Common Traits of Successful Traders

By | January 7, 2013

Learn to Lose Money to Make Money

Unfortunately, it is the sad reality that the majority of people reading this are not profitable traders. If I could single out the most common culprit for sabotaging your trading it would have to be not being able to take a loss. This is especially prevalent amongst new traders, but I’ve seen this single trading mistake cripple even more experienced traders. In fact, I’ve run across countless traders that are generally successful if not for a few outsized losses. The problem is that these outsized losses are what cripple your account and push you into the negative column. You will never be a successful trader, EVER, until you learn how to take a loss.

 

Discipline like Army 

Discipline is directly related to the bottom line of a trader’s account. The Professional Trader keeps a high focus on being disciplined and sticking to his system. He disciplines himself by constantly having the thought of making money and being positive at the end of the month in the forefront of his mind. This way he keeps himself from getting caught in the now emotional moment. He stays on the sidelines when the timing is wrong to enter a trade and always places stops while trading. He moves his stops up as the market moves in his direction, acts as he is supposed to by seizing the right opportunities as they present themselves. He also stays within his risk to reward parameters. Professional Traders keep their priorities in order by keeping their primary objective of profit at the end of the month at the forefront of their minds. This make doing what they should be doing very easy. This discipline is the same as being in shape. If you have the desired body shape in mind then you will act accordingly while eating and exercising. Professional Traders approach trading the same way.

Get Comfortable With Being Uncomfortable

“In the trading world, you will either make money or lose money on any given trade. All that matters in the end is making more money when you’re right than you lose when you’re wrong.  Knowing this, traders have learned to accept failure as part of the game, but they also use the information they acquire from their mistakes as a learning tool.  Frequently, what they learn from losing money is more valuable than what they learn when they make money”

Make Yourself Accountable

“Commitment, perseverance, and discipline are the characteristics that move people beyond desire to action, that differentiate mediocrity from greatness, and that separate greatness from superstardom”

 

Learn to Sit Tight

It is no trick at all to be right on the market,” he adds. “I’ve known many [traders] who were right at exactly the right time, and began buying or selling stocks when prices were at the very level that should show the greatest profit. And their experience invariably matched mine; that is, they made no real money out of it. [Traders] who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make the big money –Jeess Livemore

 

Comprehension

This is the trader’s ability to attend to the smallest details of his or her trading plan.  I believe a trader must have rules for entering and exiting a trade before the trade is made.  In the beginning these rules can be in the form of a checklist wherein before each trade all the details of your rules are checked and verified.  With time, the rules become such as a part of your psyche that the checklist is in your head and can be confirmed with quick precision.  The key is to never change the rules. When the rules stay the same your mind will not be able to play tricks on you.

 

Controlling EGO

The rules are not hard to understand. Recognizing a profit from a loss is simple. If the rules are easy to grasp and a profit is distinguishable from a loss, where does the problem lie? What makes it so hard to apply the rules? There is something within each of us that has a power over our minds that prevents our acting according to what we have agreed is the proper course of action. That something is present in all of us and is very powerful, more powerful than anything I know. Let’s call it ego. Until we learn to get rid of our ego, we will never make money in the market consistently. Those who haven’t identified the ego’s ways will eventually be destroyed in the market because of their ego’s tendencies. It is just that powerful. The market rewards those who have subdued their egos. Those who rid themselves of their egos are rewarded greatly. They are the superstars of their fields. In the market, rewards come in the form of profits. In the world of art, masterpieces are the results. In sports, the players are all-stars and command enormous salaries. Every pursuit has its own manifestation of victory over the ego.

 

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8 thoughts on “Common Traits of Successful Traders

  1. Bramesh Post author

    Thanks Kaushal,Sanjay Sir to share your perceptive on trading and correcting the misconception.

    Keep posting your valuable comments

    Rgds,
    Bramesh

  2. Bramesh Post author

    Dear Sandew Sir,

    Every trader has its own perceptive. Trading is 3 M Mind,Method and Money Management.

    You miss even a single and Market will slap you.

    Rgds,
    Bramesh

  3. Bramesh Post author

    Dear Fire Sir,

    Its my pleasure.

    Rgds,
    Bramesh

  4. Fire

    A very valuable reminder for us professional traders. I am taking out a print-out of this article for keeping it in front of my trading desk.

    Thanks a lot for sharing it Bramesh.

  5. Sanjay

    Agree with Kaushal… Sandew ,as u said preserve capital,you wont be able to preserve till u accept the losses ,(thats where tight sl comes in),and being comfortable in the plan in fine but accepting the flaws in the plan if any (and reanalyzing)is what you need to do .

  6. Kaushal

    @Sandew – i disagree with your comment. Point#1 is very important though subtle. perhaps if it re-read as “Learn to Lose Least Money to Make Money”. Lack of an army like discipline leads to point 1. if you do not abhor losses (which is the same point you make in your comment) and are not disciplined around your stop losses, chances are very high that you’ll end up with a crippling loss.

  7. Sandew

    While almost all traits are a must for a trader, Point # 1 and 3 are crap. No trader believe in 1 and 3 as trader prefers first to preserve capital and second, only those make money who are comfortable in the plan they follow.

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