More than analytical skills and tools of trading, success in trading hinges significantly on the personal qualities and character traits of the trader. Key qualities such as discipline, emotional resilience, adaptability, and a steadfast commitment to continuous learning are crucial. Understanding and developing these qualities are fundamental steps toward achieving long-term success in trading.
In this post, we would share the most desirable qualities that form part of the DNA of successful traders. Many of these do not exist on day one, and need to be painstakingly built over time with a lot of resolve and commitment.
Quality 1 - Honesty and Truth - When you are in a trade, you are brutally honest and truthful to your system, even if that means taking a loss and exiting. You see the charts and patterns for what you see, not what you want to believe. Objectivity and acceptance is one of the greatest hallmarks of a good trader.
Quality 2 - Character - Your DNA - Character pertains to the very make up of your being - what you are as a person and hence as a trader. It is your integrity, your self discipline and your self control. It has everything to do with your success as a trader.
Character is so important that you have to be persistent and diligent in developing it. It is about knowing your weaknesses (the market will lay them bare for sure) and working on them over time to develop a character as solid as a rock, unflinching and devoid of emotions. You believe in the mantra of "Change", "Modify", and "Grow".
Quality 3 - Humility - Accept and Bow to the Supremacy of the Market - In the inner reaches of your trading psyche, you accept the supremacy of the market and bow to it in your every trading decision.
You treat the market with utmost respect and awe. You know that the market has its own mind and can do ANYTHING. You have to be humble to accept that you analysis could go wrong and exit to keep your losses small.
Quality 4 - Objectivity and Detachment - You identify your edges objectively. Being objective means there’s no potential to define, interpret and therefore perceive any market information from either a painful or euphoric perspective. You keep your expectations neutral and stay focused in the “now moment opportunity flow”.
Your expectations on every trade are neutral, hence you are detached from the outcome. You know you stop making trading errors when you are detached. Then a magical transformation happens! You start trusting yourself and your confidence grows. So it is easier for you to follow your system without reservation or hesitation. Then your trading edges ensure that you win over a series of trades. This is all a virtuous cycle that starts with detachment.
Quality 5 - You stay alive - financially and emotionally - You deeply understand and practice preservation, of both your capital and your dignity, to stay alive. You know that if you stay alive, you could ultimately win in the market.
You will not take a financial or emotional beating in the market as it undermines your self confidence and depletes your ability to take trading decisions out of the courage of your convictions. You are ok with a string of small losses than to take a single big hit. It is far less demoralizing and helps you stay alive until the next big win.
Quality 6 - You believe in the process of trading, not the money - You have a trading system with an edge to trade the markets. The system has defined rules to trade well formed patterns with an adequate risk control mechanism. You have your entry and exit rules in black and white. You plan the trades and then trade your plan.
It does not matter to you that the next trade is a winner or a loser. You know that a system with an edge is designed to deliver profits over a series of trades. You consider money as raw material to execute the process and nothing more.
Quality 7 - You are an active observer - You have learnt to be an active observer. Both of the market and yourself. You listen, observe and capture the rhythm of the markets. You have the bigger picture, and you understand and follow the language of the market.
You also observe your thoughts and emotions every single time a trade presents itself - and filter out the negative emotions like greed, anger or ecstasy. You trade with a very alert mind. If you do not feel right, you let go of the trade.
Quality 8 - You are not addicted to the market - The urge to “always” be in a trade can be a big addiction. It leads to trading errors and overtrading. You understand that making money in the market does not require you to trade every day. You understand the importance of taking a break from the market to do things that you enjoy. You know that break gives you a fresh perspective on the market.
Even if you are in a trade, you are not looking at the screen constantly. You have your SL and profit targets on the system. You know the maximum loss that you will suffer even if none of the trades work out. In a nutshell, you have made peace with your system and the market. You trade when the trade meets your selection criteria, not to satisfy your urge for dopamine.
Quality 9 - You are flexible - You realize that markets are living, breathing, dynamic entities. They have changed in the past, are changing right now, and will continue to change in the future. Therefore, your trading methods, techniques, and style are designed to accommodate such changes.
If your system is not delivering because the markets have changed, you analyse the reasons and make changes to adjust or finetune the rules. You have a flexible approach to trading the market.
Quality 10 - You trade with money that you can afford to lose - You understand the importance of a relaxed mind in trading. You do not trade with money that is needed for normal living. You never trade with borrowed capital. Your trading performance does not impact your lifestyle needs and habits. You know that you cannot trade well with 'scared money', it will influence the mental freedom needed for sound trading decisions.
The hallmark of a good trader is always prioritizing prudence over misadventure. You are fanatical about keeping your exposure within prudent limits of money management. You know even the best trades can fail at times.
With this, we have covered all the topics that you need to learn to be a professional and successful trader. Please click on "Next Post" to go to Conclusion
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