The success of any business hinges on the ability and skills of its entrepreneur. Identifying opportunities, building strategies and executing require skill, patience and perseverance. While many are lured by dreams of making quick bucks from the stock market, one must know this profession isn’t child’s play.
Unlike other businesses, the trading environment can change rapidly, giving little or no time for corrective action. A trader’s knowledge, beliefs and patience are constantly tested. Apart from this, you will have to develop some unique personality traits if you want to be a successful trader.
We will help you along the way to develop the skills of a trader.
The American Psychological Association (APA) Dictionary of Psychology defines 'personality trait' as “a relatively stable, consistent, and enduring internal characteristic that is inferred from a pattern of behaviours, attitudes, feelings, and habits in the individual”.
Here are some traits of a successful trader
Passion:
Trading can be a monotonous business, and sometimes emotions can get the better of you. Among the most important traits of a successful trader, is the passion to trade. You need to have the passion for doing what it takes to stick to the game without being overpowered by emotions. Passionate traders painstakingly plan and record their trades for future reference and make fool-proof risk management plans.
Discipline:
While it is easy to make a trading plan and strategy, it is difficult to stick to one, especially when the going gets tough. This is where discipline comes to play. Discipline is among the key characteristics of a good trader and it can be strengthened by back-testing the strategy for a long period, understanding how it applies in different scenarios and building confidence.
Perseverance:
Themost successful traders have a never-give-up attitude. The most painful part of trading is a losing streak, even for the most successful trader. Accepting that pitfall is inevitable, a good trader takes them as opportunities to learn from them.
With an overabundance of information showcasing that trading is easy money, there are many false expectations people may have when they get into the trading world. The lure of getting rich overnight is extremely strong, attracting many newbies, but one may get lucky once, twice or thrice. Eventually, luck runs out, and it is a skill that matters, and perseverance coupled with the right skills is essential for chances to make money and end up being a successful trader. One must think that it is not the outcome of a single trade that should determine how one trades, but one needs to survive for the next 1000 trades, and having that mindset is critical.
Patience:
Patience is regarded as an important virtue for successful traders, and we have all been encouraged to cultivate it. Successful traders patiently wait for the setup before entering a trade. They stick to their plan and avoid reckless invalid setups. A successful trader always plans the trade and trades the plan.
Independence:
A successful trader is not influenced by the noises around them. It is critical that a trader has an independent outlook, as relying on opinions can be risky. They’re self-starters who, after initial mentoring, develop the confidence and responsibility to take charge. They also have the maturity to seek help from successful traders and mentors to hone their skills but do not get swayed by opinions. Even if the trader is exposed to noise, which is difficult to avoid in today’s information overload world, successful traders learn how to pick up minimal noise or convert their trading into pre-set rules (or algo) which helps to keep the noise at bay.
Adaptability:
No two trading days are the same. A successful trader, who has back-tested his setup under various scenarios, implements his strategy accordingly. For e.g., a trader who trades on volatility will sit out if the day is flat. A momentum trader also will trade only if there is strong momentum.
Fortitude:
Fortitude is defined as courage or mental strength to endure misfortune, adversity or pain calmly. Markets can be tough and uncertain. Despite meticulous planning, a loss can happen. A successful trader takes bad days in his stride, learns from them and moves on. Maintaining a journal helps in being objective and keeping a record for future reference.
Self-awareness:
Being self-aware means knowing what is to be done at what time, considering one’s skills. Practising self-awareness helps identify and neutralise erratic emotions. Traders need to know their core personality traits - they can be patient, impatient, aggressive or timid – and not let them affect their business. Journaling helps in being self-aware, identifying one’s trader personality and accordingly custom-make a successful strategy.
Trading allows us to know a lot about ourselves, our behaviour in adverse conditions, impulsiveness, greed, fear, taking calculated risks, and various personality traits.
Points to remember:
- Characteristics of a good trader include focussing on weaker traits.
- Good trades can happen only by enhancing skills.
- Work on building all the qualities of a good trader as they work in unison.
