7 Habits Of Successful Traders
The world of trading forex, stocks, and options offers huge potential rewards.
But, it comes with a huge potential risk as well.
One must never trade the amount that they cannot afford to lose.
Traders learn (journal your trading) numerous trading habits and lessons each time that they are trading.
Here are seven habits of profitable and successful traders each trader must know or at most, master.
7 Habits Of Successful Traders
1. Be Confident In Your Trading Decisions
When you do not have enough confidence or if you have fear, it will be hard for you to make trading decisions or to enter your trades.
This often leads to letting those good opportunities to just pass by.
Or at times, you just keep waiting for some additional confirmation that the stock or forex pair will favorably go your way and you may enter trades a little too late. With this, you may even end up chasing and just get in when it is already the movement’s ends.
On the other hand, being confident in your capability of making trading decision is one of the profitable and successful trading habits.
Confidence in trading means being patient that eventually, the good opportunities will come your way.
Those who lack confidence are always on the look for new trading habits just each time that something goes wrong.
Thus, they cannot focus and master one strategy. Even the most experienced trader loses confidence at times, but those who have confidence always find themselves back on the track.
Confident trading is considered to be the one most important trading habit in today’s trading market. those who are successful in trading use only this basic strategy along with technical analysis, chart patterns and candlestick charts.
But what really make them successful in this field, is the fact that their trading strategy struts with confidence. They have the capability of executing their trades just how and what they see.
2. Focus On Trading Strategies That Suits You
Some traders will venture into implementing many strategies all at once.
They have this thinking that they should be making more money every single day.
However, the most successful traders’ only uses few trading strategies.
The objective is to use trading strategies that you will be most comfortable with and be able to have these trading strategies mastered.
Of course, this is unlikely to happen overnight.
As in fact, you have to try different strategies and habits until that time that you can find something that you will be comfortable with.
Bear in mind that no single strategy will work in every market, so it is normal that at times you will sit on sidelines.
The key to making money is to trade when there are favorable odds and to stay in your game.
Once that a bottom line strategy is established, you can move on and be able to implement other trading strategeis.
3. Patience Is A Virtue
In your learning process, everything starts with patience.
Take some time to practice new strategies and trading habits by paper trading. Surely, you will make mistakes and it will take a while before you begin becoming comfortable with making trading decisions.
Making the mistakes paper trader will definitely allow you to stay in the game. If your desire is to immediately do a live trade, do it but with a smaller amount of share. You will make mistakes with a few trades.
But, if you will use the full extent of your buying power, one trade can wipe you out and stop you from trading.
Your patience to wait for the favorable trading opportunities is crucial.
As mentioned, not all strategy will work every day.
You need to wait for some time before you can find that good trade. There will be times that you will have some losing streak, but good traders will not be too much worried but will do something about it. To try to make back the losses is one of those worst things that a trader can do.
It is advised by many that one should set a maximum loss in a day, or in a week and for the overall.
If the max of the limit you have set has been hit, you can stop trading and remember that so long as you are staying on your game, there will be another day and other opportunities.
4. Take Advantage That The Forex Market Is Open For Trading 24 Hours
It is a belief that in order for one to be successful, traders must have a global perspective of this 24-hour market.
Those traders who focus only on the US market only has a glimpse of a part of the puzzle and he is not aware of how the whole world market unfolds.
They must realize that what is happening in the Asian region has a definite impact on the US and Europe.
It is very crucial of the trading habits that a trade must be very knowledgeable how they should take action on the overnight market. This will help them significantly in protecting their portfolio, and just how they can take advantage of the trading opportunities.
This will also help them in preparing for the next days of trading.
5. Be A Good Money Manager
It is a firm belief in the trading industry that a good trader will not place more than two percent risk of trading capital in just one single trade.
This would mean that if he needs to take a loss, the amount that he will be willing to give up will not be more than two percent of the capital.
The two percent is his absolute maximum.
One can also attempt to risk lesser than the said amount. The logic behind this is the fact that even if a trade is right of about 99%, one can still lose by 10 times in one row. This might just happen once at a time.
Only those who are risking little will survive this type of drawdown.
Traders who trade with all money that they have and without any other source will be very scared to make trading decisions.
Scared money will not make money.
6. Focus On Price Action
Some traders commit the mistake of having their good trades sold while having the bad ones ridden out.
One very dangerous thinking in the trading market is not selling down when there are times that it is what should be done.
Always remembers that traders are investors with equal opportunities and each one would want to have their money work at its brightest and at its best with the vision of not tying up as non-performers.
The best trading habit that can help in avoiding the trap is to keep your focus on the price action rather than on the dollar amount of the up and down. The trading market does not really give a damn about the entry price or about what your target is; so always trade on the numbers.
7. Bull And Bear Trending Markets
This is one of the most important of the trading habits that traders must be aware of. This is because there are times that when things are all doing well and traders are seeing huge profits, the latter just evaporate right from their eyes.
The best way to be guarded against such a situation is for you to continuously be updated about stop prices or to use options for hedge purposes. Stocks and forex pairs that have momentum that is fast-moving can drive the trading market higher.
However, when it turns, you must be able to think just how far it can drop. It is an old adage that trade market can use the stairs in going and the elevator in plummeting down. Learn to use stops always, and to take profits along just to the risk will be reduced.
In trading, one thing is for sure; not a single trader will know everything that there is about trading. This market is truly dynamic and continuously changing. One must always be nimble enough so they can change along with the market. It will take sheer amount of discipline, proper money and risk management and reading tapes in the 24-hour market.
There can be no better indicator other than the price. And if one will learn confidence, patience, discipline and proper risk management, he sure will be far ahead in this trading world.
To Your Success,
Team Trading Walk