust yourself! Being a trader is all about finding what works for you! Trusting your analysis and execution skills. Do not feel discouraged if you experience a losing trade or a losing streak! This is, unfortunately, part of the game. You can gain confidence in multiple ways, including (but not limited to):
● continuous learning
● testing your strategies in a demo environment
It is important that you trust yourself and your judgment when it comes to trading! If you don’t see a valid setup, don’t force the trade for the sake of it. Be patient and wait for an opportunity that you can enter with full confidence, backed up by your knowledge and analysis!
Thanks for tuning in this week! We hope you’ve enjoyed our new mini-series and will come back to learn more next week as we continue our journey through Trading Top Ten!