- Ø Successful Traders Remain Objective
It is a time-proven fact that a Successful Trader is an objective trader – by not allowing their emotions and prejudices to cloud their decision-making, a trader can both help spare themselves a lot of emotional pain and maintain a down-to-earth perspective on things.
I have personally encountered people who have utterly despaired after losing under a thousand, or have become recklessly excited after making just a thousand or so. Traders like this are typically greedy and fearful – or at least their trading motivations are.
- A trader has just lost a thousand and they really don’t want to suffer another loss, because it’ll be another blow. Another trader has just made a thousand , and they want more – even if common sense is screaming at them to just take the money they’ve earnt.
- Conversely, another trader in the same position takes their earnt money away too early, because they’re afraid that things may turn against them.
A Successful and professional trader does not allow such daily variations in their trading to intimidate them – the results of a single week or month are insignificant in the long run of their trading career, as it’s just a “small drop in the ocean”.
Suffering From Emotionial Backlash Is Normal For Newcomers, But If They Influence A Trader’s Decision-Making Too Much, It’s Generally A Good Idea To Return To Paper Trading. This would allow the trader to gain the confidence needed to not allow such daily variations (or “drops”) to intimidate and upset them.
Being emotionally objective allows a trader to maintain a “down-to-Earth” perspective on price movements – what they actually are, and not what the trader hopes or wants them to be.
Every trader has been in the following situation at least once in their careers: a trade is going against them, and they begin to look for reasons why the trade is still a good one, and why they should maintain it.
Obviously, this is incredibly risky and even outright hazardous, since it results in traders breaking their stops, and it also ensures that they’d lose huge amounts of money.
Before a trader even thinks about making a trade, they have to be absolutely certain about their entry and exit standards – switching their strategy to another in mid-trade is one of the most foolish actions a trader can do.
A trader can always uncover a reason as to why their position moves up or down, but this also means they end up not being able to see the actual price movements – they shift from acting on reaction to acting on prediction.
Under no circumstances should a day trader try to predict a market’s future price movements – a trader’s job is to act and play on the price movements themselves, not what they think or believe the movements should rightfully be. predicting price movements should be left to the actual investorste,technical analyst or technical analysis software just as trading should be left to the traders.
Sometimes, I see a trader taking a position in commodities that they know intimately and from the ground-up. This is essentially them mixing their trading with investing, and it’s quite a bold and dangerous move for them to make. Although there might be specific reasons why a trader enters into such a position for a short time, a lot of the time they end up keeping it as an investment, if their position turns against them.
The main concern is that, if a trader bases their entry standard on the line of thinking that a company is cheap and yet to recover, the trader would be increasingly persistent in holding their position, or even adding to it once the company lowers itself even more.
The more persistent a trader is on a commodity, the more difficult it would be for them to make decisions originating from the actual price movement of it.
While it is good to have expectations, a trader should always know what their potential trades are most likely to result in. If these expected results are wrong, then they would have to accept them and then properly react to what would actually be occurring.
- Ø Successful Traders are Not Afraid to Place Trades
If a trader doesn’t have any confidence in their trading skills or technical analyst or software or if they are afraid to lose money, it becomes difficult for them to actually enter and conduct trades – Their Hesitance Would Mean That They Would Lose Out On Many Good Opportunities.
There’s also a Good Chance that if they wait too long for confirmation that the commodity is heading their way, they would end up entering the trades far too late and end up both pursuing and hunting the commoditys down, ending with them entering at the end of the price movement.
As mentioned before, the fear of losing their money makes it harder for them to feel the sting of a loss or bumb trade. Too much of it would result in the trader having huge draw downs, as they wouldn’t take any losses at all. There’s also the chance that the trader would take their losses too soon, before the stop loss is achieved.
By having confidence in their ability to make at least decent trading decisions, the trader will learn patience, and in doing so will see that there are good opportunities out there – they just need to wait.
Traders that lack confidence usually look at switching thier trading strategies when things go pear-shaped – because of this, they’re never able to truly focus on one strategy and practice it to perfection.
On occassion, even an experienced trader may lose confidence in their abilities – my advice to them would be to go back to paper trading for a while, or to begin trading small shares. Either would help them regain their confidence.
- Ø Successful Traders Make Use of Only Risk Capital in Trading
If a trader uses all the money they have in day trading, and if they do not have another source of income, then fear would make them too afraid to make to any sort of decision – even neutral, passive ones.
There’s a saying: “Scared money never wins”.
- Ø Successful Traders Focus on Tried and Proven Strategies
Traders attempting to implement far too many strategies at the same time is a problem commonly seen – their train of thought is that they have to earn money every single day.
However, the Successful traders I’ve encountered actually only have a few strategies that they use – some of them only have one!
A Successful trader needs to find a strategy that works for them, that’s comfortable for them… and then become incredibly profficient with it, which will take a lot of time and patience. It would take quite a bit of time, trial, and error to find one that works and they are comfortable with.
However, they should always remember that no single strategy works in all markets, as well as not working all of the time. It’s perfectly normal for a trader to be seen standing on the sidelines occasionally – money doesn’t have to be earnt every single day.
A Successful trader should only trade when chances are favourable, and when they’re prepared to remain in the game. Once a primary strategy has been nailed down and is running smoothly, only then should they work on implementing other strategies.
- Ø Successful Traders are Patient
The quest to find the ideal, primary strategy begins with patience. A trader trying to find their primary strategy should begin with paper trading, as mistakes will be made during the learning process – it’ll also allow the trader to become more comfortable and confident in their decision making.
By marking these mistakes down on paper, it would help keep the trader in the game.
If a trader wants to jump straight into live trading (something which I highly recommend against doing), then they should begin only with small, if not tiny, amounts of shares. I advise this because many mistakes can be made and, by risking small, the trader can drastically reduce the risks and the sting of a loss.
If a trader foolishly uses their full buying power without knowing what they’re doing, one blown stop loss would fully wipe them out. Blowing a stop loss can happen; all traders I know, and I include myself in this number, have blown a stop loss at least once in their trading careers.
Patience in waiting for good trades is also essential. as mentioned before, above, no single strategy works in every market out there, and even strategies that do in some markets do not work all of the time – it may take some time for a good trade to come along, and it could also come along after a trader has had a downturn streak in their luck.
A Successful trader will do something else in the meantime, as them trying to desperately earn their money back would be a foolish move to make.
My advice is to set specific limits for losses per day, week, and overall. When one of these thresholds are hit, cease trading straight away.
Remember, “small drops” – a new day brings new opportunities!
- Successful Traders are Fantastic Finance Managers
An intelligent day trader would endanger no more than 3 to 4 percent of their trading capital on a single trade – if they need to or has to stop, then the amount of cash they’d write off as being acceptable would be no more than two percent.
My advice would be for them to try not to risk more than 3-4 percent, because even if they are correct almost all the time, the possibility of losing several times in a row is still there – and it could happen to anyone! By endangering a small amount of money, the trader would easily survive such an occurrence, if it ever came to pass.
- Successful Traders Have a Spine
Self-confidence is the most important thing to have in order to be a Successful day trader. Even if a trader only uses basic strategies and techniques, if reinforced by self-confidence, a down-to-Earth attitude, and the ability to remain emotionally objective, self-confidence is what will lead someone to trading prosperity.