7 Things You Need as a Trader
7 Things you need as Trader, to trade in a more disciplined and profitable way.
If you do not have the necessary confidence your chances for success are slim. This is not only valid for trading but also for the rest of your life. In trading you have to believe in what you are doing. There is no room for fear – mistakes are part of the game. The key to success is to analyze your mistakes and draw the necessary conclusions in order not to repeat the mistake. This is the progress you will make in your trading.
There are so many different strategies out there: trend trading with momentum, scalping, news-trading and so on. You have to find a strategy which fits your personality. Then you have to do everything necessary to master this strategy. The fastest way to learn a strategy is to follow a successful mentor and copy his or her trading with your own style. Another option is to have a trading partner with whom you share your trading experience. This can be beneficial for both parties. Together you will have to fine-tune your strategy and adapt it to potentially changing market conditions. It is often difficult to go through that whole process just by yourself.
3. Specialization on a specific product
Specialization is important. Nowadays you can trade futures, equities CFDs or Forex – there is a huge variety of instruments available to trade. It is all right to try every instrument available but sooner or later you will have to find out which instruments suits you best. If you trade a bit in stocks, trade a bit in futures and some forex you will never truly become a master in trading a specific instrument. Specialization is absolutely necessary.
You will have to find the timeframe which best suits your personality. If you are a very nervous person trading on the shorter timeframes is probably not for you. Finding “your” timeframe to trade on is essential for being a consistently profitable trader.
5. Capacity to cut losses short
All good traders know that they have to cut their (small) losses and don’t allow them to become big losses. As a trader your money is the basis of you activity. If you lose it you are out. If you cannot limit your losses you will be sooner or later out of the game. You have to be confident in what you are doing but if the market proves you wrong you will have to cut back your ego and take the loss.
6. Ability to make decisions
If you go to a Restaurant with your partner and after half an hour you still cannot decide what to order then trading is probably not for you. You have to be able to take decisions, sometimes within a very short time. You cannot hesitate in trading – if there is a valid signal you have to take it. The markets move fast. It does not pay to be afraid and hesitate to pull the trigger. If you make a loss this is part of the game.
7. Use your own brain
In the long term it does not pay to follow the suggestions and trading recommendations of other people – you will have to use your own brain and develop a trading plan which suits you. If you are listening to “tipsters” you will never become a consistently profitable trader.