Habits of a Successful Financial Trader

Habits of a Successful Financial Trader
Habits of a Successful Financial Trader

Financial trading is not exactly a walk in the park as most people think. As much as many people would like to mistakenly believe that financial trading is the easiest way to make money, only a few can live up to this. The game is by no means for the weak at heart and the only way to approach trading with the aim of making a profit is by developing a certain set of habits. An old Wall Street adage that goes by, “The easiest way to make a small fortune in the market is by having a large fortune” says it all.

Having a Plan

The first step to being a successful financial trader is by having a plan. The success stories of most successful traders usually begin with planning and end with planning. They often speak of the numerous evenings they spent analyzing markets and coming up with charts. Successful traders plan and come up with strategies based on market trends. For the case of traders carrying out index trading, they identify the strongest market sectors and the respective stocks in these markets. Like a lion waiting to pounce on its prey, they wait for the most appropriate time to enter the market. Even after entering the market they continue planning on how best to survive, how to gain a competitive advantage over other traders and how to make maximum profit. A trader without a plan is like a ship with no captain and is therefore likely to capsize.

Good Judgement of the Market

A successful financial trader has limits to which he/she can trade. Most unsuccessful traders have a history of overtrading. Overtrading is an equivalent of sitting on a time bomb with a ticking clock. Based on the market trends a successful trader should be able to use his good judgment to know when to trade light and when to trade maximally. During boom a successful trader is likely to trade maximally, the horizon limitless. On the other hand during the recession, the trader should be able to trade lightly to avoid losses. For example in precious metal trading, there’s usually a particular season when people need these precious metals for ornaments. During such a season, the trader should ensure that he trades maximally to get maximum profits since demand is high.Good traders often go by the flow of the market.

In as much as it is profit oriented, the trader has to maintain a positive attitude at all times regardless of the performance
In as much as it is profit oriented, the trader has to maintain a positive attitude at all times regardless of the performance

Positive Attitude

Trading is not a bed of roses. It should, therefore, be treated with the seriousness it deserves. In as much as it is profit oriented, the trader has to maintain a positive attitude at all times regardless of the performance. A successful trader should be able to review his performance to assess his weakest points and his points of power. Above all his focus should be on consistency rather than erratic profits and losses. Prudent traders can identify when the market requires them to change in a particular manner and they are likely to take this positively. Denial is very costly in trade and therefore a successful trader should be able to dance to the rhythm of the market. He should take whatever the market throws at him and rise with his head held even higher. Composure is key since most good things have been known to take time.

Eagerness To Learn

A successful trader should never get tired of learning. Financial trading is a very broad field and there is always something new to learn each day. CFD trading, for example, requires the trader to know all the relevant information regarding the shares, currencies, commodities, and treasuries to accurately predict whether their prices will fall or rise. For a trader to be successful he should, therefore, develop a habit of updating his knowledge regarding the market. He should be able to bury himself in research and both previous and current analysis on the market. He should have a fire in his belly that drives him to seek for more, to learn more techniques in the trade and to master the trading psychology

Avoiding Excuses

In the case of a loss, a successful trader is not expected to blame the market or any other factors that might have orchestrated this loss. If anything, he should be the one to blame since the market gives equal opportunities for all the traders to thrive. Moreover, the market has many phases that are there will always be good days and there will also be bad ones. During the good days he should ensure that he fulfills the objectives of his trade and during bad ones, he should be able to sit down and find the exact point that the rain started beating him. He must take advantage of the favorable market conditions and shun from those that are unfavorable to his trade. The sooner a trader acknowledges that excuses are for failures, the closer he gets to being successful.

The battle of financial trading is never lost while trading but rather before even the market opens. It, therefore, takes a combination of resilience, character, and discipline to make a trader successful.

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