7 Key Traits Essential For Traders

Trading extends beyond a mere understanding of market mechanics or identifying the ideal moving average for your trades. It demands a unique set of abilities that surpass the desire for quick financial gains. Emotional control, discipline, adaptability, and several other important qualities are typically not taught in school or required in regular day-to-day jobs. This poses a challenge for the average trader seeking success in this field. 

In this article, we will delve into the seven fundamental skills that every aspiring trader must cultivate. We will highlight the potential issues arising from the absence of these skills, and more importantly, provide practical tips to enhance each one. Our goal is to assist you in avoiding the common pitfalls that often ensnare new traders, leading to a cycle of frustration and trading losses. 

Whether you are just embarking on your trading journey or aiming to improve your trading skills, this article aims to provide you with the necessary support. 

PATIENCE 

In the world of trading, patience plays a crucial role at various stages: 

Firstly, patience is required when waiting for trades. Many traders fall victim to FOMO (fear of missing out) and deviate from their trading rules by prematurely entering trades without proper validation from their strategies and rules. It is vital to wait for trades that meet all the necessary criteria. Avoiding impulsive trading and using a trade checklist outlining entry criteria can aid in making better decisions. 

Secondly, traders must exercise patience while in a trade. Distinguishing winning from losing traders lies in maximizing profitable opportunities and holding onto trades for an adequate duration. Cutting winning trades too early due to the fear of giving up profits is a common mistake made by losing traders. When winning trades are prematurely closed, it becomes challenging to sustain profitable trading as eventual losses can erode all gains. Developing an exit plan and thoroughly back testing the exit strategy can instill confidence in adhering to the established rules. 

Traders need patience when growing their trading account. Impatient traders often take excessive risks in an attempt to rapidly expand their capital. Managing risk and adopting a reasonable position size form the foundation of professional and profitable trading. 

HUMILITY 

Successful traders demonstrate humility by detaching their ego from their trading decisions, eliminating the need for self-validation. In the age of social media, many individuals feel compelled to showcase their achievements as proof of their abilities. However, in the trading realm, arrogance and an unhealthy ego hinder one's chances of success. 

Traders must embrace the concept of going with the flow. The market cannot be forced to adhere to personal desires; instead, traders can only respond to the market's movements. Accepting this fundamental reality is paramount. 

Additionally, acknowledging that being wrong is an ordinary aspect of trading is essential. Humble traders effectively manage losses because they understand that losses are an inherent part of the process. A loss does not imply incompetence as a trader. Placing undue importance on individual trade outcomes is counterproductive, and ego should not be attached to the results of trades. 

CURIOSITY 

Successful traders possess a sense of curiosity and a continuous drive to enhance their trading methodologies. However, it is important to note that curiosity does not imply randomly shifting from one trading strategy to another, engaging in system-hopping, or trading without consistency. 

A curious trader consistently seeks improvement, constantly questioning and challenging their existing trading approach. They dedicate substantial time to back testing new trading rules and meticulously reviewing their trading journals in search of ways to enhance their edge. Curiosity fuels the trader's desire to not only ask questions but also actively seek answers to those questions. 

SELF-AWARENESS 

A self-aware trader possesses the ability to objectively evaluate oneself and their approach to trading. Such traders have a solid understanding of their strengths and weaknesses, allowing them to construct a trading strategy that aligns with their personal profile. 

Maintaining a trading journal and consistently reviewing past trades can enhance self-awareness. By actively confronting and revisiting trading behavior, traders can identify weaknesses and areas where potential profits were missed. 

When analyzing previous trades, it is beneficial to ask the following questions: 

These questions serve as a valuable starting point for the review process, facilitating the development of improved self-awareness over time. 

FLEXIBILITY 

Many traders tend to become overly attached to their trades, a behavior known as being "married to their trades." This attachment hinders their ability to let go of a specific trade idea, even when contradictory signals emerge or invalidate their initial analysis. Consequently, they end up forcing trades, entering positions prematurely, and disregarding conflicting signals. 

Moreover, traders who are married to their trades often mismanage them once they are entered. They tend to hold onto losses for an extended period and overlook optimal exit signals. 

These traders deviate from their trading plans and become excessively attached to their trades. In contrast, skilled traders can objectively assess their charts and trades, making optimal decisions aligned with their trading plans. Developing a trading plan before entering a trade and determining exit points in advance can assist traders in making better decisions and curbing impulsive trading tendencies. 

DISCIPLINE 

Discipline serves as the adhesive that holds all aspects of trading together. A disciplined trader demonstrates the commitment to consistently carry out necessary actions, regardless of their personal inclination. 

Undeniably, backtesting and journaling trades are crucial and advantageous activities for traders. However, many traders neglect these practices, succumbing to procrastination, excuses, or a lack of commitment to dedicate time for deliberate practice. 

In contrast, disciplined traders recognize the significance of these activities. Even when they may not feel motivated to conduct another backtest or log trades in their journal, they understand the indispensability of such actions. They persevere because they acknowledge that success in trading is unattainable without them. 

True professionals leave no room for excuses. They prioritize and execute the tasks they know they should be doing, irrespective of their emotional state or momentary desires. Discipline distinguishes professionals from the rest, as they consistently engage in the necessary actions for long-term success. 

EMOTIONAL CONTROL 

Exercising emotional control and consistently making objective trading decisions are paramount to achieving success in trading. 

Traders who allow their emotions to dictate their actions tend to engage in reckless trading, disregard their trading rules, struggle to cope with losses, and often neglect sound risk management principles. It is crucial for traders to cultivate the ability to control their emotions and resist impulsive trading behavior. 

Establishing well-defined trading rules and regularly backtesting one's trading strategy to gain an understanding of expected outcomes can significantly contribute to emotional control. The clearer a trader is about their approach to trading, the less likely they are to act impulsively. 

Traders should develop clear rules for trade entries, exits, trade management, and risk management. Documenting these trading rules and conducting frequent backtests can make a substantial difference. Collecting data from each backtest and evaluating performance aids in building confidence and improving pattern recognition skills. This process allows traders to identify areas for improvement, enhance their decision-making abilities, and ultimately strengthen their emotional control.